Table of Contents Le Introduction suse 2.0 Economie and Fiscal Outlook 2.1 Global Economic Developments and Implications. 24.1 Advanced Economies _ 2.3 Sub-Saharan Africa and ECOWAS Sub-Region 2.2 _" Macroeconomic Performance of the Nigerian Economy. 22.4 Reel Sector : 2.2.2 Monetary Sector 2.2.3 Fiscal Sector... 2.2.4 Eemal Sector. 3.0 — Review of 2018 Budget Performance 3.1 - Revenue Outtums 3.2 Expenditure Outturn: 3.3 Fiscal Defic. 4.0 — Review of 2019 Budget Implementation .. 4.4 Revenue Outturns:. 42 Expenditure Outturns 5.0 Assumptions Underlying Ol! and Non-oil Revenue Projections In 2020 - 202: 5.1 Assumptions Underlying Oil Revenues. $4.2 Crude Of Production and Export 5.1.2 Global Crude Oil Supply and Demand... 5.13 Ol Price Benchmark 5.2 Non-Oil Revenue Baseline Assumptions.. 6.0 Medium term Macroeconomic framework: parameters and targets for 2020-20215 6.1 Macroeconomic Projections ssn. a 62.1 Federation Account 6.2.1 Revenue Framework 62.2 FGN Expenditure Framework 6.2.3 Aggregate Expanditure 624 Fiscal Deficit and Deficit Financing. 6.2 2020-2022 Medium Term Fiscal Framework (MITFF). 7.0 Medium Term Objectives, Policies and Strategies... 7.1 Economic Policy Objectives... 7.4.4 — Enhancing inclusive economic grove, 7.4.2 Promoting Economic Diversifleation 7.13 Maintaining Macroeconamie Seal 7.2 Fiscal Policy Objectives 7.24 improving Revenue Generation. 7.2.2 Ensuring Adequate Fiscal Space infrastructural Davelopmant. Audet Ofics of tha Federation / MBNP ‘2020-2622 mer /ESP7.23 Enhancing the Quality of Spending.. 7.26 Ensuting Sustainable Deficlt and Dedt Levels. 7.3 Monetary Policy Objectives and Strategy. 7.3.1 Monetary Policy Objectives a 7.3.2 Monetary Policy Stratagies and Outlook. 7.4 Key Sectoral Policy initiative: £.0 — Analysis & Statement on Consolidated Debt & Contingent Liabilities.. 8. Nigeria's Current Debt Profile BALL Debt Stock. 8.12 Debt Service Payments 8.2 Debt Management Strategy 8.3 Nature and Fiscal implications of Contingent Liabilities. 9.0 Risks to the MEDIUM-TERM Outlook. 8.1 Global Economic Trends & Geo-Polltical Tensions. 9.2 International Oil Market Developments. B21 Oi PCBS vnsnnnemeinrr 8.22 Oil Demand & Supply Asks 9.3 Exchange Rate Risks 9.4 Risks to Non-Oll Revenue 9.5 Sensitivity of Budiget aggrogates to Macro-economic conditions Vy Budget Office ct the Federation / MBNP ‘2020 ~ 2020 MTEF/ESPList oF TABLES 2.2 Global Economic Growth (%) 2 3.4 Performance of Selected Indicators and Key Parameters, 2018 6 3.2 Oil & Non-Oil Revenue Profile FY 2018 6 3.3 Federation Account Revenue and VAT Distributable FY.2018 7 3.4 FGN Revenue Profile FY 2018 (N'Billion) 7 3.5 FGN Expenditure Outturn FY 2018 (N’Billion) 8 44 Performance of key 2019 Budget Parameters 8 42 — Retained Revenue Performance (Jan- Jun) 2019 9 4.3 Federation Account Revenue and VAT Distrioutable, 2019 9 4.4 FGN Revenue Profile (Jan-Jun) 2049 10 4.5 FGN Expenditure Performance (Jan-tun) 2049 10 6.1 Key Parameters & Macroeconomic Projections (2018-2022) 16 8.2 _ Federation Account and VAT Revenues (2020-2022) 17 6.3 Overview of the Revenue Framework 17 6.4 Overview of the Expenditure Framework 18 6.5 * Deficit, Financing and Critical Ratios 19 8.1 FGN Contingent Liabilities (2048 - 2022) 31 9.4 Risks Likelihood, Impact-and Mitigation Strategies 34 List OF Ficures 2.1 ~ Real GDP Growth Rates 201101 - 201902 3 2.2 Sectoral Quarterly GDP Growth Rates 201404 - 201992 3 2.3 Unemployment and underemployment Rate 2010 - 2018 4 2.4 — Monetary Policy Rate and Inflation 2016 - July 2049 4 2.5 External Reserves (June 2016 - Aug 2019} 5 5.1 Crude Oil Production and Export in Nigeria 14 5.2 “Medium-Term Off Demand Outlook 2 5.3 -Medium-Term Oil Supply Outlook 12 5.4 Unplanned OPEC Crucle Oil Supply Disruptions (mbpd) 13 5.5 Bonny Light Crude Oil Price (Moving averages versus benchmark price) 13 8.1 Trend in Nigeria's Total Public Debt (2014.~ 2018) ea 29 8.2 Debt Service Payments (2014 - 2018) = 0 Bucge! Olice ofthe Fadoraton / MBNP ‘2005 ~ 2022 WTEE/FSPLIST OF ACRONYMS [ ACRONYM; | DESCRIPTIONS ADB African Development Bank ADE African Development Fund ADR ‘Average Duty Rate 1 ANCON | Asset Management Corporation of Nigerla BHOPF Basic Healthcare Provision Fund BoA | Bank of Agriculture BOF | Budget Office of the Federation BOL Bank of Industry BVN Bank Verification Numbers CBN. Central Bank of Nigeria (CET Common External Tariff LCiF Cost, Insurance and Freight cir ‘Companies income Tax CPIA. Country Policy and Institutional Assessment CRE Consolidated Revenue Fund DISCOS [Distribution Companies DMO Debt Management Office DSA Debt Sustainability Analysis ECA Excess Crude Account ELTS | ECOWAS Trade Liberalisation Scheme ERGP Economis and Recovery Growth Plan Pe EU European Union FARC Federation Account Allocation Committee FCT Federal Capital Territory FDI Foreign Direct Investment Pree FG Federal Government- FGN Federal Government of Nigeria FRA Fiscal Responsibility Act FSP Fiscal Stretegy Paper FX Foreign Exchange etter FY Financial Year Et CAV | Global Alliance for Vaccines He ie GOP Gross Domestic Product i GOES | Government Owned Enterprises Ee TAT. import Adjustment Tax = a ier information and Communication Technology IDA Intemational Development Association He GR. intemally Generated Revenues IME International Monetary Fund 7} LIPPIS Integrated Personne! and Payroll Information System WV Joint Venture stinas 7 [MBNP Ministry of Budget and National Planning MePD Million Barrels Per Day zt MDAs Ministries, Departments and Agencies MPC Monetary Poliay Committee MSMEs | Micro, Small and Medium Enterprises Budget Office of he Federation / MBNP 2020 ~ 2022 MTEE/ES?MIF Medium-Term Fiscal Framework MTEF Medium-Term Expenditure Framework NASS' National Assembly NBET Nigerian Bulk Electricity Trading Nes Nigeria Customs Service NEXIM, Nigerian Exportimport Bank NIRP Nigeria Industrial Revolution Plan NPC. Nigerian National Petroleum Corporation CAGE ‘Office of the Accountant General of the Federation OECD Organisation for Economic Cooperation and Development ‘OPEC ‘Organisation of Petroleum Exporting Countries PEC Peoples Bank of China PIGS Petroleum industry Governance Bil PMS, Premium Motor Snir PPP Publig Private Partnership PPT Petroleum Profit Tax PSRP Power Sector Reaovery Program ‘SEZ ‘Special Economic Zones S08 Sustainable Development Goals ‘STEM ‘Science, Technology, Engineering and Math SW ‘Service Wide Votes TSé ‘Treasury Single Account UK United Kingdom USD. United States Dollar VAT Value Added Tax WEO World Economic Outlook ry Busget Offce ofthe Federation / MBN ‘oad ~ 2022 MTEF/ESPLe Ne 1, INTRODUCTION Setting fiscal targets -and strategically allocating resources to achieve deveiopmentel aspirations are central to the planning and budgeting process, The Madium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) provide information on impacts of Government's broad economic and fiscal policies, economic and fiscal environment updata, 88 well as budget policylprocess. The MTEF is a budget formulation technique whereby the government establishes @ credible procedure for allocating available public resources to strategic priorities while ensuring overall fiscal discipline and sustainability. It is a tool for ‘ensuring and sustaining the link between policy on one hand and planning/budgeting-on the other, over the medium-term, on a three-year rolling basis, The MTEF is designed to translate economic plans into public expenditure programmes within @ coherent multiyear macroeconomic and fiscal framework. it consists of the macroeconomic model that indicates fiscal targets"and estimates revenues and expenditures, including government financial obligations, Following the successful Deployment of the Economic Recovery and Growth Plan 2017-20 (ERGP) to restore the Nigerian economy to the path of growth, the 2020-2022 MTEF/FSP will signal the direction of government priorities and programmes to accelerate growth, In the Administration's a second term in office, goverment aims to continue to stimulate the economy to attain higher and sustained inclusive growth through the allocation of resources {o strategic priorities. The MTEF/FSP will set out the key parameters and assumptions underlying fiscal policies, as well as the revenue and expenditure profile of the 2020 federal budget. The projections contained herein will be guided by budget realism. Rigorous statistical and other enaiytical tools have been employed to ensure thet the estimates are economically feasible, The MTEFIFSP also provides guidance to MDAs in the formulation of policies with Fespect to spatial, social, economic, environmental dévelopment and development communication. The MTEFIFSP 2020-2022 will give impetus to the efforts to accelerate investment in critical infrastructure and human capitat development, 2.0 ECONOMIC AND FISCAL OUTLOOK oe 2.1 _. Global Economic Developments and Implications 24.1 Advanced Economies ” Global economie recovery is precarious, projected to slow down from 3.6% in 2018 to 3.2% in 2019. The decrease in the global composite Purchasing Managers! Index (PMI) in the last. three months provides further flip to this downgrade, However, a rebound to 3.5% is projected for 2020. Weakening global output growth has continued amidst prevailing uncertainties from familar