Crisis looms as Senate queries ‘unrealistic projections in MTEF’

By Henry Umoru

ABUJA—STRONG indications emerged yesterday at the Senate that the implementation of the N8.612 trillion 2018 budget recently presented to the joint session of the National Assembly by President Muhammadu Buhari may experience some hiccups.

This is because senators are querying critical projections used in the proposals as contained in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper..

Trouble with regard to the projections in the proposed budget reared its head yesterday when the Minister of State for Budget and National Planning, Mrs Zainab Ahmed, the Director General of Budget Office, Mr Ben Akabueze, and other top government officials in the financial sector made presentations on the MTEF document to members of the senate’s joint committee Finance and Appropriations as regards the MTEF and FSP.

In his remarks yesterday, Chairman, Senate Committee on Finance, Senator John Enoh, APC, Cross River Central, wondered why the federal government, having woefully failed in meeting its projection of N807bn independent revenue in the N7.444trn 2017 budget, still made similar projection for the 2018 budget.

“Why don’t we have anything on interest rate as part of the MTEF document? That will be the best way to talk about aligning the monetary and the fiscal. Why are we putting more than N800 billion as independent revenue when the President admitted in his address to the National Assembly that it had suffered about 74 percent variance.

‘’In 2018, we are still putting more than N800 billion for independent revenue. Are we just balancing the figures?  Where do you expect to get the revenue?,” he queried.

The accusations came during an interactive session between the Senate and government officials when the federal government yesterday presented to the Senate a revised 2018 to 2020 Medium Term Expenditure Framework and Fiscal Strategy Paper (FSP) for consideration.

During the meeting with the Senate Joint Committee on Finance, Appropriations and National Planning yesterday, the Minister of State for Budget and National Planning, Zainab Ahmed, told senators that it had adjusted the  Gross Domestic Product, GDP, growth rate from 4.5percent to 3.5 percent.

She also said the adjustments bordered on projected revenue for the 2018 budget, which were N710bn from restructuring government ‘s equity in all the Joint Venture oil assets (JV), N320bn additional projected    revenues from revision of terms to improve government take in the Production Sharing Contracts .

Others are additional N60bn from Excise Duties on Cigarettes and Alcohol, N305bn as additional Company Income Taxes, N100bn from improvements by FIRS in the collection of value added tax etc.

Zainab Ahmed, who explained that other key parameters and assumptions, such as oil benchmark, daily oil production estimates and exchange rate, were retained, however, allayed fears that the adjustments would affect the N8.612 trillion 2018 budget proposal.

She added that the adjustments had already been reflected in the 2018 budget estimates submitted by President Muhammadu Buhari to a joint session of the National Assembly on November 7.

The minister listed some of the adjustments made to the 2018 to 2020 MTEF submitted by the Executive to the National Assembly in October to include: N710 billion to be generated from the restructuring government’s equity in all the Joint Venture oil assets; N320 billion additional revenues from revision of terms to improve government take in the Production Sharing Contracts; and an additional N60 billion from Excise Duties on cigarettes and alcohol; N305 billion additional Company Income Taxes from the Voluntary Assets and Income Declaration Scheme, ValDS. Others include N100 billion from improvements by FIRS in the collection of Value Added Tax (VAT); N2.5 billion from special taxes on insurance of luxury cars, as well as surcharge on luxury goods and N250 billion provision as unspent balance carried forward from 2017.

“The key assumptions on the macro framework is as defined in our MTEF and the only difference in the key assumptions is that we have adjusted the GDP growth from 4.5 percent.

‘’This is as a result of a meeting we had with you while discussing the last MTEF down to 3.5 percent. But all the other assumptions at 2.3million barrels per day, oil price of $45 per barrel, exchange rate of N305/$1 are the same.

“The fiscal deficit is now N2.05 trillion, down by over N940billion, also pushing the debt/GDP ratio downwards from 2..61 percent to 1.77 percent,” she said.

Speaking further, the Minister, who noted that the adjustments were the fallout of the recommendations of a committee chaired by Finance Minister Kemi Adeosun, which identified additional revenue sources of about N1trillion to cut the 2018 budget deficit, said:  ‘When the FEC approved the MTEF/FSP, it constituted a Committee, chaired by the Minister of Finance, which was tasked with identifying additional sources of about N1 trillion revenues to cut the 2018 budget deficit and New borrowings. The outcome of the work of the Committee necessitated a revision of the Medium Term Fiscal Framework (MTFF), which also formed the basis of the 2018 budget proposal.

“This briefing note and accompanying submissions relate to the revised MTEF/FSP and MTFF, which are in alignment with the 2018 Executive Budget proposal, and were part of the documents that accompanied the 2018 Budget laid before NASS”.

In his presentation, the DG Budget explained in details to the committee members    on why $45 per barrel was proposed as oil price bench mark, N305 to a US dollar,    exchange rate, 2.3mbpd oil production level , 12.42% projected average inflation rate etc.

Speaking at the meeting, a member of the committee, Senator Ibrahim Danbaba (APC Sokoto South), said:  “It was very wrong for the executive to be making unrealistic    revenue projections in its yearly budget proposals as contained in the MTEF presentations made to this committee now.

“For example on Independent revenue projections alone, in 2017, only N155bn have been realised out of the projected N807bn representing 74% failure and yet as stated in the document, the same projection of N807bn is made for independent revenue generation    in the 2018 budget estimates    aside other unrealistic ones revenue from VAT where FG had recorded 47% failure in the 2017 budget etc.”These yearly unrealistic projections are clearly responsible for poor budget implementations on yearly basis and must be stopped    in form of reviewing of the projections.”

His submission was re-echoed by the committee chairman and other members like Senators Bukar Mustapha ( APC Katsina North), Mao Ohunabuwa ( PDP Abia North), Bassey    Akpan ( PDP Akwa Ibom North East) etc, just as they insisted that the non-oil revenue were unrealistic.

They specifically cited the FGN Independent Revenue projection of N807billion for 2017, where only N155.14billion (representing 74 percent failure) was achieved as of September this year.

In his contribution, another member of the committee, Adamu Aliero (APC, Kebbi State) said: “I find it difficult to understand why the budget for 2017 sh

The post Crisis looms as Senate queries ‘unrealistic projections in MTEF’ appeared first on Vanguard News.

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