It also projected a total revenue of N7.9tn as well as reductions in both borrowing and deficit financing, according to details of the 2019-2021 Medium Term Expenditure Framework/Fiscal Strategy Paper unveiled in Abuja by the Minister of Budget and Planning, Senator Udo Udoma.
The minister, who unveiled the MTEF/FSP to members of the public comprising the media and Civil Society groups, stressed that the Federal Government was oblivious of the revenue challenges assailing it.
Udoma said the government would drastically cut down on borrowing in 2019, as he outlined key assumptions in next year’s proposed budget to include oil production volume of 2.3 million barrels per day at a price of $60 per barrel and an exchange rate of N305 to one dollar; inflation rate of 9.98 per cent; and Gross Domestic Growth rate of three per cent.
According to him, the Federal Government has also projected oil revenue of N3.6tn for 2019 against N2.9tn for the current fiscal year, and non-oil revenue of N1.385tn as against N1.348tn in the 2018 budget.
For non-oil revenue in 2019, the government has projected Company Income Tax of N799.5bn as against N794.6bn in 2018; Value Added Tax of N229.3bn, against the 2018 figure of N207.5bn; while the share of the Federation Account Levy is put at N54.1bn, against N57.8bn in 2018.
For the coming year, the Federal Government has picked top nine government-owned enterprises, excluding the Nigerian National Petroleum Corporation, to generate the sum of N955.3bn, while the sum of N624.5bn is expected from independent revenue sources, compared to the 2018 figure of N847.9bn.
For expenditure, the government projects statutory transfer of N506.8bn, against the 2018 figure of N530.4bn; debt service of N2.144tn in contrast to N2.013tn in 2018; and sinking fund of N220bn, against N190bn in 2018.
According to the government, it intends to commit more funds to paying pension, gratuities and retirement benefits of retired employees in 2019 by proposing N527bn as against N241.9bn in 2018.
Udoma said notwithstanding the small size of the proposed budget, certain critical items would be given priority.
He outlined those items to include human capital development, health, education and pension payment.
The minister said, “In 2019, we will concentrate on getting more revenue, oil and non-oil, by squeezing the maximum from oil, and build up non-oil revenue by an average of 30 per cent up from the previous figure.
“Here, we all know that the rate of tax to the GDP is still very low. We can do much better than we are doing. So, going forward, we will rely less on borrowing and debt, but do more on revenue build up so that debt service to revenue is brought down.
“This is the approach. To the government, it is revenue, revenue and revenue. That is our priority. If you have revenue, it’s possible to deliver on infrastructure.”
Udoma, however, explained that borrowing was critical when the country was short of funds to bring it out of recession.
He added, “And that borrowing was directed at capital projects and it worked. That is why you see activities on Lagos-Ibadan rail line and others.
“However, for that level of borrowing, we are taking it down because as revenue picks up, we will rely less on borrowing.”
The minister assured the audience that the MTEF document would be passed to the National Assembly by the end of this month and that the budget would be sent in November, but regretted that the January to December calendar had yet to be met.
“The January to December budget cycle is what this administration believes in, but as an election year, we do not envisage the National Assembly passing the budget on time. This might not be the ideal time for synergy, but both the National Assembly and the Executive desire it,” he stated.