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Senate approves 2023 – 2025 MTEF /FSP, kicks against N1.7trn subsidy recommendation

Senators were divided, however, on one of the committee’s recommendations that the cost of subsidies be capped at N1.7 Trillion, which is less than the N3.6 Trillion requested by the government.

The decision followed review by the Senate Committee on Finance, led by Senator Olamilekan Adeola of the All Progressives Congress, Lagos West.Infomation Guide Nigeria

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Senators were divided, however, on one of the committee’s recommendations that the cost of subsidies be capped at N1.7 Trillion, which is less than the N3.6 Trillion requested by the government.
During examination of the report, the Senate opposed a request by the Committee on Finance to decrease the N3.6trln recommended by the government for subsidies in the 2023 budget to N1.7trln.

In the 2023 – 2025 MTEF /FSP, President Muhammadu Buhari proposed N3.6trillion for fuel subsidy from January to June in 2023. The Senate Committee, in its report on the proposals presented for consideration by the Senate, recommended N1.7trillion for fuel subsidy for the entire year of 2023. This recommendation was rejected, and the earlier proposed N3.6trillion was maintained.

In contrast to the $70 per barrel proposed by the government in the MTEF/FSP documents, the committee’s suggestion for a benchmark oil price of $73 per barrel for the planned N19.76 2023 budget was adopted.

The Senate recommends that the daily crude oil production of 1.69 million barrels per day, 1.83 million barrels per day, and 1.69 million barrels per day for 2023, 2024, and 2025, respectively, be approved and that the oil price of $73 per barrel of crude oil be approved due to the continuous increase in oil prices on the global oil market and other peculiar situations such as Russia’s continued invasion of Ukraine, as this will result in a savings of N155 billion.

The Senate recommended that the N437.57 exchange rate be maintained as stated in the MTEF FSP document, with continuous engagement between the Central Bank of Nigeria and Federal Ministry of Finance, Budget, and National Planning in an effort to close the gap between the official market and the parallel market.

Senator Adeola explained in his presentation that scenario 2 of the 2023 budget proposed by the executive in the MTEF / FSP document was adopted by the committee due to a lower vote for budget deficit and more than N1trillion for capital votes for the various Ministries, Departments, and Agencies (MDAs).

Scenario two proposes total expenditures of N19.76 trillion and a deficit of N11.30 trillion, whilst scenario one proposes total expenditures of N18.75 trillion, a deficit of N12.41 trillion, and no allocation for capital projects for the MDAs.

The second scenario, recommended by the committee for Senate approval and consequently adopted, is based on additional essential criteria, including 1.69 million barrels of oil production per day, an exchange rate of N437.57k per US dollar, and a GDP growth rate of 3.75 percent.

Other variables include a forecast inflation rate of 17.16%, new borrowings of N8.437trillion, N6.31trillion for debt service, and N722.11trillion for statutory transfers, among others.

During examination of the report, the Senate opposed a request by the Committee on Finance to reduce the projected subsidy in the executive’s budget for 2023 from N3.6 trillion to N1.7 trillion.

In the 2023 – 2025 MTEF /FSP, President Muhammadu Buhari proposed N3.6trillion for fuel subsidy from January to June in 2023. The Senate Committee, in its report on the proposals presented for consideration by the Senate, recommended N1.7trillion for fuel subsidy for the entire year of 2023. However, this recommendation was rejected, and the earlier proposed N3.6trillion allocation for subsidy was maintained.

In contrast to the $70 per barrel benchmark proposed by the government in the MTEF/FSP documents, the committee’s suggestion that the oil price benchmark for the projected N19.76 2023 budget be set at $73 per barrel was approved.

The Senate recommends that the daily crude oil production of 1.69 million barrels per day, 1.83 million barrels per day, and 1.69 million barrels per day 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 the continuous increase in oil prices on the global oil market and other peculiar situations, such as Russia’s ongoing invasion of Ukraine, as this will result in a savings of N155 billion.

The Senate recommended that the N437.57 exchange rate be maintained as stated in the MTEF FSP document, with continuous engagement between the Central Bank of Nigeria and Federal Ministry of Finance, Budget and National Planning in an effort to close the gap between the official market and the parallel market.

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Senator Adeola said in his presentation that scenario 2 of the 2023 budget submitted by the executive in the MTEF / FSP document was chosen by the committee due to a lower vote for budget deficit and over N1trillion for capital votes for the various Ministries, Departments, and Agencies (MDAs).

Scenario two proposes total expenditures of N19.76trillion and a deficit of N11.30trillion, whilst scenario one proposes total expenditures of N18.75trillion, a deficit of N12.41trillion, and no allocation for capital projects for the MDAs.

Scenario two, which was proposed for Senate approval by the committee and subsequently accepted, is based on other crucial criteria, including daily oil output of 1.69 million barrels, an exchange rate of N437.57k per US dollar, and a GDP growth rate of 3.75 percent.

Other variables include a forecast inflation rate of 17.16%, fresh borrowings of N8.437trillion, N6.31trillion for debt service, and N722.11trillion in statutory transfers, among others.

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 adopted the recommendation to close ten of the 63 government-owned enterprises ( GOEs). The affected GOEs include of the Nigerian Communication Commission (NCC), the Corporate Affairs Commission (CAC), the Nigeria Port Authority (NPA), the Joint Admission and Matriculation Board (JAMB), and the Nigerian Maritime Administration and Safety Agency (NIMASA).

Others include the Federal Inland Revenue Service, Nigeria Customs Service, National Agency for Food and Drug Administration and Control, Nigeria Upstream Petroleum Regulatory Commission, and Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMPDRA).

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Emediong Ekpe

Emediong Ekpe is a graduate of English. A professional Sports journalist/analyst, and a spoken word artist. He is passionate about decimating information and putting smiles on people's faces via news writing.

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