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Highlights of FGN Budget Proposals for 2021 Fiscal Year

Budget and Plans	3222 VIEWS
Budget and Plans
3222 VIEWS

Friday, October 09, 2020 / 08:33 AM / By KPMG Nigeria / Header Image Credit: Vanguard News

His Excellency, the President of the Federal Republic of Nigeria, Muhammadu Buhari, GCFR, today 8 October 2020, presented the 2021 Federal Government Budget Proposals before a joint sitting of the National Assembly. The proposed Revenue and Expenditure budgets for 2021 are N8.43 trillion and N13.08 trillion, respectively, resulting in N4.65 trillion fiscal deficit.

Below are the key assumptions behind the budget and movements in the proposed fiscal parameters between the revised 2020 and 2021 Budgets:

Budget Assumption/ Fiscal Parameter	2020 Approved Budget	2020 Revised Budget	2021 Proposed Budget	Percentage change
Benchmark oil price	US$57 per barrel	US$28 per barrel	US$40 per barrel	43%
Oil production volume (bpd)	2.18 million	1.80 million	1.86 million	3%
Inflation Rate (%)	10.81	14	11.95	-15%
Average exchange rate	N305/ US$1	N360/ US$1	N379/ US$1	5%
GDP growth rate (%)	2.93	-4.42	3	168%
Capital expenditure	N2.47 trillion	N2.69 trillion	N3.85 trillion	43%
Statutory transfer	N0.56 trillion	N0.43 trillion	N0.48 trillion	13%
Debt service	N2.43 trillion	N2.68 trillion	N3.12 trillion	16%
Recurrent expenditure (non-debt)	N4.49 trillion	N4.94 trillion	N5.65 trillion	14%
Total revenue	N8.42 trillion	N5.84 trillion	N8.43 trillion	44%
Total expenditure	N10.59 trillion	N10.81 trillion	N13.08 trillion	21%
Fiscal deficit	N2.17 trillion	N4.98 trillion	N4.65 trillion	-7%

Source: Ministry of Budget and National Planning; 2020 Appropriation Act

The 2021 Budget, which has been themed the "Budget of Economic Recovery and Resilience", is designed to deliver on the Government's Economic Sustainability Plan goals, accelerate the pace of Nigeria's economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.

The President used the opportunity of the 2021 Budget presentation to announce the preparation of the Finance Bill, 2020 by the Honourable Minister of Finance, Budget and National Planning for passage with the 2021 Appropriation Bill. The Finance Bill, 2020 will seek to support the realization of the 2021 revenue projections, adopt appropriate counter-cyclical fiscal policies and enhance the efficiency of fiscal incentives.