Fall In Crude Oil Price, Covid-19- Responsible For Borno 2020 Revised Budget... Finance Commissioner

By Sadiq Abubakar, The Nigerian Voice, Maiduguri
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The 2020 Budget was revised to reshape the priorities of the Government for effective and efficient implementation and for good governance in the face of the adverse effect of Covid-19 global pandemic.

He added that the amendment was informed by the global pandemic – Covid-19. The response expenditure is central to the revised budget because the reduction in capital expenditure were largely non-essential and/or administrative purchases.

Addressing Journalists at the 2020 Revised Budget press briefing, Monday at the Mlulti Purpose hall of the Government House Maiduguri, the Commissioner said that assumptions were predicated on the budgetary Projections contained in the Budgeting instruments and the Medium Term Expenditure Framework (MTEF) covering 2019-2021.

He noted further that it was also based on crude Oil benchmark of US $57 per barrel; oil production estimate of 2.18 Million barrel per day; exchange rate of N305/US Dollar; and inflation rate of 12.57%;

Increase in Internally Generated Revenue.
It is to this end that the Budget sets out to achieve the following broad based fundamental objectivees of strengthening the Security architecture to safeguard lives and properties of our people, boost the agricultural sector and forestall food Security and reduce dependency on food aids.

"Our gathering here today is principally to highlight the technical aspects of the revised budget as approved by the Borno State House of Assembly and assented to by His Excellency on 27th July, 2020.

"The Original 2020 Budget as you might have been aware of, was tagged BUDGET OF RECOVERY AND STABILIZATION. This is in line with His Excellency’s solemn declaration during his inaugural address that this administration will “build on the solid foundation already laid in the 10-pact transformation agenda to take our beloved State to the NEXT LEVEL”.

"The 10-pact transformation agenda will consolidate on the gains so far achieved and also restore the dignity and prosperity of the State. It is an all-inclusive agenda bringing everybody on board with a view to salvage and build a virile, strong and prosperous State", Adamu said.

Reviewing the 2019 approved budget, the Finance Commissioner recalled that during the 2019 fiscal year, the previous administration budgeted the sum of N144,739,304,000 for both recurrent and capital expenditures, pointing out that,

"Out of this, the sum of N80,713,304,000 was for capital expenditure whereas recurrent expenditure was N64,026,173,375.00 while expenditure was financed through an estimated recurrent revenue of N120,266,455,375 and capital receipt of N20,070,837,000.

"As at 31st December, 2019, our actual revenue collection stood at N83,293,971,636 made up of the following: internally Generated Revenue of N 4,765,906,340, State Share of Statutory Allocation of N77,472,060,476, Capital Receipts (Aids & Grants), N 1,056,004,820 with a Grand Total of N83,293,971,636

According to him, the breakdown of the expenditures (Recurrent and Capital) are for actual and approved budget expenditure of recurrent for 2019 which includes:

Personnel cost N33,587,331,375 against N20,238,842,000.

Others include Overhead Cost N21,923,077,032 against N16,479,563,391 65.2782.03,

Pension and Gratuity N10,200,000,000 agaunst N8,193,653,086 with a grand Total of N64,026,173 against N46,596,293,509

While for the capital Expenditure which includes Administration N13,609,794,466 against N38,480,210,366, Economic N848,200,000 against N27,775,099,169, Law and Justice N2,272,961,218 Against N23,843,442,900, Social N194,827,600 12,111,302,656 with a total of N80,713,304,000 against N38,422,534,465

However, Adamu Alhaji Lawan explained that th 2020 budget highlighted some issues and justified them based on their merits beginning with the size of the Original Approved Budget which was N146,894,223,000.00 with Recurrent Expenditure of N71,164,324,000.00 and Capital Expenditure of N75,729,899,000.00, representing 48.45% for Recurrent and 51.45% for Capital Expenditure respectively.

He also lamented that in the very first quarter of the 2020 budget implementation process, the world was hit by the Covid-19 pandemic that caused unprecedented global economic meltdown where the fiscal forecast indices were completely overturned to compromise the budget projections.

According to him, there was sharp and sudden decline in crude oil price and production quantity from the budget benchmark price of $57/barrel and production volume of 2.18mbpd to $20/barrel and 1.8mbpd respectively.

Zau Fanjumba added that the adverse effect of the Covid-19 Pandemic also caused the depreciation of the Naira from the budget estimate of N305/$1 to N360/$1. Inflation rate also jerked from 10.81% to about 15%.

And the COVID-19 shock increased public expenditure needs, including increased spending on healthcare (to contain the outbreak and to prepare for a severe outbreak) and support to the Nigeria Governor’s Forum and the World Bank provided to States, a revised set of revenue projections based on FGN revised MTEF 2020-2022 to guide states to achieve credible amended budgets.

"Accordingly, we had to reassess the revenue projections stemming from oil price and broader economic shock, appropriate emergency spending required for COVID-19 health response and mitigation of economic impact on the poor and vulnerable, reprioritize spending towards most critical expenditures (cut non-essential spending), increase budget deficit and borrowing limits where necessary, revise financing sources and avoid accumulation of expenditure arrears.

"The World Bank came up with States Fiscal Transparency, Accountability and Sustainability (SFTAS) Additional Financing (AF) Program for Results (PforR) to support States. Specifically, the programme supports all 36 Nigerian States to respond to the COVID-19 pandemic and the fiscal crisis.

"The foregoing factors and the prevailing socio-economic circumstances impelled the revision of the 2020 budget. And the Borno State 2020 Revised Budget has taken into cognizance the problems on ground" Adamu said.

The Commissioner highlighted that the State’s gross statutory allocation projections in the amended 2020 budget was within that of the NGF projections, using the parameters of the FG Addendum to the Medium-Term Expenditure Framework (MTEF) 2020-2022 while the fiscal indices were crude oil price benchmark of US $ 20 /barrel and daily production level of 1.7 million barrels /day.

He noted also that there was expected rise in Internally Generated Revenue (IGR) as a result of the establishment of BOGIS (Digitalization of Land Registry and Sales of Government assets, recapitalization of Borno Investment Company including Borno Renaissance Micro Finance Bank.

While reduction in non-essential overheads and capital expenditures proportionate to the amount of the revenue reduction plus the additional COVID-19 responsive expenditures with tagged allocation of expenditures to COVID-19 programs for crisis and recovery amounting to N18,342,000,000 representing 17.5 percent of the total amended budget expenditures.

"Grants and support for effective response to the pandemic in the revised budget is estimated at N8,910,000,000.. The budget deficit is fully financed from Internal Loans with no new domestic arrears consequent to the amendment of the 2020 Budget, we have issued and published online the following relief measures to cushion the effects of the Covid-19 on our taxpayers and SMEs.

"Tax relief and incentive program for Small & Medium Enterprises (SMEs) approved by the Chairman, IRS and published online on the IRS website www.bornosirs.bo.gov.ng and press release issued on that.

"Extensions of filling and payment dates and waiving penalties and interest over the defined extension period (determined by the state and announced); AND (ii)Reduce OR waive interest on all late filing and payment (beyond the defined extension period) for tax liabilities that fell due during the extension period (for sectors or segments as determined by the state and announced).," the commissiiner said.