From Ndubuisi Orji, Abuja
President Muhammadu Buhari has written to the House of Representatives, seeking a review of the Medium Term Expenditure Framework (MTEF), upon which the 2022 Appropriation Act is based.
The president, in a letter addressed to Speaker Femi Gbajabiamila, said a review of the fiscal framework had become necessary due to current developments in global and local economy.
He listed such developments to include spikes in the market price of crude oil aggravated by the Russian/Ukraine war, lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.
Besides, he said the decision to suspend the removal of Petroleum Motor Spirit (PMS) subsidy at a time when high crude oil prices have elevated the subsidy cost and has greatly eroded government revenues.
“There is also the need to make adequate provisions for the recent enhancements of allowances for officers and men of the Nigeria Police Force to boost their morale as they grapple with heightened security challenges in the country,” he said.
The president noted that the alteration of the 2022 Appropriation Act, in line with current developments, will ensure its successful implementation.
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Furthermore, Buhari stated that with the new economic realities, the total budget deficit is projected to increase by N965.42 billion to N7.35 trillion representing 3.99 per cent of the GDP. The increment of deficit will be financed by a new borrowings from the domestic market.
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The president explained that the adjustments to the 2022 Fiscal Framework include: (a) An increase in the projected oil price benchmark by $11 per barrel from $62 per barrel to $73 per barrel; (b) A reduction in the projected oil production volume by 283,000 barrels per day from 1.883 million barrels per day to 1.600 million barrels per day; (6) An increase in the estimated provision for PMS subsidy for 2022 by N3.557 trillion from N442.72 billion to N4.00 trillion; (d) A cut in the provision for federally funded upstream projects being implemented by N200 billion from N352.80 billion to N152.80 billion; (e) An increase in the projection for the Federal Government independent revenue by N400 billion; and (f) An additional provision of N182.45 billion to carter for the needs of the Nigeria Police Force.
He added that “based on the above adjustments, the Federation Account (main pool) revenue for the three tiers of government is projected to decline by N2.418 trillion, while Federal Government‘s share from the account (net of transfer to the Federal Capital Territory and other statutory deductions) is projected to reduce by N1.173 trillion.
“However, the amount available to fund the Federal Government budget is projected to decline by N772.91 billion due to the increase in the projection for independent revenue (operating surplus remittance) by N400 billion.
“Aggregate expenditure is projected to increase by N192.52 billion, due to increase in personnel cost by N161.40 billion and other service wide votes by N21.05 billion (both for the Nigeria Police Force), additional domestic debt service provision of N76.13 billion and net reductions in Statutory Transfers by N66.07 billion…”