CEM REPORT, BUDGET | The Senate has approved the payment of N3.6 trillion for subsidies for the 2023 fiscal year as proposed in the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (2023-2025 MTEF/FSP).
The approval goes against the recommendations of its Committee on Finance which slashed the oil subsidy payable in the 2023 fiscal year to N1.7 trillion.
The Chairman of the Senate panel, Senator Solomon Adeola, who presented the report of the Senate Joint Committee on Finance, National Planning and Economic Affairs on the 2023-2025 MTEF/FSP said the panel decided to slash the N3.6 trillion to reduce the fiscal deficit of N11.3 trillion as contained in the MTEF/FSP.
“The Committee hereby recommends that the cost of petroleum subsidy be capped at N3.6 trillion accordingly.
“All relevant agencies of the governments will be required to take necessary action to keep the petroleum subsidy cost to the government within N1.7 trillion ceiling in 2023 by this action.
“A saving of the sum of N737,306,443,151 will be saved and this should be used to reduce the fiscal deficit of N11.3 trillion of the government as contained in the MTEF/FSP.
“That the fiscal deficit of N11.3 trillion be reduced with the savings from subsidy regime amounting to N737.31 billion to N10.563 trillion.”
The committee report approved the projected new borrowings of N8.437 trillion (including Foreign and domestic Borrowing), proposed by the executive.
The Senate approved other recommendations of a $73 per barrel oil price benchmark as against $70 per barrel proposed by the executive in the MTEF/FSP documents.
The committee recommendations noted that an oil price of $73 per barrel be approved as a result of a continuous increase in the oil price in the global oil market and other peculiar situations such as the continuous invasion of Ukraine by Russia as this will result in a saving of N155 billion.
The panel also recommended daily crude oil production of 1.69million barrels per day, 1.83mbpd, and 1.83mbpd for 2023, 2024 and 2025 respectively.
The report also said the exchange rate of N437.57 billion be sustained as contained in the MTEF/FSP document with continuous engagement between the Central Bank of Nigeria and the Federal Ministry of Finance, Budget and National Planning with the view of bridging the gap between the official market and parallel market.
The report also recommended the projected Gross Domestic Product growth rate of 3.75 percent be approved.
The projected Inflation rate of 17.16 percent proposed was retained by the panel.
Other parameters recommended by the panel in the 2023-2025 MTEF/FSP document included among others, a retained revenue of N9.352 trillion as a result of an increase in the benchmark as the ceiling oil subsidy to the year in review.
Many of the senators in their submissions before the adoption of the report expressed their reservations over the N437 to a dollar exchange rate which according to them gives over N300 difference to the N 730 or N740 to a dollar being exchanged at the parallel market.