If oil money powers your budget, and the benchmark is at $57 per barrel, giving you a $31 billion budget, there is sad news. Nigeria feels that way because the nation has cut the benchmark to $30. Largely, Nigerian budget is now sub-$20 billion, for 200 million people.
In the evening of Tuesday, December 17, 2019, President Muhammadu Buhari appended his signature to the 2020 Appropriation Bill of N10.59 trillion (about $31 billion at black market rate or $35 billion at official exchange rate)
The budget was sent to the President last week by the national assembly for signing. Buhari who used the occasion of his 77th birthday to endorse the Appropriation Bill was surrounded by some members of his party administration.
Vice President Yemi Osibanjo; Senate President, Ahmed Lawan; House of Representatives Speaker, Femi Gbajabiamila; Secretary to the Government of the Federation, Boss Mustapha; Minister of Finance, Budget and National Planning, Zainab Ahmed and the Minister of State for Budget and National Planning, Clement Agba, all graced the occasion.
There would be so much financial engineering for even that low number: the Federal Executive Council has approved reductions on capital budget by 20%, and 25% cut in recurrent expenditures. In short, I expect customs revenue to drop as import from Asia has crashed. Government’s plan to sell some assets like power systems will struggle as there would be fewer buyers; so that number has to go low in the budget.
And the big one: the government has frozen recruitment except for health services and security. I do not believe that one though, relying on past records. Tough months ahead across all sectors because this sub-$20 billion cannot be 70% executed. In other words, the real 2020 Nigerian budget is below $14 billion.
Of course, the Central Bank of Nigeria has promised to inject N1 trillion into the economy. Yet, I do not see how Nigeria can service its debts obligations, pay politicians-at-service, pay public sector workers, and not devalue Naira or flood everywhere with treasury bills to mop cash. But we will see: miracles happen on Fridays and Sundays in that country, always.