Due crash in oil price, the federal government said it is proposing to cut the 2020 budget size by N1.5 trillion from N10.59 trillion to N9.09 trillion.
The proposed cuts was announced on Wednesday by minister of finance, budget and national planning, Zainab Ahmed after the federal executive council meeting (FEC) in Abuja.
The proposal has to be approved by the national assembly.
The minister said, “From the expenditure side, the president has approved that we should cut down the capital expenditure budgeted by 20% across ministries, departments and agencies,” NAN quoted her to have said.
“Also, a 25% cut of all government-owned enterprises and these include the ones that are in the national budget, the 10 top ones we included in the 2020 budget but also those we did not include in the 2020 budget.
“So, all of these would have their recurrent expenditure and capital expenditure cut down by 25%.
“By these measures, we expect that the operating surpluses that would accrue to the federation will increase because when their operational expenditure reduces the operating surpluses that they remit to the treasury will also increase significantly,” she added.
Speaking further, Zainab said the ministry of budget and national planning has issued guidelines to other ministries on how the adjustments would be made.
“I can just say that the bulk cut is about N1.5 trillion, the reduction in the size of the budget. And this includes N457 billion from PMS under-recovery,” she explained.
According to the minister, the budget revisions would be based on a worst-case scenario of $30 per barrel at 2.18 million barrels per day.
President Muhammadu Buhari had constituted a committee to examine the impact of the coronavirus outbreak on the economy and how to fund the 2020 budget after oil price fell below the budget benchmark.