The Nigerian federal government is considering slashing the 2020 budget by #1.5 Trillion. This is to say that the initial budget which is #10.59Trillion will now be reduced to #9.09Trillion. The proposed budget reduction was announced by the Minister of Finance, budget and national planning, Zainab Ahmed. The budget slash is the federal government’s way of responding to the impact of the Coronavirus outbreak on the Nigerian economy.
President Muhammadu Buhari, had set up a committee to examine the impact of the pandemic on Nigeria’s economy. The committee was given the task of how to fund the 2020 budget after oil price fell below the budget benchmark. The Committee is headed by Zainab Ahmed, the minister of finance, budget and national planning. Timipre Sylva, minister of state petroleum resources, CBN governor, Godwin Emefiele, and group managing director of of the Nigerian National Petroleum Cooperation, Mele Kyari, are members of the committee.
After the federal executive meeting held in Abuja, Ahmed, expressed hope that the decision being made would help stabilize the economy. She said that recurrent expenditure would be reduced by 25% across all the federal government agencies.
Also, the capital budget would reduce by 20% across ministries, department and agencies. This, she said, has been approved by the President. By doing this, operating surpluses that would accrue to the federation is expected to increase.
“What we have done is to give every Ministry guidelines on how these adjustments will be made. This is to enable us have detailed input from the Ministries”, she stated. Ahmed, further added that the budget cut is about #1.5 Trillion reduction in the budget size. It includes #457 billion from the Premium Motor Spirit (PMS) under recovery. The budget revision would be worked around $30 per barrel, which is lesser than the initial budgeted $57.
The Minister revealed that the country’s Civil service recruitment would be put on hold. Essential services such as health and security are only to be considered. When things improve , the issue of recruitment will be revisited. The President has directed that salaries and pensions must bee paid unfailingly.
The non-essential tax rebate currently being implemented will be reviewed in order to generate more revenue.