headwinds including: the further escalation of trade tensions between the US and China imposition of new rounds of sanctions on Iran with attendant implications for volatility in commodity prices; BREXIT; and tension in the Korean Peninsula budget otfce of the Federation / MBNP 2020 = 2022 MTEE/ESP22 Macroeconomic Performance of the Nigerion Economy 2.22 Real Sector (0) GDP growth and Sectoral Performance Figure 2.4: Real GDP Growth Rates 202191-201992 ‘The Nigerian economy has gained some traction, having sustained eight consecutive quarters of GDP growth Annual growth has increased from 0.82% in 2017 to 1,93% in 2018 and 2.10% in Q1 2019 (an upward revision from 2.01% due to oil output revisions). However, the growth of 1.94% observed in Q2 2019 indicates a decline by 0.16% points. The performance observed in Q2 2019 follows ‘an equally strong first quarter performance and was aided by stabilty in oil output as well as the successful pofitical transition. Overall, a total of 15 of 465 activities grew faster in Q2 2019 relative to last year, while 13 activities of 46 had higher growth rates relative to the preceding quarter. Figure 2.2: Sectoral Quartery GDP Growth Rates, O14 QA to 2019 02 The Gross Domestic Product (GDP) 3 Sectoral Quarterly GOP Growth expanded 1.94% Year on Year (YoY) in Q2 2018, from 1.50% in Q2 2018, but down from 2.10% in Q1 2019. The slowdown In non-oil largely masked the 5.18% YoY growth in Q2'49 oi! GDP. Non-oil GDP growth plunged to 1.64% YoY in Q2'19 from 2.47% YoY in Q1'19, There was significant growth —TAatecte —Mirirg — —Manufecurieg moderation jg agriculture and —tonsrton a Sences telecommunicafions as well as notable slips into contraction in manufacturing (- 0.13% YoY), real estate (-3.84% YoY), and trade (-0.25% YoY) in Q2'19, The weaker growth 'n Agriculture partly attributed to seasonal factors and security setbacks which appear to be constraining production and distribution of output in the sector. Manufacturing deceleration was mainly reflective of weaknesses in oil refining (-23.8% YoY); textile, apparel & footwear (-1.4% YoY); and basic metal, iron, & steel (-3.1% YoY) while the dip in real estate may have been driven by the impact of low liquidity in the sector. : 30 (6) Unemployment and Underemployment Determined to make economic growth translate to improved iiving standards, the Administration has prioritized investment in labour intensive sectors of the economy to stimulate inclusive growth. Concerted efforts at improving the business environment are geared towards increasing the capacity of the private sector to generate employment Several ‘components of the Social Investment Programme (SIP) are also aimed at providing direct ‘employment to the teeming young population. Budget Otis ofthe Fecleration / MNP 2ou0 ~ 2022 WTEs/#SPFigure 2.2: Unemployment and underemployment Rates Although, unemployment and underemployment remain high, the trend is expected to moderate as the effects of 290 the various programmes kick in. The 150 unemployment rate increased to 23.1% in 100 Q3 2018 from 18.8% in Q3 2017. The 50 underemployment rate also rose from 00 10.3% In Q2 2018 fo 19.7% in QS, 2018. 9.9 ODD 250 Thus, the total number of people classified SSB? SF Se Se gr BPS” as unemployed increased from 16.0 milion {0 20.8 milion, Meanwhile, the economically active working population (15-64 years of age) increased by 4.0% to 115.5 million people (Q9'17:111.1 million people). e—Unemployment Rate 2.2.2. Monetary Sector (2) inflation Figure 2. Core and: Composite inflation rates slightly inched higher after maintained their ectining trend. a5 From a peak of 18.72% in January, 2017 inflation declined to 11.14% in 20 July, 2018 before reversing the trend and rising to 17.40% in May 2019, but declined again to 11.08% in July 2019. Food inflation has remained above headline since February 2017, 5 and has largely eroded the impact of sustained moderation in core inflation 0 predominantly observed in the last 27 months, On a year-to-date basis, mean headline inflation (¢,11.22% YoY) is stil 124bps ahead of the 9.98% projected for full year 2819 in the 2019- 2021 MTEFIFSP. lonetary Policy Rete and inflation Ulan 2018 - Jul 2013) ee je: (0) Interest Rate - The Central Bank reduced the Monetary Policy Rate (MPR) by 50 basis points to 13.5% in March 2019 after holding it steady at 14.0% for 20 months, but retained the Cash Reserve Ratio (CRR) at 22.50% and Liquidity Ratio at 30.00%. In reality, the MPR has ceased to be a key determinant of market interest rates over the past three years. Average lending rates of Deposit Money Banks (DMBs) over the last three years have ranged from 15.33% to 31.05%. 2.2.3. Fiscal Sector Nigeria's revenue base is broadly categorized into oll and non-oll. Oil revenue is primarily from crude oil receipts while non-oll earings are from taxes generated. Receipts from both sources. have collectively accounted for about 65% of total receipts since 2015. in response to the economy lapsing into recession in 2016, government's fiscal policy stance was to increase aggregate expenditure, Hence, there has been a rise in nominal budgetary expenditure in the Bucge! Office of ine Fedration/ MANF 2020 ~ 2022 MTEF/FSPpast three years. However, when adjusted for inflation, output growth and currency depreciation, expenditure remain lower than its pre-recession level. Nigeria's current fiscal position is threatened by widening fiscal deficit, which has forced the government to increasingly access the debt markets to meet its obligations. The resultant rise in debt has incteased the federal government's debt service obligations as a percentage of federal Tevenues to over 50%, thereby raising debt sustainability concems. itis therefore imperative thet government explores altemative means to raise substantially higher revenues to sustainably meet all its obligations 2.24 External Sector fo) . Trade Total trade grew by 2.50% in @1,2019 compared to Q4,2018, and 7.52% relative to the corresponding quarter in 2018. The value of total imports rose 3,30% in Q1 2019 compared to Q4 2018, and by 25.84% over the corresponding quarter of 2018, The value of total exports in Q1, 2019 increased by 1.78% against the level recorded In Q4, 2018 but dacreased by 3.90% against its value in Q1, 2018. Crude oil export accounts for 81.78 % of total exports wale impor of refined petroleum product is 30.0% of total imports. Trad data are yet to reffect the expected impact of the priority accorded the agricultural sector of the economy. Import of agricultural products were 7.98% higher in value than in Q4 2018, and 28.1% higher than in Qt, 2018 while the value of agriouttural exports was 11,88% lower than in Q4, 2018 but 17.5% higher than Q1-2018. (0) External Reserves and Capito! Flows Figure 25: External Reserves (June 2046 ~ Aug 2019) Accretion to foreign reserves has been seoreun sustained, rising from US$23.81 billion in — September 2018 to about US$43.7 billion $spcaos by August 2019, The increase is largely due od to favourable international oil price and nos minimal disruption of oil production given, Soh the stable security situation in the Niger * Detta region. Current reserves well exceed i six months import ver. PPSSSSER SSS S = FAAP EES I HEIL The total value of capital importation into Nigeria stood at $8,485.49 milion in the first quarter of 2019, This represents an increase of 216.03% compared to Q4 2018 and 34.61% increase compared to the first quarter of 2018. a The largest amount of capital importation by type was received through Portfollo Investment, which accounted for 84.21% (87,145.98 ) of total capital importation, followed by Other \avestment, which accounted for 12.91% ($1,098. 15m) of total capital, and then Foreign Direct 'nvestment FDI, which accounted for 2.88% ($243.36) of total capital imported in 2079. Sucget Office ofthe Faceration / MBNF 2020 ~ 2522 ME)3.0 _ REVIEW OF 2018 BUDGET PERFORMANCE. The 2018 Budget of Continuity was designed to further reposition the economy on the path of higher, inclusive, diversified and sustainable growth, and to continue fo lift significant numbers of our citizens out of poverty, Although it was based on the ERGP, some of the underlying assumptions and targets were updated to reflect current realities. Actual performance, however, for GDP growth and oll production were substantially below the revised targets, while infiation and oll price came in better than the revised targets, Table 3.1 Performance of Key Parameters, 2018 1_|s0> Growth Rate (24), 2h 1.93) 2 [Oil Production (mbpa) 23) 1.86 3_[OUl Price (US §} SLs 7.3 “4. [inflation Rate (94) i2a] anal [FS Texchange Rate (nS) 305[ 305.95] ‘iin Incramanie: eduction forrspayment of camsoal Team, Setucl Gl produeton wes 1.96 mbps Source: BOF, NBS, CEN, NPC ” Revenue Outiums Oil Revenue Gross off and gas revenues was N6,645.62 billion (N2,072.45 billion or 27.2% less than projected). After deductions for costs of production and derivation, net oil revenue was N4,017.38 billion. This represents N2,144.17 billion (or 34.8%) shortfall, mainly attributable to the lower oil production volume as well as higher deductions. Non-Oil Revenue Performance of non-oli revenues was N3,260.82 billion, representing 74% of the Budget, Corporate tax collection was N1,368.69 billion (79% of projection); VAT collection was N1,108.04 billion (72% of projection}; Tax Amnesty was N67.83 billion; while collections of import, excise and special fevies amounted to N716.26 billion (about. 