Following concerns over the nation’s rising debt profile and dwindling revenue, the Federal Government of Nigeria said it was planning to reduce its fiscal plan for the first time since the return of democracy in 1999.
This, according to the government, was to ensure prudence, reduce deficit financing and borrowing, even as it vowed to deploy strategies to improve the nation’s revenue so as to reduce the country’s debt service to revenue ratio which is currently at 62 percent.
To achieve this, a budget size of N8.65 trillion is being proposed for the 2019 fiscal year, indicating about N470 billion reduction from N9.12 trillion budgeted for the 2018 fiscal year.
The Minister of Budget and National Planning, Sen. Udoma Udo Udoma, made the disclosure at a public consultation on the 2019 – 2021 Medium Term Fiscal Framework (MTEF) and Fiscal Strategy Paper (FSP) on Thursday in Abuja.
Udoma revealed that deficit in the 2019 budget would be cut from N1.9 trillion in 2018 to N1.6 trillion, noting that the key assumptions for the 2019 proposed fiscal plan include an oil production volume of 2.3 million barrels per day (mbpd), $60 per barrel of oil benchmark and an exchange rate of N305 per dollar
He said Inflation rate was put at 9.98 percent, while Gross Domestic Product (GDP) growth rate was reviewed downward to 3.01 percent from 3.5 percent earlier projected in the Economic Recovery and Growth Plan (ERGP).
Udoma added that N3.6 trillion oil revenue was being targeted as against N2.9 trillion for the current fiscal year, while N1.385 trillion is projected as non-oil revenue as against N1.348 trillion in the 2018 budget.
The Federal Government said nine government-owned enterprises, excluding the Nigerian National Petroleum Corporation (NNPC), is expected to generate the sum of N955.3 billion, while a sum of N624.5 billion was being expected from independent revenue sources, down from about N847 billion in 2018.
Udoma said for the government expenditure, a sum of N506.8 billion is projected for statutory transfer against N530.4 billion in 2018; debt service of N2.144 trillion in contrast to N2.013 trillion in 2018; and sinking fund of N220 billion, against N190 billion in 2018.
According to him, up to August 2018, the 2018 revenues was N2.48 trillion, while the full year 2017 revenue was N2.6 trillion. The minister added that the overall 2018 revenues current run-rate is 30 percent higher than that of 2017.
“2018 revenues up to August 2018 was N2.48tn, while the full year 2017 revenue was N2.6tn. Overall, 2018 revenues current run-rate is 30 per cent higher than last year’s. This is the reason we have cut the size of the budget from N9.12 trillion to N8.65 trillion.
“In 2019, we will concentrate on getting more revenue, oil and non-oil, by squeezing the maximum from oil, and build up non-oil revenue by an average of 30 percent up from the previous figure,’ he said.
Explaining the rationale behind the nation’s ballooned debt profile, Udoma said the borrowing was critical as the country needed funds to bring it out of recession, “that borrowing was directed at capital projects and it worked. That is why you see activities on Lagos-Ibadan rail line and others.”