The Senate on Wednesday passed the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) ahead of the expected laying of the 2022 Appropriation Bill before the joint session of the two chambers of the Legislature by President Muhammadu Buhari.
The passage of the 2022-2024 MTEF/FSP was sequel to the consideration of the report by the Joint Committees on Finance; Local and Foreign Debts; Banking, Insurance and other Financial Institutions; Petroleum Resources (Upstream); Downstream Petroleum Sector and Gas
The Joint Committee’s report was presented by the chairman of the Finance Committee, Senator Solomon Olamilekan Adeola, during plenary.
The joint committees’ chairman had during the presentation of the MTEF/FSP report said that the committee approved the $57 benchmark oil price based on wide consultations with key stakeholders.
He expatiated: “And also because of the age long fiscal strategy of addressing the oil price shocks by the adoption of a higher than forecast oil price benchmark for fiscal projections over the medium term;
“Other recommendations included daily crude oil production of 1.88 million barrels per day, 2.23 1.88 million barrels per day and 2.22 1.88 million barrels per day for 2022, 2023 and 2024 respectively, be approved.
“This is in view of an average 1.93 million barrels per day 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.
“That the Exchange Rate of N410.15 Dollars proposed by the Executive for the 2022-2024 be approved; that the projected Inflation rate of 13.00 per cent be also approved; that the projected New Borrowings of N4.89 trillion (including Foreign and Domestic Borrowing) be approved, subject to the provision of details of the borrowing plan to the National Assembly.
“That the Salaries and Wages Commission should review the salary structure of all the MDAs, in order to come up with a new salary structure for the MDAs that will reflect the true financial position of the Agencies; that the proposed budget of the Government-Owned Enterprises (GOEs) should be reviewed upward to show the reflection of their capabilities to generate more revenue as a result of the findings of the Joint Committee”, the lawmaker added.
In addition, the upper chamber of the legislature after considering the joint committees’ report approved the Federal Government’s revenue projection of N8.36 trillion; and proposed expenditure of N13.98 trillion for the 2022 financial year.
Accordingly, it also approved the daily crude oil production of 1.88mbpd, 2.23mbpd, and 2.22mbpd for 2022, 2023 and 2024, especially on what it described as “in view of average 1.93mbpd over the last 3 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”.
The Red Chamber, as part of committees’ recommendations, approved the benchmark oil price of USD$57 per barrel; adopted the Exchange Rate of N410.15/US$ by the Executive for 2022-2024; and gave its nod to the projected Gross Domestic Product (GDP) growth rate of 4.20%; as well as 13% inflation rate.
Also, the Senate approved fiscal deficit of N5.62 trillion; new borrowings of N4.89 trillion – an amount which includes Foreign and Domestic borrowing – subject to the provision of details of the borrowing plan to the National Assembly.
It also approved other parameters such as statutory transfers totaling N613.4 billion; Debt Service estimate of N3.12 trillion; Sinking Fund to the tune of N292 billion; Pension, Gratuities and Retirees Benefits of N567 billion.
Out of the Aggregate Federal Government’s Expenditure of N13.98 trillion, the upper chamber approved the sum of N6.12 trillion for Total Recurrent (Non-debt); N3.47 trillion as Personnel Cost for Ministries, Departments and Agencies (MDAs); N3.26 trillion for Capital Expenditure (exclusive transfers); N350 billion Special Intervention (Recurrent); and N10 billion for Special Intervention (Capital).
The Senate also recommended that the fiscal deficit estimate of N5.62 trillion should also be sustained due to the government’s conservative approach to target setting and its determination to improve collection efficiency of major revenue generating agencies.
It further called on the Salaries and Wages Commission to review the salary structure of all Ministries, Departments and Agencies (MDAs), in order to come up with a new salary structure that will reflect the true financial position of the agencies.
The chamber also demanded a continuous review of the Fiscal Responsibility Act to ensure that all revenues are remitted to the Consolidated Revenue Fund (CRF) as at when due, in order to curtail frivolous deductions and diversion of funds by the MDAs.
It further maintained that all laws relating to mining businesses be reviewed as a matter of urgency, to ensure upward review of rates applied to royalties, ground rent and licenses renewal of all mining companies operating in Nigeria to ensure transparency in the collection of revenue by relevant agencies, as well as recommend stringent sanctions in proposed new laws to address illegal mining.
The Senate amid its recommendations also called on the Nigeria Customs Service to accelerate the process of installing scanners at all ports across the country to curb the issues of smuggling and underpayment of custom duties on imported goods which has resulted in huge loss of revenue to the government.
It also charged the federal government to urgently implement the Petroleum Industry Act recently assented to by the president in order to curtail the problems of smuggling and round-tripping of petroleum products imported into the country.
In addition, the chamber recommended that the proposed budget of Government Owned Enterprises (GOEs) be reviewed upward to show the reflection of their capabilities to generate more revenue as a result of the findings of the joint committee.
Consequently, it further recommended that the offices of the Accountant General (AGF), Auditor General of the Federation (AuGF) and Fiscal Responsibility Commission be strengthened in the area of staffing and proper funding of its activities to ensure optimal performance of their duties in order to adequately monitor the remittances of all government revenue.
The chamber proposed that the Act establishing some MDAs such as the Nigeria Investment Promotion Council (NIPC), National Lottery Trust Fund Act, Bank of Industry Act, Bank of Agriculture Act, Energy Commission Act and Nigeria Nuclear Regulatory Commission, if reviewed and amended as a matter of urgency, would assist to generate more revenue to the coffers of government.
It also recommended that the federal government budget be reviewed and purged of some agencies with demonstrated capacity to generate adequate revenue for their operations without any recourse to government for funding
The chamber gave example of such agencies to include the National Agency for Food and Drug Administration and Control, NAFDAC, and Nigerian College of Aviation Technology, Zaria.
Meanwhile, President of the Senate, Senator Ahmad Lawan, also endorsed that the Federal Inland Revenue Service (FIRS), should intensify its revenue collection drive, including value added tax (VAT) collection.
Lawan pointed out that there was nothing wrong in FIRS’ continued VAT collection as part of federally collectable revenue since there is no final court ruling on it.
He said: “Therefore, we shouldn’t confuse our system until there is a very clear cut, definite judgement by the Supreme Court. We should go ahead with VAT as part of the resources available to us,” Mr Lawan said in his remarks to the MTEF debate.
On the growing need for improved non-oil revenue, the Senate President urged the FIRS, Nigeria Customs Service (NCS) and other major revenue generating agencies to generate more revenues, saying that “we have given them all the support that is necessary. They have no reason not to improve on their collection.”