84% of projection). Table 3.2 Oll and Non Oi Revenue Profle FY 2028 (N'Billion) oH In aggregate, actual gross non-oil revenues of N3,260.82 billion “represents about 3% of GDP! The fatiance between actual collections and projections may parly be attributed to continuing weaknesses in the revenue collection systems. This. reinforces the need to sustain government's efforts at plugging leakages and generally strengthening nor-oil__ revenue collections. "The GOP used here isthe actuat nominal non-cil GDP, Budget Oice ofthe Fedration / MEN? 2000 ~ 2022 MTEE/FSPFederation and VAT Paol Accounts Distributable Table 3.3 Federation Account Revenue ‘and VAT Distributable 2018 [N’BIlion) In FY2018, the amount available for distribution from the Federation Account was N8,053.29 billion (or 58% Of the Budget). OF this, the Federal | ‘loam "| #0] am) aan Government received N3,188,87 F {CONE Swe GEsIRS se rn billion while the States and Local [“jesesseaee tam — Sar sa Governments received N1,617.44 [gh bilfon and Ni.248.98 billion | ‘[Sumumusas 148223 ese respectively ser Sana erin Za fen Sa See oo aa fa From the Value Added Tax Pool Account, the distribution was N159.56 ar g z Bilion, N5B1.86 tition and N372.30 [Siete mel —1—aata Ts billion for the Federal, State and Local Pe governments respectively. As for the tax amnesty income, the Federal Government received only N8.99 billion while the Statés got N20.87 bilon FGN Revenue As at the end of the year, Fecieral Government's actual agaregate revenue was N3.96 tillion, which is §5 percent of the budget, although higher than 2017 revenue. This includes: Oil Revenue of N2.32 trilion (77% of budget and 64% higher than 2017); Company Income Tax (CIT) of N637.26 bition (80% of budget and 17% higher than 2017); Value-Added Tax (VAT) of N148.92 billion (72% of budget and 15% higher than 2017); and Customs Collections of 303.81 billion (94% of budget and 18% higher than 2017). Table 3.4 FGN Revenue Profile FY 2018 (N'Bilion) The. significant deviation of the overall revenue performance from the target was partly because some one-off items such as the N710 ie bilion from Oil Joint Venture Asset i+ Sate etimemaa fae restructuring and N320 billion from ee | ass | ey revision of the Oi! Production [of -se mgt] —taeae| ara Sharing Contract legistationterms [jee Segarra | rect — tas did not materialise, Sen aaa eee Fh aman aocaslonne | [Ba] ==) arm Teas Budgel Office of the Federation / MBE 2020 ~ 2022 WIE) ESP3.2__Exoenditure Outtums Table 3.5 FGN Expenditure Outturn FY 2028 (N'BIllion) Of the total appropriation of N9,120.33 bilfon, N7,455.78 billion was spent under the 2078 budget. This et represents 81.7% performance. Debt Rete tz/—ata{- 14 service and the implementation of ron- Age eat Ha —Siewl “ausel ism! debt recurrent expenditure, notably eerste Pay wnt aa an] payment of workers’ salaries and Se =| pensions were on track. Capital I Ete! —Reras releases only commenced after the a 2 signing of the 2018 Budget on 20th a June, 2018, and ran up to June 2019 a aa when the 2019 budget was signed into in law. As at 20th June, 2019, about oe ‘ag| rit —ea ae] N1.74 trilfon had been released for Set Eee asl ae) £28) capital projects. Spending on capital ‘was erioritsed in favour of critical ongoing infrastructural projects in the power, roads, ral and agriculture, as well as defence sectors. 3.3__ Fiscal Deficit The 2018 budget deficit was N3,492, billion (thatis, at about 2.73% of GDP), N1,537.83 biflion higher than the projected N1,954.46 billion. This was financed mainly by borrowing 4.0 REVIEW OF 2019 BUDGET IMPLEMENTATION ‘The 2019 Budget Proposal was intended to further place the economy on the path of higher, inclusive, diversified and sustainable growth, in order to continue to lift significant numbers of our citizens out of poverty. The performance of the key parameterseriving the 2019 budget Yyear-to-May shows that GDP growth, Oil production were below target, but oil price is running ahead of projection. ‘Table 4.4: Performance of key 2049 budget oarameters ‘S76. Description FY Bodget [Actual 2|SbeGrewen Rate (| Sa cx “Slinfiston Rete (2) Sse Thal El exchenge Rate (NZS 308/ os) Te feptezent growin ile lerhaiyear 2019. neal Gwin Teri ore GUzDI9 AGoa aA TR ond | 94% respective. ‘hth incremental procucton for repayment of eamno areers, echval ol produetion wan 125 mova Source: BOF, NBS, CBN, NNPC 4.4 Revenue Outtums 4.1.2 Of! Revenue Gross oil and gas budget revenue is projected at N9,326.95 billion for FY2019. Of this, N3,888.23 billion was expected as at end-May on prorata basis. However, only N2,182.30 Budget Offica of the Federation / MBNP 2020 ~ 2002 MTEE/FSPbillion was realized. This represents 81.5% performance. After deductions (Including 13% derivation), net cil and gas revenue inflows to the Federation Account amounted to N1,432.07 billion. This represents 2 shortfall of N1,736.55 billion (or 22.8% of the prorata amount). Lower than projected oil production, as well as front-loaded costs by NNPC for federalfy funcied projects, were largely responsibie for the shortfall, Table 4.2 Revenue Performance (Jan-June) 2049 4.1.2 Non-Oil Revenue 1,715.38 bition was generated as 2 non-oi! revenues 2s against ASL veins Fem) 2140.21. billion projected. This a fase implies a collection performance of oe =2) 80.1%, Of this, Corporate Tax and ent ns aa aT VAT collections were N636.74 bilfon a eta] taal gest! and N604.98 billion, representing [a ar saa] oa sam 76.7% and 70.9% collection ee ao jaei-am performance respectively. Customs stakes Sinn Take ai waa Ba collection was N408.17 bilion or ‘atianalawean | —Tiesalraal_tarse| rege! pee) 100.5% of the projection as at June a TTT a | feet teeters etwnpyosnr someon te — Sourea: OAGF 4.4.3 Federation and VAT Pool Accounts Distributable Table 4.3 Federation Account Revenue and VAT Distributable, 2019 (N’Bilion) The amount available for distribution from the Federation Account was N2,984.83 billion, representing 57.5% of N5,156.56 /PSRARSERESIRRSSS billion expected, Of this, the Federal | ‘inns Government received N1,562.37 billion Fasten ee] sua aiae a saat] eon Sir sie 728) —[ ayaa tara eer wihile the States and Local Governments “asus 9: San SHY i ETE ri received N791.92 billion and N610.54 billion respectively. Federal, State and | ‘[MivAT foo seme sgantd vo] va Local governments received N87.17 [iam shee = al billion, N280.56 billion and N203.39 billion | eee Si GORD a Tespectivaly from the VAT Pool Account. = 4.1.4 FGN Revenue FGN's actual revenues totaled N2,043.32 billon out of N3,499.24 bilion projected as at June 2018, Cut of this, oil revenue was N800.42 billion {49% of prorata budget) while non-oil taxes and indesendent revenues were N614.57 billion (87% of the prorata budget) and N217.84 billion (69% of the prorata budget) respectively Company Income Tax (CiT} and Value Added Tax (VAT) collections were N349.11 billion and N61.36 billion respectively, representing 86% and 71% of targets. Customs collections wes N184.10 bition, of which N173,28 billion wes from import duties, excise and fees, while N10.83 billion was from Special Levies. Budge! Office ofthe Federation / MBNP 2020 ~ 2022 MTES/FSPTable 4.4 FGN Revenue Profile (an - June} 2049 (N'silion) The shortfall in CIT collections is partly due to seasonal factors as most companies remit their income taxes during the second half of the a = e ia year, The slow recovery in Sears us|—ein{—meal—-w economic activities that drive z i} peer} pest fa consumption and the lingering ae eC “ne}—gat— te] mae et Security issues contributed to the (Ghemeas uae} Seats] underperformance of other non-oil eases eet aa #88! revenue sources Ike Value Added i a Seah mets Tax (VAT). Nomoll revenue 3 Setter oes) aoa ‘aim] eo] collections, especially income and ESSE rem] ao Gua] —iex] Consumption taxes, are expected to ee ee Sumas improve as the fiscal year progresses and economic activities increase, with improvements in tax collection efforts, and continuing implementation of policies to improve the environment for doing business in Nigeria : 42 Expenciture Outtums Table 45 FEN Exoenciture Performance (Jan ~ June) 2019 Of the N4,458.48 bilion budgeted spending by half-year 2019, 3,300.13 billion has been spent, thet is, 78%. The spending was largely on SEH recurrent expenditure, including [Casa N1,109.10 billion for debt service. ae Personne! cost was also closely on | "| triumsunan track, As at end of June 2019, no (2am release has been made for capital = ne a expenditure as the Budget was only |“ swim temteem Ti, signed info law in June 2048. ferrfem an tw S| ae Impiementation of the capital budget ams will be expedited to ensure that critical — priority projects are completed or ier substantially progresses, - (Ciisoteeseunas 5.0 ASSUMPTIONS UNDERLYING OIL AND NON-OIL REVENUE PROJECTIONS IN 2020 - 2022 3.1_ Assumptions Underlying Oil Revenues 5.1.1 Crude Oil Production and Export The oil sector contributes less than 10% of Nigeria's real GDP. Nonetheless, crude oll receipts 10 Buciget Office of tne Fecierotion / MBNP ‘2020 ~ 2622 MIE5/FSPstill account for over 60% of federal government's revenues and about 90% of Nigeria's foreign exchange earnings. Thus, crude oll production and export continue to have important implications for federal fiscal operations. As Figure 5.1 shows, actual daly crude off production and exports have been well below budget projections since 2013. Average daily proctucton declined from 2.47mbpd in 2010 to 1.8imtpd in 2018. The lower than budgeted output wes largely due fo declining producibilty of the countrys oll wels arising = from inadequate investment over several 2 years. Security challenges resuiting in Ce ete production shut-ns and pipeline SESS eee eee leakages attributed to activities of vandals as well 2s ageing pipelines also contributed significantiy to this situation. As reported by Figure 5.1: ude or Preducion and xportin thesia os NNPC, a total of2,278 vandalized points was eese)etstomeminemniiasbita"84 recorded between January 2018 and cween TT January 2019, This has continued to save undermine the revenues expecied from crude oll production and export. Onshore and shallow water assets, where govemment revenue teke is higher, have been more prone to these factors, However, reflecting the increased engagement with stakeholders in oll producing communities, success of the amnesty programme end new NNPC business model, daily crude cil production, inclusive of incremental production for repayment of cashoall arrears, averaged 1.6mbpd in 2018. The National Bureau of Statistics (NBS) ragorts that average dally olf Production stood at 1.98mbpd in the first quarter of 2019, The NNPC expects crude oil production to improve in the medium term, in view of concerted efforts by the Corporation and security agencies to combat the menace of oll theft and pipeline vandalism. Furthermore, efforts to enhance security in onshore and shallow water locations are expected to reduce uncertainties and engender new private sector investments in the ofl sector. However, a sustainable improvement in Nigeria's oll production capacity will not be feasible without significent new investments in exploration and production, which is unlikely to happen without resolving the legislative / regulatory uncertaintieg-Surrounding applicable governance and fiscal terms. ee Nevertheless, considering the fact that crude oil production has averaged 1.92mbpd over the last 3 years, a more conservative oil output benchmarte-will be adopted in the medium term in an effort to ensure greater budget realism. Therefore, following consultations wit stakeholders, crude oil production is estimated at 2.18mbpd, 2. 22mbpd, 2.36mbpd in 2020, 2021 and 2022 respectively, OPEC's withdrawal of Nigeria's exemption from production cuts, with the country’s quota now 1.8 mbpd, excluding condensates, has also been taken into account. The projection for 2020 Is significantly. lower than the estimate for the 2019 budget, and the 2.4 mbpd forecast in the ERGP. It is noteworthy tiat the NNPC claims it has a maximum crude oil production capacity of 2.5 million barrels per day. 5.1.2 Global Crude Oil Supply and Demand Global crude oil demand is expected to continue to grow over the medium-term. The Organization of Petroteum Exporting Countries (OPEC) forecasts an annual average demand Growth of 1.2 mbpd, reaching @ height of 104.5 mb/d by 2023. By 2020, faster worid all demand : i Budget Otics of he Fadrafon / MENP ‘and = 2022 TS /F58growth of 1.6 mbpd is projected. This is based on expected regional economic changes, policy measures and price levels, as well as the structural changes taking place in oil markets. In terms of incremental demand over the medium term, India, Nigeria's key export destination, is projected to record the fastest average demand growth of 3.7% per annum. India's demand is Projected to rise from 4.7 mbpd in 2018, 5.2 mbpd in 2020 and 5.8 mbpd in 2022 (Figure 5.2) Nevertheless, China's total crude oi demand, at 41.1mbpd, is estimated to still be far higher than India’s 48.2mbpd. Fig. 5.2: Medium Term Oil demand outlook naaPo inca # Chine OECD # Euros Other Developing Counties Demand for oil in OECD countries is, expected to rise slightly by 0.3mbpd largely in OECD America, However, the non-OECD region is anticipated to lead oil demand growth in 2020 with an increase of around 1.3 mbpd, most of which is attributed to China and India. Growth in crude oil demand may nonetheless be constrained by higher oi! prices, efficiency improvements, lower population growth rates in the OECD and China, and the ‘urther penetration of alternative fuel vehicles. OPEC estimates a steady rise’ in global cll supply from an average of Fig. 5.3: Medium Term Oil Supply Outlook 98.4mbpd in 2018 to 100.8mbad in ie 2019, 1024mbpd in 2020 and 104.7mbpd in 2023. Total non- 100 OPEC oil supply is expected to ‘grow from about 81.8 mbpd in 2019 to 64.3 mbod in 2021 (Fig. 5.3) According to OPEC, the US remains by far the. most important source .of medium-term supply growth, contributing §.6 mbpd, or ‘two-thirds of new supply, driven by surging shale oll output, Other o major sources of medium-term non-OPEC supply are Brazil, Non grec OPEC Canada, and Kazakhstan. They are expected to collectively add another 2.6 mbpd by 2023. Oil supply from OPEC-members 's expected to Increase slightly by 0.3mbpd to 39.3mbpd between 2019 and 2020, OPEC supply is expected to decline afterwards to 38.9mbpd in 2021 and 38.6mbpd in 2023. (Miion Bartels Per Day 8 2017 oi mois 2020 2021022 2B 2 Buciget Offic ot ine Fecieration / MBMP 2020-=2022 MTEE/FSEFig. 5.4; Unplanned Crude O8 Supply Energy Information Administration reported Distruptions significant decline in unplanned crude oil era eere et supply disruptions from 38.5mbpd in 208 to 22.Ambpd in 2018. Between January and e July 2019, unplanned supply disruptions a amount to 20.3mbpd. As Figure 5.4 shows ri over 80% of unplanned crude oll supply a disruptions occur in OPEC member Z : countries, However, unplanned OPEC oil 701 72018 ams me Tete guppy dlaruptons decined trom 32, Ambpd in 2015 to 18.7mbpd in 2018. Non-OPEC wOPEC Non-OPEC production outages decreased from 4.4mbpd in 2015 to 3.4mbpd in 2018. By July 2019, a total of 2.8mbpd non-OPEC oil output ware lost 5.13 Oil Price Benchmark Oil prices have generally been fising since April 2016, As Figure 5.5 shows, Bonny Light crude oll price rose from an average of $43 per barrel in 2016 to $56.2 in 2017 and $72.1 in 2018 Partly due to geopolitical tensions. In 209, Bonny Light crude oil prio Increased steadily from January average of $60 per barre! to a six-month high well above $70 per barre! between April and May. Fighre 5.5: Bonny Light Crude Oil Price (US$/Barrel) OPEC reports that crude oi! ao, prices rose over the first half of 208 April 2019, due to supportive oil = market fundamentals, The a Declaration of Cooperation continued to show high H2RZEe ogg ssusesernesa A ZSSSEESEZREERSERSZRRSE conformity levels with voluntary SORSSRRSEREESER TEESE SS production adjustments in order BSST SESE Tee ee TETE = to bring more balance to the Sourea Cento! dank of igeria market.“Fighter global oil supply, robust Bhysical crude demand and concerns related to renewed unrest in North Aftica were observed to offset worries over global economic growth and downward révisions of global GDP growth. The recent strong ‘market sentiment was fueled by concerns about additional oil supply disruptions in view of ‘new geopolitical risks in the Middle East, On averagetrude oil price was $67.2 per barrel by July 2018. This is 8.3% higher than the benchmark price of $30 per barrel used in the 2019 budget. Considering the difficulty of predicting cil prices in a globally integrated market, the outlook for world oll price remains highly uncertain. OPEC forecasts an average of $35.5 per barrel for Bonny Light crude oil in 2048. In the medium term, the World Bank expects crude oil price to fall slightly trom an average of $66 per barrel in 2019 to $65 per barrel in 2020, rising afterwards to 65.5 per barrel in 2021 and $86 per barrel in 2022. Noteworthy is the fact that the rapid increase in shale oil supply by the United States will Continue to exert downward pressure on crude oil prices, in spite of the OPEC restrictions on rude oil output and US sanctions on the purchase of crude oll from fran and Venezuela, 3 Budgat Office ofthe Federation / MNP 2020-2022OPEC expects US shele oil production to increase sharply from 4.7mbpd in 2017 to 7.7mbpd in 2029 and 9.0mbpd in 2028. In consultation with the Nigerian National Petroleum Corporation (NNPC), a benchmark oil price of $55 per barrel has been proposed for 2020, 2021 and 2022. Its very important to set the oil price benchmark below the forecasts in order to insulate the budgat rom the usual significant adverse effects of the price falling below the budget benchmark. More importantly, the approach would enable us to build “iscal buffers which can be used to respond effectively to negative oll price shocks in the.medium term. Adequate buffers are useful in preventing pro-cyclical policies which would require significant expenditure reduction when oil prices are down, thereby impeding economic growth and development. 