The federal government yesterday re-submitted the 2015-2017 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the Senate with a new proposal of N4.661 trillion as its budget estimate for the 2015 fiscal year.
The figure is N156 billion lower than the N4.817 trillion proposed in the first MTEF and FSP submitted by the executive on October 15. The government also slashed its subsidy bill for kerosene and petrol in 2015 by 50 per cent from N1.221 trillion to N614.6 billion. The N4.661 trillion budget estimate for 2015, according to the document, would be predicated on $73 per barrel oil benchmark and a foreign exchange of N162 to the dollar as against the initial proposal of $78 per barrel benchmark and an exchange rate of N160 to the dollar.
As exclusively reported by THISDAY, the National Assembly had on October 27 returned the first MTEF/FSP to the executive with the understanding that the $78 per barrel benchmark proposed by the executive for 2015 was unrealistic in view of the dwindling price of oil in the global market.
Oil prices have dropped 30 per cent since June to $79 per barrel yesterday. The federal parliament therefore asked the executive to re-submit a revised document that takes into consideration the drop in oil prices. The revised document sent by President Goodluck Jonathan to the Senate yesterday was accompanied by a letter in which he explained that the downward review was necessitated by recent developments in the international oil market. According to him, the revised MTEF/FSP was a product of consultations with key stakeholders, which he said resulted in some adjustments made in the new document.
While the new MTEF/FSP showed a reduction in capital expenditure from N1.436 trillion to N1.208 trillion, the federal government retained recurrent expenditure at N2.622 trillion. Capital expenditure also includes N184.8 billion for the Subsidy Reinvestment and Empowerment Programme (SURE-P) fund as against the N259 billion proposed in the first MTEF. The government also reduced the budget projections from N4.896 to N4.733 trillion and N5.028 trillion to N4.930 trillion in 2016 and 2017, respectively.
It also reduced its revenue target from N3.867 trillion for 2015 to N3.826 trillion while it equally reduced the N4.016 trillion projection for 2016 to N3.948 trillion. The document also contains a reduction from N4.279 trillion targeted for 2017 to 4.225 trillion. The revenue target in the current 2014 budget is N3.731 trillion.
The document however retained the oil production target for 2015 at 2.2782 million barrels per day. This figure is lower than the 2.3883 million barrels per day approved for the 2014 budget. The revised MTEF/FSP also retained the projections of 2.3271 million barrels per day and 2.4067 million barrels per day for 2016 and 2017 respectively.
The government also reduced the N250 billion proposed as kerosene subsidy under the first MTEF/FSP to N156 billion and halved the subsidy for petrol from N971.1 billion to N458.6 billion.
