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Senate passes revised MTEF, slashes proposed budget by N60bn

Senate chamber

Ahead of today’s presentation of the 2022 National Budget to the Joint Session of the National Assembly by President Muhammadu Buhari, the Senate has passed the revised 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The MTEF/FSP contains the parameters upon which the 2022 budget will be framed.

Yesterday’s passage came barely 24 hours after President Muhammadu Buhari sought the upper chamber’s approval to make some changes in the MTEF.

The President had sought to increase the budget for 2022 from N13.98 trillion (initially approved by the Federal Executive Council) to N16.45 trillion.

According to him, the increase is to accommodate allocations such as the N100 billion to the electoral umpire, Independent National Electoral Commission (INEC), for the 2023 elections; N50 billion as hazard allowance to health workers, and a host of others.

He added that the needed adjustments were important to reflect “the new fiscal terms in the Petroleum Industry Act (PIA).”

Buhari explained in his letter: “The PIA establishes 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 2022-24 Fiscal Framework is premised on a hybrid of January-June (based on the current fiscal regime) and July-December (based on PIA fiscal regime), while 2023 and 2024 are now fully based on the PIA.”

The PIA establishes 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.

But unconvinced after considering his requests, the Senate Committee on Finance instead reduced the proposed expenditure by N60 billion and pegged the Federal Government’s total expenditure at N16.39 trillion.

Also, the panel slashed the fiscal deficit by almost N57 billion to N635.4 billion against the N692.0 billion proposed by Buhari, and fixed the retained revenue at N10.3 trillion against the N10.13 trillion proposed or N10billion less.

However, the legislators retained the provisions of N100 billion to INEC for the 2023 polls and N54 billion for the National Agency for Science and Engineering Infrastructure (NASENI).

The Committee also recommended that Ministries, Department and Agencies (MDAs) submit their revenue profile as a premise for being captured in the 2022 budget proposal.

Chairman of the Committee, Adeola Olamilekan, who presented the report, said that Gross Revenue Projection was reduced by N341.57 billion, from N8.870 trillion to N8.528 trillion, just as deductions for federally-funded upstream projects costs and 13% derivation were slashed by N335.3 billion and N810.25 million, respectively.

Net Oil and Gas revenue projection declined by N5.42 billion from N6.540 trillion to N6.535 trillion, while Non-oil taxes remain unchanged.

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