5.2__Non-Oil Revenue Baseline Assumptions The assumptions underlying the non-cil revenue forecasts for the period 2020-2022 are outlined below. The estimates are mainly determined using anticipated grow in the relevant bases for different taxes, the effective tax ratio of collections, and the projected efficiency factor taking account: of operational improvements in the operations of the various tax administrators. The various measures to Improve non-oil tax revenue in the medium term as articulated in the Strategic Revenue Growth Initiative (SRG!) were considered. This include stronger enforcement efforts against tax defaulters; implementation of the Integreted Tax Administration System project; full self-assessment regime for all taxpayers; increased deployment of new technology to improve revenue collection; and stepping up of anti smuggling activites by the Customs Service. Government intends to sustain the Incvease in contribution of tax revenue io the budget through continuous reforms to modernise and further improve tax administration. The underlying bases for estimating non-oll taxes are as follows: Import Duties, Excise, Fees and Special Levies The projections of import duties are based on'the cost, insurance and freight (CIF) value of imports, applicable tariffs, and an efficiency factor, The nominal growth of the tax base was assumed to be criven by a tex elasticity in the medium term. The Nigeria Customs Service (NCS) is employing the use of technology to enhance efficiency in customs revenue collection. ‘The Service will continue the roll-out of the Nigeria Integrated Customs Information System I| (NCIS Il) trade portal across the country for declaration, processing, icences and exemptions and manifest submission. This solution wil merge the different standalone systems and block all joopholes identified in the current system, To further eliminate revenue leakages in the calculation of customs duty, insurance will be automated to complement the automation of Form M (Cost) and Manifest (Freight). In addition, excise trade will be automated using blockchain technology. This will bring greater transparency and accountabilty across complex business networks, enabling real time tracking of assets. In the medium term, the NCS will introduce frameworks for effectively recovering duties, taxes and appropriate fees from transactions conducted over electronic networks such as the intemet, Also, non-intrusive inspection technology equipment (scanners) will be procured and deployed to critical ports to ensure nationat security and trade facilitation. To further increase port efficiency, tighten border controls to check smuggling and reduce revenue leakages, the Single Window Project will be implemented. Companies income Tox Companies Income Tax (CIT) projection in the medium term is based on the estimated “4 Budget Office ef the Federation / MANP 2020 = 2022 MTEH/FSPnominal GOP, Companies’ Profitability Ratio, and an efficiency factor. In adaition, improved collection efficiency arising from increased efforts at broadening and strengthening the tax net, taxpayer engagement/enlightenment and enhanced use of technology, are expected to enhance CIT eollsction performance. The Federal inland Revenue Service (FIRS) is placing {fen on about 3,000 non-compliant tex payers’ bank accounts with turnover of N1 billion and above. This is to be drilled down to companies below the N1 billion turnover threshold. FIRS will also leverage on e-solutions such as e-Registration, e-fling, e-Tax payment, &-TCC, e-Receint, e-Stamp duty and FIRS-GIFMIS integration. These initiatives are expected to significantly reduce the incidence of tax evasion thereby increasing the tax collectible. Overall, this is expected to result in a reduction in the adjustment factor for the CIT base and improvement in collection performance in the medium term. Value Added Tax (VAT) Value Added Tax (VAT) collection projection is based on estimated total nominal consumption of vatable items and collection efficiency. Nominal consumption is projected at N122.75 trillon in 2020 from estimated N119.28 trilfon in 2018, The VAT projections over the medium-term are based on a rate of 7.5%. This will be effected through the Finance Bill which will accompany the 2020 Budget Proposal. However, it is Important to note thet the proposed increase in VAT rate will not adversely affect the poor as the VAT Act already exempis goods that are consumed by the poor. The list can be expanded if there is need to do so. Efforis will be geared towards enhancing VAT-collections by broadening VAT coverage and improving collection efficiency, This willbe achieved through continuous nationwide VAT registration and monitoring, as well as the use of technology for auto-collact platforms in more sectérs of the economy. In addition, the solution to deduct and refit VAT and WHT from State government Contract payments is to be deployed to al! the 36 states. VAT collection efficiency is expected {0 increase from the present average of 21% of the projected nominal consumption to at least 25% in 2020, 30% in 2021 and 35% in 2022. The FIRS will elso tap into the Central Bank's financial inclusion initiative for the informal sector by investing in infrastructure to bring them Into the tax net. FGN independent Revenue Government-Owned Enterprises (GOES) are stil characterized by.tevenue leakages’ and weak accountability. Hence, additional measures will be introduced to ensure that they operate in a more fiscally responsible manner. GOEs will be required to observe maximum cost-o-income ratios and substantially improve remittances in the medium term, under anew performance management framework 5.0 MEDIUM TERM MACROECONOMIC FRAMEWORK: PARAMETERS AND TARGETS FOR 2020-2022 - 6.1__ Macroeconomic Projections ‘The medium-term revenue and expenditure framework is criven by key parameters as well as other macroeconomic projections presented in the table below. Budge! Otfce of me Faderation / MANP 12020 ~ 2022 MTE#/ESPTable 6.1: Key Parameters and othar Macroeconomic Projections 2018 2019 2020 2021 2022 Oil Price Senchmark (USS/] 51.0 60.0 55.0 3 35.0 Oi! Production (mpd) 2.30 230 2.18 2.22 236 Exchange Rate (N/$) 305.0, 305.0 305.0 305.0 305.0 Inflation (%) 1.78 9.98 10.81 10.52 10.79 Non-Ol GDP (Non) 114,72.8 128,489.39 129,692.6 145,616.6 163,438.8 il GDP {Nan} 11,3960 | 11,1635 13,2679 13,873.9 16,146. Nominal GDP (N'bn) " 126,168.8 139,652.7 142,9605 159.4905 179,584.9 GDP Growth Rate(%) 2.20 3.01 93 3.35 3.85 Consumption {N'bn} 107,764.5 119,282. 122,752.4 _136,214.7 __151,079.7 ‘Source: Ministry of Finance, Budget & National Pianing; NPC; BOF; BS The GDP is projected to grow at 2.93% in 2020. In the medium term, itis expected that real ‘GDP will grow stronger and stabilise over time. The share of ol in real GOP is projected to slow down slightly due to expacted softening of global demand and stable oil prices at lower levels, while non-oll real GDP is expecied to grow as government policies geared at diversification and enhanced business environment continues to yield results. The nominal GDP is expected to increase from N122,752.4 billion in 2020 to N138,214,7 billion in 2024 and then N151,078.7 billion in 2022. Similarly, constimption expenditure is projected to grow from,N122,752.4 billion in 2020 to N136,214,7 billion and 151,079.7 billion in 2021 and 2022 espectively, reflecting a gradual steadiness in the growth recovery. Inflation, However, is expected to remain slightly above single digit in the medium term, 6.2 2020-2022 Medium Term Fiscal Frarnework (MTFF) 6.2.1 Federation Account Revenues The amount accruable to the Federation Account and VAT Pool Acggunt projected at N7.63, trilion and N2.09 trillion, respectively in 2020. Of this, oil revenue cgntributes up to 66% of Federation Account receipts. Other Components of the Federation Account revenues include revenues from Corporate Tax N1.73 trilion, Customs Revenue N759.77 billion, Special Levies 112.85 billion, Solid Minerals N3.91 billion, anc Actual.Balances in Special Accounts N10.73, bition FGN's share from the Federation Account is N4.05 trillion while the States and Local governments are projected to get N2.05 trilion and N1.58 trilion, respectively. For VAT, the Federal Government is projected to receive N313.47 billion, the States N1.04 trillion, and the Local governments N731.43 billion, 6 Budge! Office ot he Feceration / MNP 2020 = 2022 MTEF/ESPTable 6.2: Federation Int and VAT Revenues (2020 - 2022} Pl bps Dae FTES fs Ol este Crs Datos Poets Tita Foren (ews spas i Ema sao a aa eine ~a | aaa 6.2.1 Revenue Framework From the share of the Federation Account and VAT as well as other revenues, the aggregate revenue available fo fund the 2020 budget is projected at N7.17 trillion (2.4% or N170.41 billion More than the 2019 Budget of N6.99 trilion}, 34.23% of this is: projected to come from oil Sources while the belance js to be earned from non-oll sources, When the retained revenues of the ten major Government-Owned Enterprises (GOES) are considered the aggregate FGN revenue is projected at N7.72 tillion ‘Table 6.3: Overviaw of the Revenue Framework Frcs aco ten 5 | Tia a war a9 Sirona as ——— sia sem — eer] — Theres 6 i teem SE] tr] on ree oe © [LSC Opt ee i sheep aseaac ei iroe) f-toisiatau aes Se ainoste) — goaonsuss] esata) i ATEN Serer cine