The Federal Government has projected the sum of N12.65 trillion as budget for 2021.
It also projected the sum of N5.16 trillion as budget deficit for 2021 up from N4.98trillion in the 2020 budget.
This is contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) forwarded to the Senate by President Muhammadu Buhari on Tuesday for consideration and approval.
The final draft of the budget would be prepared based on the parameters and fiscal assumptions of the approved 2021-2023 MTEF/FSP.
Buhari’s letter seeking the Red Chamber’s approval for the fiscal document was read by Senate President Ahmad Lawan during plenary.
The president said the early submission was to allow the legislature enough time to perform its constitutional duties of reviewing the framework.
The Minister of Finance, Budget and National Planning, Dr Zainab Ahmed had, earlier this month, hinted that the President had given directives for her ministry to expedite action on next year’s budget estimates to enable him present the 2021 budget proposal to the National Assembly by the end of September this year.
In the fiscal document, the Federal Government also pegged the 2021 oil benchmark at $40 per barrel and an exchange rate of N360 to one US dollar.
The statutory transfers stand at N481billion, Debt Servicing N3.124trillion, sinking fund N220billion, recurrent expenditure of N5.7trillion and capital expenditure of N3.33trillion.
The capital expenditure represents 26.3 per cent of total expenditure and it is 24 per cent higher than the 2020 provision of N2.69trillion.
The Government also projected Stamp Duty to earn N500 billion up from N200billion in 2020.
The Government noted that of the 2021 budgeted expenditure, debt service is estimated at N3.124 trillion and provision for sinking fund to retire maturing bonds issued to local contractors/creditors is NN220billion.
A total of N4.31 trillion is provided for personnel and pension costs, an increase of N724.67billion over 2020.
The Government also projected oil production of 1.88million barrels per day for 2021 up from 1.80mbpd in the 2020 budget.
On budget deficit which the government projected to be N5.16trillion in 2021, it noted: “This represents 3.62 per cent of estimated GDP, well above the threshold of 3 per cent stipulated in the Fiscal Responsibility Act 2007.
“Unless we can find new revenue sources, given the limited scope for cost-cutting, it will not be feasible to keep budget deficits within the 3% target set in FRA 2007.”
The government noted that the deficit will be financed by new foreign and domestic borrowing of N4.28trillion, N205.15billion from privatization proceeds, and N674.11billion drawdowns on existing project-tied loans.
It said that the projected debt service/revenue ratio at 47 per cent (actual for 2019 was 58 per cent) raises some concern about the sustainability of FGN debt.