Minister of Budget and National Planning, Senator Udoma Udo Udoma, explained that the Federal Government has proposed N8.73 trillion for 2019 fiscal calendar
Juliana Taiwo-Obalonye, Abuja
The Federal Executive Council presided over by President Muhammadu Buhari, on Wednesday approved the 2019-2021 Medium Term Expenditure Framework and Fiscal Strategy Paper setting sail for the commencement of planning on next year’s budget.
With the approval, the documents will now be forwarded to the National Assembly for review and approval.
Minister of Budget and National Planning, Senator Udoma Udo Udoma, while briefing State House Correspondents at the end of meeting, explained that the Federal Government has proposed N8.73 trillion for 2019 fiscal calendar, a figure that is about N400 billion lower than N9.12 billion of 2018.
He said the council has pegged the price of crude oil at $60 per barrel, exchange rate at N305/dollar and daily crude oil production at 2.3 million barrels per day.
Udoma had last week during a public consultation on the 2019-2021 Medium Term Fiscal Framework and Strategy in Abuja, explained that government would cut the budget from N9.12 trillion in 2018 to N8.65 trillion in 2019, as part of measures to ensure prudence, reduce deficit and borrowings, while laying greater emphasis on revenue drive.
He had also stated that government also wanted to reduce the amount of borrowing to finance the nation’s budget deficit in the proposed 2019 fiscal year.
According to its 2019-2021 Medium Term Expenditure Framework (MTEF), the government will cut deficit in the 2019 budget draft from N1.9 trillion in 2018 to N1.6 trillion in 2019.
Udoma said, “Today Federal Executive Council (FEC) approved the 2019 2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP)and it will be submitted to the National Assembly for consideration.
“The MTEF FSP that was approved today is designed to translate the strategic development objectives of the Economic Recovery and Growth Plan (ERGP) into a realistic and implementable budget framework for the medium term.
“As you know relevant inputs from engagements with stakeholders the last of such engagements was just last week, the inputs from stakeholders were part of the document that was submitted.”
But commenting on the government’s proposals, some economic analysts warned the cut in the size of the budget would hurt funding of infrastructure and job creation initiatives.
According to the Chief Executive, Financial Derivatives Company Limited, Mr Bismarck Rewane, the cut in budget size will have adverse effect on infrastructure development as capital expenditure would equally suffer a shortfall during the year under review.
On the other hand, he said the cut was meant to reduce the level of external and domestic borrowings in order not to create a financial burden for incoming administration.
Rewane also said the cut may be to further reduce the level of debt servicing currently considered too high in comparison to government revenue.
A development economist and a consultant to many governments of the world, Mr Odilim Enwegbara said that the economy is not an austerity budget yet until the government cuts down on the recurrent. If the government does not cut down on the recurrent, he noted, the economy will not grow.