ao ‘anata or ensue or| aca Sassen tesa nse" Bunsen | pentane] —aoeneas| nena! -2 [Sethe tae EiFocmm ee EARS) isamonon |__ 1a aleaae cs Budget Office of the Federation / MENP 2030 ~ 2022 Tes6.2.2 FGN Expenditure Framework ‘The FGN's expenditure budget is estimated at N9.12 trilion (this includes grants and donor funding of N38.39 billion), This is slightly higher than the 2019 of N8.92 trilion. interest Payments on debt is estimated at N2.45 trilion and while provision for Sinking Fund to retire maturing bonds to local contractors is N298 billion. The provisions for personnel cost and Pension costs are estimated at N2.67 trilion and NB36.72 billion respectively. in addition, N40.17 billion (representing 1% of the consolidated revenue fund) has been earmarked for the Basic Health Care Provision Fund (BHCPF)2, N22.73 billion for GAVI/Routine Immunization in the service-wide votes (SWWV), and N89.44 billion for the power sector reform programrne With these provisions, only the sum of N7.01 trillon (exclusive of capital in statutory transfers) is available as amount for Ministries, Department and Agencies (MDAs} capital expenditure, With the inclusion of capital in statutory transfers, capital supplementation, and. grant end donor funded projects, as well as Mull-lateral / Bi-lateral project-tied loans of N328.13 bilion, the capital expenditure amounts to N2.17 trillion, 6.2.3. Aggregate Expenditure With the inclusion of the planned expenditure of the top 10 GOEs of N553.14 billion, the Proposed aggregate expenditure rises to an estimate of N10.00 trilion. With the inclusion of the GOEs capital estimated at N188.23 billion, aggregate capital expenditure (inclusive of capital in statutory transfers) is estimated at N2.17 tillon. This represents 22% of the aggregate projected Federal Government expenditure in 2020, which falls short of the 30% target in the ERGP, This is the consequence of the slower growth in revenues than the rate of growth in non-discretionary recurrent expenditures, specifically debt service and personnel costs. Table 6.4: Overview of the Expenditure Framework Vy 2 The Basic Heelthaare Provision Fund hae been grovided for in Szxtutory Transfers notin Service-Wide Votes as was the case in 2029. Budget Office of ine Federation / MEN? 220 ~ 2022 MIEE/FSPPols Orne Venn Nt fern OP errr [raj oly Ra Wie t = =a am ‘Sten jase} aru] — graeme — aoa (eosin | 6.2.4 Fiscal Deficit and Deficit Financing Given the projected revenue and planned expenditure, the fiscal deficit is estimated at N1.95 trilion, about N33.61 billion (or 1.8%) more than the estimate of N1.82 trillion in 2019. This evel of deficit is 1.3796 of GOP - well below the threshold (3% of GDP) stipulated in the Fiscal Responsibility Act (FRA), 2007. In order to present a more comprehensive picture of the FCN's fiscal operations, the revenues and expenditures of the top 10 GOEs as well as expenditures financed from project-tied loans, will be captured in the FGN's budget. Accordingly, the aggregate fiscal deficit for 2020 will be N2.28 trilion, which Is 1.59% of GDP, still within the 3% threshold, Table 6.6: Defior, Financing and Critical Ratios tt ” Bucigst Office of the Federation / MBNP 2020 = 2022 NTEF/?SP|eetor On reanne Yatenateownl Pte Rerme (aria a eS aoa a 7 Fes te lana | — aneurin] acon The deficit will largely be financed by new borrowings estimated at N1.70 trillion, while about N262.08 billion will be derived from Privatization Proceeds, and N328.13 billion are loans secured for specific development projects. 7.0 _MEDIUM TERM OBJECTIVES, POLICIES AND STRATEGIES This Fiscal Strategy Paper highlights the fiscal and economic objectives of the government over the period 2020-2022 and the policies to achieve them. Ovér the next three years, government aims at accelerating economic growth, creating jobs and promoting structural transformation to reduce poverty and income inequality. _ 7.1__ Economic Policy Objectives _ In line with the goals of the ERGP 2017-2020, the medium-term economic objectives of Government continue to be predicated on three main pillars: restoring and sustaining economic growth, building a globally competitive economy, and increasing social inclusion by Investing in our people. Improving human capital indices will however be expressly reflected as an execution priority going forward. in 2020-2022, Gavemment will continue its fiscal Strategy of directing resources to most productive and growth-enhancing sectors including Security, Infrastructure (including Power and Transportation), Agriculture, Manufacturing, Housing and Construction, Education, Health and Water Resources. This is with the aim of reducing the current infrastructure gap, creating employment opportunities and enhancing growth performance. Government will also leverage private capital to supplement capital allocations from the Budget. Government's economic objectives include: i. enhancing economic growth and ensuring inclusiveness; Budge! Office of he Federation / MAN? 2020 ~ 2029 MTEE/ESPji, promoting economic diversification; fi, maintaining macroeconomic stability; To achieve these objectives, fiscal, monetary and trade policies will be aligned and implemented in a very coordinated manner, 7.14 Enhancing inclusive economic growth The economy is expected grow faster in the medium term, rising from 2.93% in 2020 to 3.38% jn 2021 and 3.85% in 2022. In orderto achieve this objactive, Government will pursue targeted Public sector infrastructure spending while harnessing new private investment, In addition, government support will be geared towards further stimulating activities of Mioro, Small and Medium-Scale Enterprises (MSMEs) Government will continue to strengthen the frameworks for concessions and public private Partnerships, including working with the legislature to address legislative and reguiatory bottlenecks undermining private investments in key sectors. It is expected that growth, in the medium term, will generate the revenue necessary for future expansion of public service delivery, rebuild fiscal space, and narrow new borrowing requirement 7.1.2 Promoting Economic Diversification {n the medium term, efforts will be made to ensure stable macroeconomic environment, Government has made significant progress in ensuring macroeconomic stabilily, thus laying the foundation for rapid and sustainable growth. Inflation rate reduced from 18.7 percent in January 2017 to 11.08 percent in July 2019, In addition, exchange rate is markat reflective and stable, and external balance is positive. The trend reflects the improved coordination of fiscal and monetary policias, as well as pragmatic management of foreign exchange supply to the market, 7.1.3 Maintaining Macroeconomic Stability in the medium term, efforts will be made to ensure stable macroeconomic environment. Government has made significant progress in ensuring macroeconomic stability, thus laying the foundation for rapid and sustainable growth. Inflation rate reduced from 18,7 percent in January 2017 to 11.4 percent in May 2018. In addition, exchange rate is market reflective and Stable, and extemal balance is positive. The trend reflects the improved! coordination of fiscal and monetary policies, as well as pragmatic management of foreign*exchange supply to the market. itis also projected that the exchange rate wil generally.cemain stable as the monetary, fiscal and trade become policies are fully aligned. This outcome will be achieved through policies that seek to remove uncertainty in the exchange rate and restore investors’ confidence in the market. This includes strategies to reduae market interest rates; moderate inflationary Pressures; provide critical infrastructure to lower the cost of doing business; and ‘stabilize ‘exchange rate, in addition, government is redoubling its revenue generation efforts to Moderate fiscal deficits. These, in addition to a healthy debt sustainability framework, will Support stability in the macroeconomic environment. In the medium-term, the broad objective of fiscal policy is to ensure fiscal and debt Sustainability through enhanced domestic revenue mobilisation and improved expenditure a Budget Offize of he Fedaraton / MBNP 2020-~ 2022 BATEF/ESPmanagement measures. Hence, Government will pursue the following fiscal objectives: L.__ improving revenue generation fi, ensuring adequate fiscal space for infrastructural development li, enhancing quality of spending; and, iv, ensuring sustainable deficit and debt levels. 