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Oil price crash: FG proposes to cut 2020 budget by N1.5trn, suspends recruitment

Oil price crash: FG proposes to cut 2020 budget by N1.5trn, suspends recruitment
March 18
21:38 2020
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The federal government is proposing to cut the 2020 budget size by N1.5 trillion from N10.59 trillion to N9.09 trillion.

Zainab Ahmed, the minister of finance, budget and national planning, announced the proposed cuts on Wednesday.

The proposal has to be approved by the national assembly.

“From the expenditure side, the president has approved that we should cut down the capital expenditure budgeted by 20% across ministries, departments and agencies,” NAN quoted her to have said.

“Also, a 25% cut of all government-owned enterprises and these include the ones that are in the national budget, the 10 top ones we included in the 2020 budget but also those we did not include in the 2020 budget.

“So, all of these would have their recurrent expenditure and capital expenditure cut down by 25%.

“By these measures, we expect that the operating surpluses that would accrue to the federation will increase because when their operational expenditure reduces the operating surpluses that they remit to the treasury will also increase significantly.”

She said the ministry of budget and national planning has issued guidelines to other ministries on how the adjustments would be made.

“I can just say that the bulk cut is about N1.5 trillion, the reduction in the size of the budget. And this includes N457 billion from PMS under-recovery,” she explained.

The minister said the planned recruitment into the country’s civil service would be suspended except for essential services such as security and health services.

She said the federal executive council also agreed to restore and compliant by the civil service retirement regulations, while the modalities for the implementation of the social investment programme would also be reviewed.

Ahmed also disclosed that the council agreed to review the non-essential tax rebate currently being implemented to cut down on tax expenditure so as to generate more revenue.

“On recruitment, there is already an instruction to stop recruitment. What the agencies have been doing is replacement but even that is being suspended,” she said.

“When things improve we will go back to the issue of recruitment but for now, our wage bill is already very high.

“The president has directed that salaries and pensions must be paid unfailingly. We are maintaining our workforce as it is but we are just stopping the increase in the size of the nominal roll.”

According to the minister, the budget revisions would be based on a worst-case scenario of $30 per barrel at 2.18 million barrels per day.

President Muhammadu Buhari had constituted a committee to examine the impact of the coronavirus outbreak on the economy and how to fund the 2020 budget after oil price fell below the budget benchmark.

 

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March 25, 2019USDGBPEUR
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