The return of Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) by President Muhammadu Buhari to the National Assembly for amendment has raised fresh controversy following the suspension of the Senate rules to allow him present the 2022 Appropriation Bill tomorrow in a joint session.
Buhari had in a letter to the upper chamber dated October 4, 2021, explained that the revision of the MTEF/FSP, which was passed by Senate penultimate week, was necessitated by the need to reflect the new fiscal terms in the Petroleum Industry Act, 2021, as well as other critical expenditures in the 2022 budget.
LEADERSHIP reports that the request of the president was supposed to be included in the next legislative day’s order paper while deliberations are made and a committee assigned to interrogate the claim in the letter as well as the benefiting agencies for an onward report that could take weeks.
But on receiving the letter for the review of the 2022/2024 MTEF/FSP that would determine the country’s next year’s budget, the Senate suspended its rules for an expeditious passage today (Wednesday) in order to pave the way for Buhari to present the 2022 Appropriation Bill tomorrow.
On the controversy surrounding the suspension of the rules and why the items listed may not go through serious scrutiny, Senate Leader Yahaya Abdullahi said the Committee on Finance required just 24 hours to scrutinise the document.
“In view of the planned 2022 budget presentation to the joint session of the National Assembly by President Muhammadu Buhari this Thursday, I move for suspension of our relevant rules for expeditious consideration of the revised 2022 – 2024 MTEF/ FSP documents.
“In doing this, I move that lead debate on the request should be skipped and that it should be transmitted to our committee on Finance for the required scrutiny for just 24 hours, which makes the committee’s report to be submitted on Wednesday in plenary to pave the way for the Thursday budget presentation by the president,” Senator Abdullahi said.
The leader’s motion was seconded by the minority leader, Enyinnaya Abaribe, and adopted by the Senate when put to voice vote.
The Deputy Senate President Ovie Omo-Agege also confirmed that President Buhari will be presenting the 2020 appropriation bill tomorrow, while reading and referring to the President’s submission of the revised 2022-2024 Medium Term Fiscal Framework to the Committee on Finance for legislative input.
Buhari, in the request, explained that the revision was necessitated by the need to reflect the new fiscal terms in the Petroleum Industry Act, 2021, as well as other critical expenditures in the 2022 budget.
According to him, the underlying drivers of the 2022 fiscal projections, such as oil price benchmark, oil production volume, exchange rate, GDP growth, and inflation rate, reflect emergent realities and the macroeconomic outlook, and remain unchanged as in the previously approved 2022-2024 MTEF/FSP.
“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 a 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”, he said.
Accordingly, Buhari listed the changes to the 2022 Fiscal Framework projections to include Gross Revenue projection which decreased by N341.57 billion, from N8.870 trillion to N8.528 trillion; decreased deductions for federally funded upstream projects costs and 13 percent derivation by N335.3 billion and N810.25 million respectively; and Net Oil and Gas revenue projection declined by N5.42 billion, from N6.540 trillion to N6.535 trillion.
Buhari added that also to be modified in the fiscal framework is a decline in Net Oil and Gas Revenue by N5.42 billion, and an increase in projected FGN’s Retained Revenue from N8.36 trillion to N10.13 trillion.
Giving a breakdown of the projected increase in federal government’s revenue, he said N837.76 billion was from increase in revenue of government owned enterprises; N697.6 billion from MDAs Internally Generated Revenue; the introduction of Education Tax of N306 billion and dividend of N8.3 billion from the Bank of Industry as revenue lines; and FGN share of oil price royalty of N96.9 billion, which is expected to be transferred to the Nigerian Sovereign Investment Authority based on the provisions of the Petroleum Industry Act (PIA).
He added that the proposed 2022 Aggregate Expenditure (including GOEs and Project-tied Loans is projected to increase by N2.47 trillion, from N13.98 trillion to N16.45 trillion.
Buhari noted that the increase in expenditure was due to N100 billion additional provision to INEC to cater for the 2023 general elections; and the provision of N54 billion to NASENI, which represents one percent FGN share of the Federation Account.
Others are additional provision of N510 billion in the Service Wide Votes to cater 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), and additional capital provision of N1.70 trillion.
The president explained that the provision for additional capital in the framework was as a result of projected increases in Capital Supplementation by N179.1 billion; GOEs Capital by N222.1 billion; TETFUND Expenditure by N290.7 billion; Multilateral/Bi-lateral Project-tied Loans by N517.5 billion, and MDAs Capital Expenditure by N390.5 billion (including N178.1 billion provision for population and housing census to be carried out in 2022.
The deputy Senate president, after reading the president’s letter, referred it to the Committee on Finance.
The committee, which is chaired by Senator Olamilekan Adeola, was mandated to report back tomorrow, October 6, 2021.
“You will have to report back to us latest tomorrow (Wednesday), to enable us to use it as a predicate for the budget presentation on Thursday”, Omo-Agege said.
At the House of Representatives, the Speaker, Femi Gbajabiamila, who read the president’s communication, hinted that Buhari may present the budget tomorrow.
“I am going to send this letter to the House Committee on Finance for immediate consideration. The president may present the budget on Thursday; it is not certain yet, but maybe on Thursday,” Gbajabiamila said.