As federal government projected revenue from oil earnings continues to decline, Federation Account Allocation is now expected to fall by 80 per cent,
In real term, the allocation will drop to N1.1 trillion as against N5.5 trillion previously projected for the 2020 fiscal year.
This revelation was part of the discussion during a meeting between the Ministry of Finance, Budget and National Planning and the UK Department for Internal Development (DFID).
The meeting was a citizen’s dialogue session focused on Nigeria’s response to the fall in oil prices and the COVID-19 pandemic.
The government also expects that Nigeria’s Gross Domestic Products (GDP) will contract by 3.5 per cent year on year in 2020.
This will be despite a N649 billion reduction in allowable fiscal deductions by Nigerian National Petroleum Corporation (NNPC) for federally funded projects/expenditures.
Specifically, the projected Premium Motor Spirit (PMS ) under-recovery (petrol subsidy) has been reduced from N457 billion in the 2020 federal budget to zero.
The Nigerian government says it now expects oil prices in 2020 to average $20 per barrel against the budget benchmark of $57 per barrel.
The average production cost of Nigerian crude has been revised downward to $28 per barrel from $33 per barrel with implications for Petroleum Profit Tax (PPT).
According to the government, Customs revenue has come down to N1.2 trillion in 2020 against N1.5 trillion previously
The amount accruable to Value Added Tax (VAT) pool account now estimated at N2.0 trillion against N2.1 trillion previously in the year 2020.
Amount accruable to federation account now projected at N3.9 trillion against N8.6 trillion previously.
Projected federal government receipt from the federation account for 2020 is now put at N2.4 trillion against N4.8 trillion previously.
States and local governments are now likely to receive only N2.1 trillion and N1.5 trillion, respectively from FAAC compared to N3.3 trillion and N2.5 trillion, respectively, in previous estimates.
Projected N5.6 trillion budget deficit to be financed through privatisation proceeds will be N126 billion, but no details were provided.
Drawdowns from FGN special accounts of N260 billion, bilateral/multilateral drawdowns N387 billion, and new borrowings estimated at a whooping N4.6 trillion.
As part of measures to alleviate the impact of COVID-19, the government has set up an Economic Sustainability Committee to, among others, assess systemic vulnerabilities and develop programs that would make recession short-lived and ensure sustainable long-term growth
Government plans to invest in road and farmlands as well as offering credit facilities in order to improve agricultural products.
The federal government said it has plans to off-take agro-products, especially now that market conditions are unfavourable.
The government has also pledged to provide funding supports for the aviation sector, being the worst-hit at this period.