THE Federal Government has said that it never violated the provisions of the Fiscal Responsibility Act in the preparation of the 2021 budget.
It explained why it exceeded the three per cent fiscal deficit threshold prescribed by the Fiscal Responsibility Act, stating that the country was in unusual times.
The Federal Government said this just as it disclosed that it would not consider the option of debt relief that was currently being considered for low income countries by the International Monetary Fund.
The IMF had approved a second debt service relief of six months for 28 low income countries.
The Washington based lender said in a statement that the approval was made by its Executive Board on October 2, 2020.
Responding to a question on whether Nigeria would take the option of the debt relief, on Tuesday in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the Federal Government was not considering such option at this time.
She said currently, various loan agreements had been entered with various lenders, adding that asking for debt relief would portend Nigeria as a country that could not repay its indebtedness.
President Muhammadu Buhari had
presented a budget proposal of N13 08trn, up by 22.9 per cent from the N10.8trn 2020 budget, with revenue projected at N7.5trn, while the deficit amounted to N5.21trn.
The President said the 2021 Budget deficit, inclusive of Government-Owned Enterprises and project-tied loans, was projected at N5.2trn, adding that this represented 3.64 per cent of the budget size.
The N5.21trn deficit of the budget exceeded the three per cent threshold prescribed by the FRA 2007 for the annual budget.
Specifically, Section 12, sub-section 1 of the Act states, “Aggregate Expenditure and the Aggregate amount appropriated by the National Assembly for each financial year shall not be more than the estimated aggregate revenue plus a deficit, not exceeding three per cent of the estimated Gross Domestic Product or any sustainable percentage as may be determined by the National Assembly for each financial year.”
The Presidential candidate of the Peoples Democratic Party in the last general election, Atiku Abubakar, had on Saturday faulted the 2021 budget, saying that it contravened the fiscal responsibility act.
In his post on Facebook, the former Vice President said, “Looking at the 2021 Budget Proposal placed before the National Assembly by President Muhammadu Buhari on Thursday, October 8, 2020, a number of issues, very grave and perhaps disturbing issues, arise.
“I could bring up several of them, but for the sake of its direness and consequence to our economy, permit me to address one very important issue.
“The budget deficit in the proposal is N5.21trn. This amount is just over 3.5 per cent of Nigeria’s 2019 GDP. This is contrary to the Fiscal Responsibility Act of 2007.”
But speaking on the development, Ahmed said that although the 2021 budget deficit exceeded the three per cent threshold, the government had not breached the law.
She said that there was a provision in the Fiscal Responsibility Act that allowed the government to surpass the threshold during “unusual times.”
The finance minister noted that since the country was battling the negative impact of the Coronavirus pandemic and was faced with the threat of economic recession, there was a need to exceed the threshold to save the economy from collapse.
“Under the Fiscal Responsibility Act, the deficit prescribed is three per cent but there is a provision that states that during unusual times, the three per cent fiscal deficit threshold can be exceeded and that is what we did,” she said.
