President Muhammadu Buhari has submitted the revised 2022-2024 Medium Term Fiscal Framework (MTEF) for the consideration and approval of the House of Representatives.
According to the President, the revision was necessitated by the need to reflect the new fiscal terms in the Petroleum Industry Act (PIA) 2021, as well as other critical expenditures in the 2022 Budget.
“The underlying drivers of the 2022 fiscal projections, such as oil price benchmark, oil production volume, exchange rate, GDP growth, and inflation rate reflect emergent realities and the macroeconomic outlook, and remain unchanged as in the previously approved 2022-24 MTEF&FSP,” he said in a letter addressed to the lawmakers and read during Tuesday’s plenary.
“The PIA establishes a progressive fiscal framework aimed at encouraging investment in the Nigerian petroleum industry. This significantly alters the oil and gas fiscal terms and has necessitated changes in the 2022-2024 Medium Term Fiscal Framework.
“The fiscal effects of PIA implementation are assumed to kick in by mid-year 2022. The revised 2022-24 Fiscal Framework is premised on a hybrid of January-June (based on the current fiscal regime) and July-December (based on PIA fiscal regime), while 2023 and 2024 are now fully based on the PIA”.
Arising from this and other critical expenditures that should be accommodated in the 2022 Budget, the changes to the 2022 Projections in the Fiscal Framework are as follows:
Federation Account Revenue:
a. Gross revenue projection decreased by N34,157 billion, from N8.870 trillion to N8.528 trillion.
b. Deductions for Federally-funded upstream project costs and 13% Derivation, decreased by N335.3 billion and N810.25 million respectively.
c. Net Oil and Gas revenue projection declined by N5.42 billion from N6.540 trillion to N6.535 trillion.
FGN Retained Revenue;
a. A projected decline in Net Oil and Gas Revenue by N5.42 billion.
b. An increase in projected FGN’s Retained Revenue from N8.36 trillion to N10.13 trillion (inclusive of GOEs), largely based on:
i. A projected increase in the revenues of Government-Owned Enterprises (GOEs) by N837.76 billion,
iii. MDAs Internally Generated Revenue by N697.6 billion;
iv. The introduction of Education Tax of N306 billion and Dividend of N8.3 billion from the Bank of Industry as revenue lines; and
v. FGN share of oil price royalty of N96.9 billion which is expected to be transferred to the Nigerian Sovereign Investment Authority based on the provisions of the PIA.
a. The FGN Aggregate Expenditure (including GOEs and Project-tied Loans) is projected to increase by N2.47 trillion, from N13.98 trillion to N16.45 trillion.
b. The increase in expenditure is due to:
vi. N100 billion additional provision to INEC, to cater for 2023 General Elections;
vii. The provision of N54 pillion to NASENI, which represents 1% FGN Share of Federation Account;
vii. Additional provision of N510 billion in the Service Wide Votes to cater for National Poverty Reduction with Growth Strategy (N300 billion), Police Operations Fund (N50 billion), Hazard Allowance for Health Workers (N50 billion), Public Service Wage Adjustments (additional N80 billion), and MDAs’ Electricity Bills Debt (additional N37 billion),
ix. Additional Capital provision of N1.70 trillion, attributed to projected increases in:
– Capital Supplementation by N179.1 billion;
– GOEs Capital by N222.1 billion;
– TETFUND Expenditure by N290.7 billion;
– Multi-lateral / Bi-lateral Project-tied Loans by N517.5 billion; and,
-MDAs Capital Expenditure by N390.5 billion (including N178.1 billion provision for population and housing census to be carried out in 2022).
a. The Aggregate Deficit (inclusive of GOEs and Project-tied Loans) is projected to increase by N692.0 billion or to 3.42% of GDP from 3.05% of GDP.
“I, herewith, forward the Revised 2022-2024 MTFF. As the 2022 budget of the Federal Government will be prepared based on the parameters and fiscal assumptions of the approved revised 2022-2024 MTEF, seek the cooperation of the National Assembly for expeditious legislative action on the submission,” the President said.