7.2.4 Improving Revenue Generation |tis imperative to significantly improve the nation's public revenue profile in the medium term, indeed even in the short term. Higher revenus collections wil enable Government to continue to deliver public services, scale up infrastructure investment, and support mitigating measures to ameliorate the impact of policy reforms on the poor and vulnerable. In the medium term, Government will continue to engage with stakeholders in the Niger Delta to ensure conducive environment for of production, distribution and export. In addition, pipeline security will be furlher enhanced to attract new investments. Oil revenues wil be used to further diversify the production and revenue base of the economy. Non-oil revenues are relatively more stable than oll revenue, Hence, efforts will be geared towerds increasing the ratio of revenué to GDP from the current rate of 8% to 15%. To this end, Government will: accelerate the Implementation of its revenue growth initiatives. Improvements in non-oit collections will be attained through improved tax and Customs administration and expanded non-oil revenue base. The FIRS has implemented new initiatives like enhanced tax audits, ens on bank accounts of non-compliant tax payers, The Tax Appeal Tribunal nas been reconstituted fo resolve disputed tax assessments and unlock outstanding collections. The tax system will be further strengthened by improving collection efficiency, enhancing compliance, and reorganizing the business practices of revenue agencies and employing appropriate technology. In addition, government will ensure that more businesses in the informal sector are brought into the tax net. The FIRS will continue to collaborate with other Agencies of govemment such as Corporate Affairs Commission, Nigeria Customs Service, Central Bank of Nigeria, Office of the Accountant General of the Federation and security agencies for improved tax-compliance. In particular, the fight against tax related ‘raud will be enhanced with the establishment of the FIRS/EFCC Joint Tax Force, econom To further improve Customs collections, government will contitte to deploy relevant technology, strengthen ant-smuggling measures and review tariffs and waivers. The efficiency of port operations will be enhanoad by implementing a single customs window, speeding up vessel and cargo handling and issuing mafe licenses to buiid modern terminals in existing ports, especially outside Lagos. a To Improve the generation and collection of independent revenues, we will work with the Legislature to amend the laws establishing some of the GOEs. In addition, their revenues and expenditures will be monitored more closely through the new Performance Management Framework. 7.2.2 Ensuring Adequate Fiscal Space for Infrastructural Development During 2020-2022, we will strive to retain the policy of allocating a minimum of 30% of budgeted expenditure to capital projects in line with the ERGP. Capital budeet allocation will reflect Government priorities in key sectors of the economy. An important strategy to keep public expenditures at sustainable levéls is to rationalize the Government wage bill. The aim 's to gradually clean the Government payroll. Towards this end, efforts will be intensified to 2 Budget Ofice of he Federation / MANE 2020-2022 NTEF/FSPextend the Integrated Payroll and Personnel Information System to all MDAs to improve the effectiveness and efficiency of payroll administration, 7.23. Enhancing the Quality of Spending Government remains committed to improving the efficiency and quality of its spending. Thus, Public expenditure will be property scrutinized to ensure value for money. We will continue to strengthen the budget formulation and implementation process; expenditure provisions for overhead will be guided by recommendations of the Efficiency Unit, and only capital projects that are well aligned with ERGP objectives will be accommodated. As part of the cost control measures, attention will continue to be paid to the costing of activities/projects, competitive bidding in public procurement, enhanced monitoring & evaluation of programmes/projects and continuous audit of MDAs' operations. Other key measures include mobilizing private capital through altemative delivery mechanisms for capital expenditure in roads, transportation, housing, and agricuiture, e.g., the Road Trust Fund, Family Home Fund, etc. The National Savereign Investment Agency is also expected to play an increasing role in this respect 7.2.4 Ensuring Sustainable Deitcit and Debt Levels Fiscal deficits have been rising over the past three years as govemment adopted an expansionary fiscal stance to get the economy out of recession and back on the path of sustalnable growth. Its instructive to note that section 12 subsection 1 of the FRA 2007 allows government to exceed the 3% celing on deficit curing threat to national security or Sovereignty. As efforts to enhance olf and non-oil revenues begin to yield results, government will ease off deficit budgeting, and endeavour to maintain the deficit within the 3% level threshold stipulated in the Fiscal Responsibility Act 2007 over the medium term. Tha lower budget deficit will help fo reduce the rate of domestic debt accumulation and the resulting debt Service payments, contain deficit monetization and the attendant macroeconomic dislocations. To ensure debt sustainabilty, total public debt wil be kept at our self-imposed debt sustainability threshoid of 25% of GDP. It has however become necessary to consider setting other prudential limits like Debt Service/Revenue Ratio to ensure continuing sustainabilty of FGN’s debts. 7.3 Monetary Policy Objectives and Strategy ‘The medium-term monetary policy objectives as well as-the policies to achieve the objectives are outlined below: 7 7.3.1 Monetary Policy Objectives In the medium term, the CBN will support efforts towards continued growth of the economy, economic diversification and job creation, In addition, the CBN will continue to take steps to ‘maintain price stability, exchange rate stability, financial system stability and strong extemal reserve position, Thus, the priorities of the CBN in the medium term are: * Preserving domestic macroeconomic and financial stability; * Fostering the development of a robust payments system infrastructure Sudge! offce ofthe Federation / MBNP 2020 ~ 2022 MIEF/#SP‘+ Improving access to mortgage facilities and credit for smal holder farmers, MSMEs, and consumers; + Supporting the education sector and youth with entrepreneurship skills in the creative industry; + Boosting extemal reserves; * Acosierating economic growth and job creation; * Supporting economic diversification efforts through intervention programs in the agriculture and manufacturing sectors. ‘+ Promoting price and monetary stability, reducing inflation to singie digit; + Maintaining exchange rate stability; 7.3.2 Monetary Policy Strategies and Outlook 7.3.2.1 Facilitating Economic Growth, Diversification and Job'Creation GOP growth has been positive for eight consecutive quarters following the emergence of the economy from recession in the second quarter of 2017. In 2020-2022, monetary policy will also be geared towards supporting thé continued growth of the economy, economic iversification and job creation. This will be done by reducing current high level of Treasury- Bill rates, improving access to credit for MSMEs, deepening intervention program in the Agricultural Secto: c 7.3.2.2 Macroeconomic stability The CBN will leverage monetary policy tools to support improved GDP growth, greater private sector investment and low inflation, while seeking to maintain exchange rate stability. Monetary policy will continue to provide an anchor for inflation expectations and steer inflation towards the medium-term target of 6-9%. 7.3.2.3 Exchange Rate Stability The exchange rate appreciated from over N525/USS1 in February 2017 at the BDC window to N3SQ/US$1. With improved inffow of foreign exchange, the exchange rate has remained stable around N380/USS1 for the past 27 months. The official exchange rate has also been maintained at about N30S/USSt over the same period. The CBN will continue to operate a managed flost exchange rate regime in order to reduce the impact which continuous volatility in the exchange rate could have on our economy. In addition, invastors and exporters will continue to have opportunity to sell their foreign exchange at the prevailing market rate at the Investors’ and Exporters! (I8E) window of the foreign exchange market 7.3.2.4 External Reserves aft External reserves increased remarkably from US$23.81 billion in September 2016 to over USS45 billion by July 2019. Current reserves well exceed six months import cover. Further increases are expected in the near term in view of favourable crude oll prices. The CEN will support measures aimed at increasing and diversifying Nigeria's exports base and ultimately help in shoring up external reserves. The CBN’s N500 billion support facility for the growth of non-oil exports will be aggressively implemented. This is expected to significantly contribute towards improving non-oll export earnings. 'n this regard, the CBN will launch a Trade Monitoring System (TRMS) in October 2019. Itis an automated system that will reduce the length of time required fo process export documents from 1 week to 1 day. ” Buciget Olfice ofthe Federation / MBN? 2020 ~ 2022 MTEF/FSP7.3.2.5 Financial System Stability Capital Adequacy Ratio for the banking industry improved from 11% in June 2017 to over 16% in May 2018 and liquidity levels have also increased by over 20% within the same period, In adsition, the ratio of non-performing loans in the banking system has reduced from 15% in June 2017 to 9% in May 2019. The CBN intends to further strengthen the banking sector and increase its resilience through the following measures: * Require banks to maintain higher level capital, as well as liquid assets in order to reduce the impact of an economic erisis on the financial systern; + leverage on data analytics to improve identi and the financial system; ication of potential risks to individual banks * improve our onsite and off-site supervision of al nancial institutions; and * Pursue @ program of Banking. Industry recapitalization to position Nigerian banks ‘among the top 500 in the world; develop a robust mechanism that will helo ensure that the necessary safeguards are put in Place by banks and financial Institutions to protect against loss of data, fraud and cyber incursions in their respective systems. 