The Federal Executive Council (FEC) presided over by President Muhammadu Buhari on Monday approved the nation’s Medium Term Expenditure Framework (MTEF) in preparation for the presentation of the 2016 Budget.
It therefore agreed to spend a total of N6 trillion for 2016 budget, using $38 per barrel of oil as benchmark.
The council also agreed to peg the production of crude oil at 2.2 million barrels per day, but was however not forthcoming on whether it would continue with the fuel subsidy regime or not.
The Minister of Budget and National Planning, Senator Udo Udoma, accompanied by the Minister of Information and Culture, Alhaji Lai Mohammed; and the Minister of State, Budget and National Planning, Zaynab Ahmed, disclosed these to State House correspondents at the end of the council’s emergency meeting also attended by Vice President Osinbajo.
The Medium Term Expenditure Framework sets up government’s economy for the next three years.
Udoma while giving some of the highlights of the approved MTEF, said the council considered the $38 per barrel of oil benchmark as very conservative.
He said when the approved MTEF would have been submitted to the National Assembly, the preparation of the 2016 Budget would be finalised.
He hinted that the 2016 Budget would be about N6 trillion, which is about N1 trillion more than this year’s budget, adding that all the increases would be expended on capital projects.
The 2016 appropriation bill is made up of 30 percent for capital expenditure and 70 per cent of recurrent.
Nigeria, Africa’s biggest economy and the continent’s top oil producer, faces its worst economic crisis in years lately following a sharp fall in crude prices.
“The cabinet today approved a medium-term framework for three years…It will be submitted to the National Assembly…We are projecting a 30 percent capital budget for next year,” the minister said after a cabinet meeting in the presidential villa.
However, Udoma did not provide details on how the budget would be funded, coming at a time the Federal Government is confronted with huge funding challenges in key sectors of the economy including power and other infrastructure.
Nigeria relies on oil exports for 70 percent of government revenue. In its budget for 2015, the finance ministry was compelled to revise down the assumed oil price several times before submitting it based on $65 a barrel in December 2014. Lawmakers ultimately passed the budget at an even lower level of $53 a barrel in April at an exchange rate of N198. Recall that President Goodluck Jonathan on May 20, 2015 signed N4.5 trillion about ($22.6 billion) budget for 2015, passed by parliament in late April.
The budget was 3.2 per cent lower than 2014 budget as it came at a time the country’s revenue from crude oil was hit by low prices.
The fuel subsidy, which is a heavy burden on the nation’s purse, was also subsequently slashed by 90 per cent because of low income.
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