FG To Depend On Domestic And Foreign Creditors To Fund 2020 Budget – Fin. Minister

The Minister of Finance, Budget and National Planning, Zainab Ahmed, has revealed that the Federal Government will have to borrow more from domestic and foreign creditors in order to fund the 2020 budget which has been cut by President Muhammadu Buhari.

Ahmed said the 2020 budget has a deficit of N5.3 trillion, and the gap will be filled with foreign and domestic loans. She made this known after the Federal Executive Council (FEC) approved the reduction of the budget expenses from N10.59 trillion to N10.52 trillion. This was done after Ahmed submitted the 2020 Medium Term Expenditure Framework.

FG had also reduced the oil benchmark to $25 from $30 on Wednesday, May 14, 2020. Recall that the government had previously cut the benchmark from $57 to $30 after oil price crashed due to the outbreak of coronavirus and the oil price war between Saudi Arabia and Russia.

Ahmed, who revealed that the daily crude oil production is now 1.94 million barrels per day and the naira-dollar exchange rate is pegged at N360/$1, stated that “The revised budget is now in the total sum of N10.52tn, a difference of just about N71.5m when compared to the approved budget.

“This is because, as we cut the size of the budget, we also have to bring in new expenditure previously not budgeted, to enable us to adequately respond to the COVID-19 pandemic.

"The Federal Government in this budget will have direct revenue of funding the budget of N5.158tn. The deficit to this budget (is) N5.365tn and this will be financed by both domestic as well as foreign borrowings.

“The foreign borrowings we are doing for 2020 are all concessionary loans from the International Monetary Fund, the World Bank, the Islamic Development as well as Afro-EXIM Bank.

“There will also be some drawdown of previously committed loans for major ongoing projects that we will be drawing from both existing facilities as well as some special accounts with the approval of Mr President and the National Assembly,” She told Statehouse press.