Senate Approves 2021 MTEF, Pegs Oil Benchmark At $40

Senate Approves 2021 MTEF, Pegs Oil Benchmark At $40

The Senate has approved the 2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The lawmakers maintained the crude oil benchmark price of $40 per barrel as proposed by President Muhammadu Buhari.

Their decision comes seven days after the House of Representatives announced largely similar decisions.

The Senate also approved the total estimated expenditure of N13.08 trillion for the 2021 fiscal year against the N12.66 trillion proposed by the president.

In the document, he made proposals for a budget deficit, crude oil benchmark price, exchange rate, among others.

Details

Adeola Olamilekan, the Chairman of the National Assembly joint committee on finance, who presented the report, said the committee put daily production output at 1.86mbpd, 2.09mbpd, and 2.38mbpd for 2021, 2022 and 2023 respectively.

This, he said, “is in view of average 1.97mbpd over the past three years and the fact that a very conservative oil output benchmark has been adopted for the medium term in order to ensure greater budget realism and disruptions due to attacks/sabotage in the Niger-Delta which has substantially abated for a while”.

Other recommendations

Other parameters in the 2021-2023 MTEF/FSP documents that were sustained include:

* Fiscal deficit of N5.19 trillion (including GOEs).

* New Borrowings of N4.28 trillion (including Foreign and domestic Borrowing).

* Statutory transfers, totalling, N484.4 billion.

* Debt Service estimate of N3.12 trillion.

* Sinking Fund to the tune of N220 billion.

* Pension, Gratuities & Retirees Benefits of N520.6 billion; and

* Total Recurrent (Non-debt) of N5.66 trillion; Personnel Costs (MDAs) of N3.05 trillion; of Capital expenditure (exclusive of Transfers) N3.58 trillion; Special Intervention (Recurrent) amounting to N350 billion; and Special intervention (Capital) of N20billion.

The projected inflation rate of 11.95 per cent and GDP growth rate of 3.00 per cent was also approved.

MDAs indicted

The committee noted that the majority of the revenue-generating agencies engaged in arbitrary and frivolous expenditure, making it difficult to determine actual federal government revenue. It said a large percentage of these expenditures were extra-budgetary.

It also said many revenue-generating agencies expended enormous funds on overhead and recurrent expenditure, including huge personnel costs “that were difficult to reconcile with the number of staff on their nominal roll, thereby reducing their operating surpluses”.

“Most of these agencies,” Mr Adeola said, “engaged either in outright non-remittance or under-remittance of operating surpluses due to the Consolidated Revenue Fund, in breach of the Fiscal Responsibility Act, 2007 and the extant laws that created the agencies.”

“The sum of N1.4 billion outstanding remittance was discovered in the case of just one of these agencies between 2018 and 2019.

“Many agencies generate and expend revenues under sundry administrative guidelines, unknown to the National Assembly, and at variance with the extant laws establishing these agencies, as well as other financial regulations applicable to the public service.

“Unremitted and under-remitted funds due the CRF, were not just revenues earned by government, through the agencies, but include profits and earnings, resulting from foreign and domestic borrowings, invested in or through these agencies, in the three years reviewed.”

The lawmaker said some agencies were found to be in Joint Venture Agreements with other local and foreign companies, “without posting any profit over many years of such agreements, with some still being funded by the budget”.

He said agencies entitled to certain statutory percentages either from the monies collected through it and paid into the CRF or from other agencies of government, were being denied such monies, which continue to hinder their performance.

The panel stressed the need to institute sanctions for inability to meet revenue targets, “where it is established that there are no visible constraints for such non-performance, whilst positive performance in revenue generation by MDAs should be rewarded.”

Meanwhile, the Senate also urged the federal government to direct that all outstanding remittances currently held by revenue-generating agencies be remitted not less than 30 days of this resolution into the CRF.