President Muhammadu Buhari has proposed the sum of N8.6 trillion for the 2018 budget, according to the details of the 2018-2020 Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) obtained by Daily Trust.
The proposed amount, which is exactly N8.595trn, represents about 15 per cent increase from this year’s N7.44trn budget.
The proposal is, however, subject to review by either the president or the lawmakers. The Federal Government had said that the 2018 budget proposal would be submitted to the National Assembly in October.
The MTEF and FSP documents were presented to the House of Representatives and read at plenary on Tuesday.
President Buhari said the proposed budget is predicated on an oil benchmark of $45 per barrel, with daily production output of 2.51 million barrels per day (bpd).Exchange rate stands at N305/$1.
The president said the oil benchmark was based on moving average (MA) model, which de-links the benchmark from short and medium-term fluctuations in the market price of oil.
“…in line with current realities in the international oil market, including weakening outlook of future prices occasioned by rising oil and unconventional oil supplies and slow economic recovery, as well as other potential downside risks, a benchmark oil of $45pb for 2018, $50pb for 2019 and $52pb in 2020 have been proposed,” he said.
The proposal was against the backdrop of projected oil prices ranging from $50pb to $60pb in 2018 as the market regains balance, the document said.
The total budget proposal includes N199.91bn grants and donor funding, the president said.
Daily Trust reports that the proposed 2018 budget is about N1.16trn above this year’s, it showed that capital expenditure would take N2.377trn, or 30.22 percent, against this year’s 31.73 percent (N2.174trn).
Recurrent expenditure takes over N6trn, representing 69.78 percent.
The aggregate revenue to fund the 2018 budget is projected at N5.65trn – 11.0% or N562.50bn over the 2017 estimate of N5.08trn.
The MTEF document showed that 43.2 percent of the above amount is projected to come from oil sources, while the balance is to be earned from non-oil sources.
“Following from the revenue projections and expenditure estimates, the fiscal deficit is estimated to increase by N592.75bn (or 25.0%) from the estimate of N2.36trn in 2017,” the document said.
Out of the total proposal of N8.6trn, the actual expenditure showed that N3.169trn is for recurrent (non-debt); N2.122trn for personnel costs (MDAs); N2.028trn for debt service; N350bn for special intervention programme (recurrent); N245.2bn for overheads; N191.631bn for CRF pensions; N194.339bn for power sector reform programme; N198.7bn for Service Wide Votes
The breakdown indicated that N2.122trn would be share of oil revenue; N1.373trn for non-oil; N807.8bn from Companies Income Tax (CIT); N807.570bn from independent revenue; N277.562bn from the Customs; N241.920bn from Value Added Tax (VAT) and N114.298bn from Federal Government’s share of signature bonus, among others.