By Jeph Ajobaju, Chief Copy Editor
Senators on Wednesday passed a revised N16.39 trillion budget for 2022 based on the request of President Muhammadu Buhari who used the 2022-2024 Medium Term Expenditure Framework.
Buhari’s revision was received on Monday and referred to the Finance Committee for expeditious consideration ahead of tomorrow’s budget presentation to the National Assembly (NASS) by him.
The Senate approved expenditure hike of N16.39 trillion from the previous N13.98 trillion and retained revenue of N10.3 trillion and deficit of N635.4 billion.
It commended the Budget Office and the Ministry of Finance, Budget and National Planning for insisting that MDAs submit their revenue profile as a premise for being captured in the 2022 budget.
Finance Committee Chairman Olamilekan Adeola said in his presentation that
- Gross Revenue Projection was decreased by N341.57 billion, from N8.870 trillion to N8.528 trillion.
- Deductions for federally-funded upstream projects cost was slashed by N335.3 billion and 13 per cent derivation by N810.25 million.
- Net Oil and Gas revenue projection reduced by N5.42 billion, from N6.540 trillion to N6.535 trillion.
- Non-oil taxes remain unchanged.
- Federal retained revenue is projected to increase by N1.773 trillion, from N8.36 trillion to N10.13 trillion.
- The new increase to federal expenditure is N5.241 trillion.
Buhari explains review
Buhari in his letter to the Senate dated October 4 explained that the revision was necessary to reflect the new fiscal terms in the Petroleum Industry Act (PIA) 2021, as well as other critical expenditures in the 2022 budget.
Underlying drivers of the 2022 projections, such as oil price benchmark, oil production volume, exchange rate, GDP growth, and inflation rate, reflect realities and macroeconomic outlook which remain unchanged in the previously approved 2022-2024 MTEF/FSP, he said.
His words: “The PIA established a progressive fiscal framework aimed at encouraging investment in the Nigerian Petroleum Industry.
“This significantly alters the Oil and Gas fiscal terms and has necessitated changes in the 2022-2024 Medium Term Fiscal Framework.
“The fiscal effects of PIA implementation are assumed to kick in by mid-year 2022.
“The revised 2022-2024 Fiscal Framework is premised on hybrid of January-June (based on current fiscal regime) and July-December (based on PIA fiscal regime), while 2023 and 2024 are now fully based on the PIA.”
Changes approved by the Senate
Changes Buhari made to the 2022 Fiscal Framework which were approved by the Senate to include
- Gross Revenue Projection decreased by N341.57 billion, from N8.870 trillion to N8.528 trillion.
- Decreased deductions for federally funded upstream projects costs by N335.3 billion.
- Decreased deductions in 13 per cent derivation by N810.25 million.
- Net Oil and Gas revenue projection declined by N5.42 billion from N6.540 trillion to N6.535 trillion.
Buhari said
- N837.76 billion was from increase in revenue of Government Owned Enterprises.
- N697.6 billion from the Internally Generated Revenue of MDAs.
- Education Tax of N306 billion.
- Dividend of N8.3 billion from the Bank of Industry.
- Federal share of oil price of N96.9 billion to be transferred to the Nigerian Sovereignty Investment Authority based on the PIA.
- Aggregate Expenditure (including GOEs and Projected-tied Loans) was increased by N2.47 trillion, from N13.98 trillion to N16.45 trillion.
- Increase in expenditure was due to N100 billion additional provision to the INEC for the 2023 general election.
- Provision of N54 billion to NASENI, which is 1 per cent federal share of the Federation Account.
- Additional provision of N510 billion in the Service Wide Votes for National Poverty Reduction with Growth Strategy (N300 billion).
- Police Operations Fund (N50 billion).
- Hazard Allowance for Health Workers (N50 billion).
- Public Service Wage Adjustments (additional N80 billion).
- MDAs’ Electricity Bills Debt (additional N37 billion).
- Additional Capital provision (N1.70 trillion).
Buhari explained that additional capital was based on projected increases in
- Capital Supplementation by N179.1 billion.
- GOEs Capital by N222.1 billion.
- TETFUND Expenditure by N290.7 billion.
- Multi-lateral/Bi-lateral Project-tied Loans by N517.5 billion.
- MDAs’ Capital Expenditure by N390.5 billion (including N178.1 billion for population and housing census in 2022.
