Home Economy Senate Approves  2023 – 2025 MTEF /FSP, moves budget oil price benchmark from $70 to $73 per barrel

Senate Approves  2023 – 2025 MTEF /FSP, moves budget oil price benchmark from $70 to $73 per barrel

by Business News Report

Senate has passed the 2023 – 2025 Medium Term Expenditure Frame Work and Fiscal Strategy Paper, MTEF /FSP preparatory to the President presentation of the 2022 budget proposals to the joint session of the National Assembly on Friday. The approval was sequel to the consideration of the Senator Olamilekan Adeola, led Senate Committee on Finance. Senators were however  divided over one of the recommendations of the committee that suggested  the cost of subsidy that should  be capped at N1.7 trillion which is less than the N3.6 trillion initially proposed by the Executive. During the consideration of the report, the Senate kicked against move by its committee on Finance to reduce N3.6 trillion proposed for subsidy in the 2023 budget by the executive to N1.7 trillion. President Muhammadu Buhari had in the 2023 – 2025 MTEF /FSP proposed N3.6trillion for fuel subsidy from January to June in 2023, just as the  Senate Committee  in its report on the proposals presented  for consideration by the Senate , recommended N1.7trillion for fuel subsidy for the entire 2023 which was however rejected by sustaining the earlier proposed N3.6trillion earmarked for subsidy . The Committee’s recommendation for $73 per barrel oil price benchmark for the proposed N19.76 2023 budget was however approved against $70 per barrel proposed by the executive in the MTEF/FSP documents.

 According to the Senate, the daily crude oil production of 1.69 mbpd, 1.83 mbpd, and 1.83 mbpd for 2023, 2024 and 2025 respectively, be approved and that the  oil price of $73 per barrel of crude oil be approved as a result of continuous increase in the oil price in the global oil market and other peculiar situations such as the war in Ukraine by Russia as this will result in saving of N155 billion. According to the Senate, the  exchange rate of N437.57 be sustained as contained in the MTEF FSP document with continuous engagement between the Central Bank of Nigeria and Federal Ministry of Finance, Budget and National Planning with the view of bridging the gap between the official market and parallel market. In his presentation,  Senator Adeola said that the  scenario 2 of the 2023 budget proposed by the executive in the MTEF / FSP document , was adopted by the committee because of lesser vote for budget deficit and over N1trillion for capital votes for the various Ministries , Departments and Agencies ( MDAs) .

The scenario two has a proposed total expenditure profile of N19.76trillion and deficit of N11.30trillion as against scenario one which has a proposed total expenditure profile of N18.75 trillion with deficit of N12.41trillion and zero allocation for capital projects for the MDAs. The scenario two proposed recommended by the committee for approval by the Senate and accordingly approved is based on other critical parameters like 1.69million barrel oil production per day , N437.57k exchange rate to a US dollar and 3.75% Gross Domestic Product ( GDP) growth rate. Others are projected inflation rate of 17.16% and new borrowings of N8.437trillion , N6.31trillion for Debt Service, N722.11billion as statutory transfers etc .

The report said, ” A retained revenue of N9.352 trillion as result of increase in the benchmark as the ceiling oil subsidy to the year in review; Fiscal deficit of  N11.3 trillion (including GOEs);  “New Borrowings of N8.437trillion (including Foreign and domestic Borrowing), subject to the provision of details of the borrowing plan to the National Assembly; Statutory transfers, totaling, N722.11 billion; Debt Service estimate of N6.31 trillion; Sinking Fund to the tune of N247.7 billion; Pension, Gratuities & Retirees Benefits of N827.8 billion; and Aggregate FGN Expenditure of N19.76 trillion; made up of Total Recurrent (Non-debt) of N8.53 trillion; Personnel Costs (MDAs) of N827.8 billion; of Capital expenditure (exclusive of Transfers) N3.96 trillion; Special Intervention (Recurrent) amounting to N350 billion; and Special intervention (Capital) of N7 billion.” The Senate approved the recommendation on exiting of 10 out of the  63 Government Owned Enterprises ( GOEs). The affected GOEs are the Nigerian Communication Commission ( NCC) , Corporate Affairs Commission ( CAC) , Nigeria Port Authority ( NPA) , Joint Admission and Matriculation Board ( JAMB) and Nigerian  Maritime Administration and Safety Agency ( NIMASA). Others are the Federal Inland Revenue Service ( FIRS), Nigeria Customs Service ( NCS) , National Agency for Food and Drug Administration and Control ( NAFDAC) , Nigeria Upstream Petroleum Regulatory Commission ( NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Agency ( NMPDRA) .

The recommendation states :”That the relevant oversight committees of National Assembly are at liberty to remove recycled projects in their budget proposal during the Committees’ budget defecse. “Mainstreaming of annual GOEs’ budgets into the federal government budget processes to ensure the same level of scrutiny, procurement and monitoring exercise. “That 10 out of the 63 GOEs be placed on cost of collections to serve as a test case for other  GOEs  which can be added in the future , the list of this GOEs includes; NCC, CAC, NPA, NIMASA, NUPRC, FIRS, CUSTOMS, NMPDRA, JAMB, NAFDAC, with immediate effect with the proposed finance bill 2023 coming up with the amendment the existing Act of the above mentioned agencies.” Meanwhile, prior to the approval, many Senators in their contributions,  expressed their reservations  on the N437 exchange rate to a dollar which according to them gives over N300 difference to the N 730 or N740 to a dollar it is at the parallel market .

Responding, Senator Adeola said that the committee tried  to increase the exchange rate from N437 to N550 to a US dollar, but had to do it with  caution to avoid further devaluation of the Naira. In his remarks, President of the Senate, Senator  Ahmad Lawan who noted that based on the observations and findings made by the Committee, said that Nigeria at the moment is in  a war situation as far as crude oil theft is concerned and also under revenue remittances by many of the MDAs. He said, ” The scenarios proposed are very challenging ones and all hands must be on deck to stem the tide. The passed MTEF / FSP documents , will be the basis upon which President Muhammadu Buhari will anchor projections and proposals of the 2023 budget scheduled for presentation to joint session of the National Assembly Friday this week.

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