The Senate, on Tuesday, received a request from President Muhammadu Buhari through a letter dated April 5, 2022, to approve adjustments to the 2022 fiscal framework. In the letter read during plenary by the Senate President, Ahmad Lawan, Buhari said the adjustment became imperative in view of new developments in both the global and domestic economies, especially the spikes in the market price of crude oil, which were a fallout of the Russian-Ukraine war.
He urged the upper chamber to approve an increase in the oil benchmark by US$11 per barrel, from US$62 per barrel to US$73pb; a reduction in the projected oil production volume by 283,000 barrels per day, from 1.883mbpd to 1.6mbpd; and an increase in the estimated provision for Premium Motor Spirit subsidy this year by N3.557tr, from N442.72bn to N4tr.
If approved, the President’s request will raise the total budget deficit by an additional N965.42bn to N7.35bn, representing 3.99% of GDP, with the incremental deficit to be financed by new borrowings from the domestic market.
According to him, “as you are aware, there have been new developments both in the global economy as well as in the domestic economy which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 Budget was based.
“These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.
“The decision to suspend the removal of Petroleum Motor Spirit (PMS) subsidy at a time when high crude oil prices have elevated the subsidy cost has significantly eroded government revenues,” he stressed.
President Buhari, underscored the need cut in the provision for Federally funded upstream projects being implemented by N200 billion, from N352.80 billion to N152.80 billion.
Buhari also proposed an increase in the projection for Federal Government Independent Revenue by N400bn; and an additional provision of N182.45bn to cater for the needs of the Nigerian Police Force.
Based on the above adjustments, he continued, “the Federation Account (Main Pool) revenue for the three tiers of government is projected to decline by N2.418tr, while FGN’s share from the Account (net of transfer to the Federal Capital Territory and other statutory deductions) is projected to reduce by N1.173tr.”
He disclosed that the amount available to fund the FGN Budget is projected to decline by N772.91bn due to the increase in the projection for Independent Revenue (Operating Surplus Remittance) by N400bn.
He explained further that Aggregate Expenditure is projected to increase by N192.52bn, due to increase in personnel cost by N161.40bn and other service wide votes by N21.05bn (both for the Nigeria Police Force), additional domestic debt service provision of N76.13bn, and net reductions in Statutory Transfers by N66.07bn.
Giving a breakdown, he said the net deductions would see a cut by N13.46 billion from N102.78 billion to N89.32 billion for NDDC; NEDC, by N6.30 billion from N48.08 billion to N41.78bn; UBEC, by N23.16bn from N112.29bn to N89.13bn; Basic Health Care Fund, by N11.58bn from N56.14bn to N44.56bn; and NASENI, by N11.58bn from N56.14bn to N44.56bn.