Great efforts by the President’s economic team on the recalibration of the national budget. The exchange rate moved from about N305 to N360 per US$1. Benchmark oil price shifted from $57 per barrel to $25. The 1.94 million barrels per day was from 2.18 million barrels per day. Mrs Zainab Ahmed is doing her best on this hard job – I wish all of them good luck.
The Federal Executive Council has approved the review to the 2020 budget and the Medium Term Expenditure Framework for 2020-2022 as recommended by the ministry of finance.
The budget has new benchmarks which now includes $25 per oil barrel, and a target production rate of 1.94 million barrels per day and then an exchange rate of N360 to $1, Finance minister Zainab Ahmed said while briefing State House correspondents on Wednesday.
Ms Ahmed said the revised budget now amounts to N10.5 trillion, a difference of about N71.5 billion when compared to the initial approved budget.
“This is because, as we cut down the size of the budget,” she noted, “we also have to bring in new expenditure previously not budgeted, to enable us adequately respond to the COVID-19 pandemic.”
Ms Ahmed said while the federal government will fund the budget by N5.158 trillion, the deficit from N5.365 trillion will be financed by both domestic and foreign borrowing.
This was the proposed budget; the final version is marginally different, but insignificant.
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Is it still implementable with these numbers? It still looks unworkable, because many things the numbers were hedged on are still fragile and vulnerable. The Q2 is basically written off, this magic will be too great for the remaining two quarters.
The federal government’s wage bill needs a serious downward review, they need to implement substantial pay cuts there. People elsewhere cannot be taken pay cuts, with some not even paid at all, while people in public and civil service are collecting full pay, in an economy that is basically flat. We are still too afraid to make big decisions here, so the struggle continues.
We somewhat believe we will generate N5 trillion under the shadow of Covid-19, then borrow the other N5 trillion. We are still living like that son of former wealthy man, who hasn’t realised that his dad had filed for bankruptcy long time ago.
We need to shift 180°, we simply cannot achieve the numbers put up here, they are too ambitious to be real.
apt Francis, your analysis is so on point.