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Published On: Wed, Mar 18th, 2020

Coronavirus: Senate to slash 2020 budget

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•As oil revenue slumps

By Ikechukwu Okaforadi and Musa Adamu

Senate yesterday hinted that it will slash the N10.33trillion budget of 2020 to bring it in time with the economic realities arising from the global effect of the corona virus, which has crashed the oil prices in the international oil market.
This was sequel to the recommendation by the chairman senate committee on finance, Solomon Olamilekan (APC, Lagos), who presented report of the joint committee on finance, appropriations, national planning and economic affairs and petroleum resources (upstream) to the lawmakers.
Recall that the senate had set up the joint committee to consider the sharp drop in oil prices and other economic issues caused by the outbreak of deadly Corona virus, vis a vis the negative impact on the 2020 appropriation Bill passed by the National Assembly.
Presenting the report of the joint committee, Olamilekan said it is necessary to down size the 2020 budget of the country, saying “The downsizing of the Appropriation Act 2020 as passed by the National Assembly is inevitable, but the modalities to be adopted in the reduction of the budget must be used as suggested by the Appropriation Chairman and agreed to by the Joint Committee”.
He said the joint committee considered wide range of issues bordering on the economic realities of the country, including: The current Appropriation Act 2020 passed by the National Assembly; Cost of production of a barrel of crude oil compared with the other counterparts in the Petroleum Producing Countries.
Others, he said are: The reality of the current situation of the Government in terms of number of agencies and parastatals of the Government putting into perspective the Oronsanye Panel Report; The need to prioritise both the Social and the Real Sector of the economy looking at their importance to the overall benefit of Nigeria.
“Loss of revenue as a result of Gas flaring which runs into several billions of dollars; Devaluation of Naira; Removal of oil subsidy.
The joint committee further recommended that revenue generating agencies must be alive to their responsibility in line with the Fiscal Responsibility Act passed by the National Assembly and other relevant laws of the National Assembly.
It said other issues affecting the oil sector such as cost of production of a barrel of Crude oil and any other matter be taken care off in PIB, noting that the Joint Committee will invite other relevant Stakeholders to an interactive session.
“The Stakeholders are; Caentral Bank of Nigeria, Nigerian National Petroleum Corporation, Ministry of Finance, Budget and National Planning; and also engage relevant Stakeholders in the Business community for their own inputs and suggestions on the way forward of the present economic realities”, he said.
Commenting on the report of the committee, the senate President, Ahmad Lawan, said that Nigerian is in a challenging period. He stressed the need for National Assembly to hasten the passage of the PIB to enable the petroleum industries to have the legal framework to work harder and faster.
“Now we know it is difficult to get a foreign loan, we have to be a genius as a government and a country. We have to look inwards. This require a wholistic approach both monetary and physical to ensure that the economy does not collapse.
“If we must borrow for domestic purposes, we must be careful not to allow the private sector lose out. We should not only suffer but benefit also from this tough time”, Lawan said.

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