The federal government has cut down the 2020 budget by over N320 billion and proposed a new budget of N10.27 trillion against the N10.59 trillion passed by the national assembly.
This is as a result of the Covid-19 pandemic on global economies as well as recent crisis in the oil market.
The new budget proposal has been sent to the national assembly for consideration and passage.
The new budget proposal reduces the oil benchmark from $57 per barrel to $30 per barrel while the oil production volume was reduced from 2.18 million barrels to 1.70 million barrels.
The revenue projection for the 2020 budget was also reduced by N3.3 trillion (about 39 per cent) from the initially approved amount of N8.41 trillion to N5.08 trillion.
The exchange rate was, however, increased from N305 to N360 to a dollar. This is based on the devaluation of the naira by the Central Bank of Nigeria.
Based on the new proposed budget, statutory transfers (a category into which the National Assembly budget falls), were cut by N152.67 billion from N560.47 billion to N407.8 billion.
Capital expenditure was reduced by N155 billion from N2.78 trillion to N2.62 trillion while recurrent expenditure was reduced by N25 billion from N4.49 billion to N4.46 billion.
The fiscal deficit increased from N2.2 trillion to N5.18 trillion – which is not unrelated to the drop in revenue.
According to the proposal, the fiscal deficit is expected to be financed through fresh borrowing of N4.43 trillion as against the initial borrowing plan of N1.59 trillion.