2020 budget based on new 7.5% VAT

* Presents 2020 N10.33trn Appropriation Bill to
NASS

President Muhammadu Buhari accompanied by members of the
Federal Executive Council (FEC) on Tuesday presented the 2020
budget proposal to a joint session of the National Assembly
(NASS).

Buhari, who addressed the joint session of NASS at about,
2.03p.m., unveiled a budget of N10.33 trillion for the 2020 fiscal
year.

The Federal Executive Council had proposed N10.007 trillion
for the financial year but the figure was increased to N10.33
trillion by the National Assembly.

The president said the 2020 budget was designed to be a
budget of “Fiscal consolidation to strengthen our macroeconomic
environment; Investing in critical infrastructure, human capital
development and enabling institutions, especially in key job
creating sectors.’’

President Muhammadu Buhari said the 2020 budget has been
based on a new Value Added Tax of 7.5 per cent.

He added that the budget was meant for “Incentivising
private sector investment essential to complement the government’s
development plans, policies and programmes; and enhancing our
social investment programmes to further deepen their impact on
those marginalised and most vulnerable Nigerians.”

According to him, the total Federal Government revenue in
2020 is N8.155trillion comprising oil revenue of N2.64 trillion,
non-oil tax revenues of N1.81 trillion and other revenue of
N3.7trillion.

“This is seven per cent higher than the 2019 comparative
estimate of N7.594 trillion inclusive of the Government Owned
Enterprises,’’ he said.

The president said non-debt recurrent expenditure include
N3.6 trillion for personnel and pension costs, an increase of
N620.28 over the 2019 fiscal year figure.

“This increase reflects the new minimum wage as well as our
proposals to improve remuneration and welfare of our police and
armed forces,’’ he said.

He disclosed that N2.46 trillion was earmarked for capital
projects, inclusive of N318.06 billion in statutory
transfers.

Other estimates are N556.7 billion for statutory transfers;
N2.45 trillion for debt servicing and provision of N296 billion as
sinking fund.

He explained that the sinking fund would be used to “retire
maturing bonds to local contractors”.

The 2020 budget is based on an oil production estimate of
2.18 million barrels per day, oil price benchmark of 57 dollars per
barrel and an exchange rate of N305 to a dollar.

Other benchmarks are: real Gross Domestic Product (GDP),
growth rate of 2.93 per cent while inflation rate “is expected to
remain slightly above single digits in 2020’’

On sectoral allocation, the president said the Ministry of
Interior would get N35 billion as against N569 billion in 2019,
Defence (N100 billion), Education (N48 billion) and Health (N46
billion) for some key spending

He noted with delight the continued recovery of the nation’s
economy as well as the increase in the foreign reserve from 23
billion dollars in 2016 to N42.5 billion dollars in
August.

“This increase is largely due to favourable prices of crude
oil in the international market, minimal disruption of crude oil
production given the stable security in the Niger Delta region and
our import substitution drive, especially in key commodities,’’ he
explained. (NAN)

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