74 Key Sectoral Policy Initiatives 744° Accelerating Economie Growth and Job Creation The Economic Recovery and Growth Plan (ERGP) envisages an economy where GDP growth 's accompanied by economic civersification and decent job creation. Accordingly, the plan focused on supporting key sectors driving and enabling economic growth especialy agriculture, energy and MSME, manufacturing and key modem services by leveraging sciance and technology. It is anticipated that revival of these sectors, will restore growth, help create Jobe and bring about the much-desired structural change To accelerate the mobilization of private capital towards, the achievement of the ERGP, government conducted special intervention programmes ~ Focus Labs" targeted at reso'ving Specific bureaucratic bottlenecks facing large-scale investments in Nigeria. The Focus Labs identified $22. billion worth of private investments in six priority sectors, with the potential to create half a million jobs by 2020, ‘The Federal Government has in the past four years sought to prioritize initiatives designed to improve the capacity of entrepreneurs and small businesses. These include: * Government Enterprise and Empowerment Programme; * A more active look at how to scale up the interventions of the Federal Govemment, ®.g. the Growth and Employment Project, Youth Entrepreneurship Development; * Accelerating the implementation of the Nigeria Industria Revolution Plan (NIRP) using ‘Special Economic Zones (SEZs) to generate jobs; * Enforcing the local content policy to promote job creation through procurement processes + Expanding workfare programmes in collaboration with the States; Budget Office of tne Federction / MENP 2000 «2522 MIEE/ FSP74.2 Establishment of an Entrepreneurship Bank which is one of the keys to finence entrepreneurship; 7 Improving employability of school leavers and graduates, given the changing nature of work arising from increasing digitalization of the global economy; Developing local empowerment centres to disseminate and provide business support to entrepreneurs through apprenticeship and mentorship. To guarantee sustainabilty, Boosting public works programmes; and, Scaling up the N-Power volunteer corps to provide temporary employment for graduates arinually in education, agriculture and health. Industrialisation through Public Private Partnershias Industielisation is a major pillar of the Economic Recovery and Growth Plan (EGRP). By providing an enabling environment for the private sector, Nigeria aspires to be the manufacturing hub in Sub-Saharan Africa and a major exporter of manufactured products. Government is committed to devoting resources and political will to amplify the potential of Private capital and remove the obstacles to investments. This underscores government ‘commitment to the Made in Nigeria for Exports (MINE} projact which is an initiative to boost manufacturing's share of the gross domestic product (GDP) to 20 per cent, generating $30 billion in annual export earings and creating 1.5 million new jobs in the export-oriented manufacturing value chain. Other strategies include: : 743 Provide incentives to support industrial hubs Create enabling environment to enhance private investment, targeting energy minerals, iron/stee!, and gold and gemstones. Formalise artisanal end small-scale mining activities by automating mining cadastral office operations Review / provide local fiscal and regulatory incentives to support the development of industrial cities, parks and clusters, especially around existing ports and transport corridors Revitalize export processing zones by reviewing local fiscal and regulatory incentives Rationalize tariffs and waivers on the equipment and machinery imports required for agro-industry art Operationalise and fund the newly established Special Economic Zones Companies (SEZsC) to provide dedicated infrastructure (power, transportation, ICT, Water, etc) to ‘support hub productivity = Facilitate technology acquisition and transfer in thie SEZs by making available research utput ftom local research institutes Energy Sector Policy initiatives The energy sector is fundamental to development across al! other sectors of the economy. Energy sector policy has been aimed at optimising efficiency in the energy value chain. Sector strategies include: Improve the commercial viability of GenCos and DisCos improving NBET's financial capability to support the electricity market ‘doration / MBNP 12020 ~ 2022 wTEE/ESP+ Energising Education Programme aims to power 37 universities and 7 teaching hospitals by providing independent power plants, upgrade of existing distribution networks and world class renewables training centre al every university ‘+ Energizing Economies initiative on the other hand supports the rapid deployment of off-grid electricity solutions to provide clean and consistent power to economic clusters in Nigeria. The first 18 economic clusters have been ideniified to serve 18 milion Nigetians, + Optimizing the existing instalied capacity available for generation ‘+ Ending Gas Flaring * Completing major gas infrastructure lines to plants and main trunk to faciltate gas supply for power generation + Introducing strategy for capital market and banking programmes that ensure ail Upstream industry operators get paid. for each contract * prioritise the LPG sector development from a commodity sector based on export, to a value creation sector based .on domestic utilisation and industrialisation + Reviewing the gas pricing structure to recover all prudent costs as services improve and give wiling developers access to underdeveloped gas resources + Accelerating standardization of the process for executing independent power projects (|PPs), including defining pricing, to encourage private-sector participation + Deploying a clear, legal and commercial framework for investments in power projects * Reducing transmission and distribution losses / energy theft ‘+ Restructuring the Transmission Company of Nigeria to improve management and operational efficianey. + Implementing the National Renewable Energy and Efficiency Policy (NREEP) + Ensure the effective implementation of the Nigeria Electrification Project (NEP) over the madium term, which is the largest off-grid electrification programme in Africa. The FGN has secured funding for from both the World Bank ($350m) and the African Development Bank (AfDB) ($200m)} for three components of the NEP. 744 Agriculture and Food Security Agricuiture has remained a stable driver of GDP growth. Reforms and programmes in the Sector have resulted in significant increase in agricultural output and reduction in food imports, The Agricultural sector will boost growth by expanding crop prodaetion and the fisheries, livestock and forestry as well'as developing key value chains. Overall, the medium-term goal Js to tum Nigeria into @ net exporter of key agricultural products, e.g., groundnuts, cassava, Poultry, vegetable oil, cashew nuts, fish, livestock, rice, tomatoes ete. Strategies to achieve food security in the medium term include: + Government will continue strengthen key CBN schemes to improve access to finance for all players, including the Agricultural Credit Guarantes Scheme, Commercial Agriculture Credit Scheme (CACS) and the SME Credit Guarantee Scheme, including long term sunset clauses; + Use iigable land and river basin infrastructure effectively to enable year-round agricuttural production; + Improve investments in value chains, and supporting the integrated transformation of the agriculture sector by boosting productivity of the crop and other sub sectors; a Budget Office ofthe Facieration / MAN 2020 - 2022 WTEFESP+ Enhancing agriculture productivity by facilitating accéss to inputs, financing and | extension services; + Enhancing agricultural extension servioas, including through N-Power programmes, | from the current ratio of 1:3,000 to 1:1,000 by 2020; + Extending the Anchor Borrowers Programme to all States and major crops: + Restructure and Recapltalize the Bank of Agriculture (BoA) to provide single-digit interest rate cresit to small farmers through the network of micro-credit banks; and, ‘© Expanding the scope of the Nigeria Incentive-Based Risk Sharing System for | Agricultural Lending (NIRSAL) through sufficient and timely funding, and enhancing the regulatory function of the Nigerian Agricultural Insurance Corporation (NAIC) + Encourage crop specialization at the state level based on the compatitive advantage i of each, by providing incentivized, targeted funding through the BoA. * Implement a National agricultural quality assurance programme to create a set of Products quality standards, train major exporters and enforce inspections, revitalizing the Nigeria Commodity Exchange (NCX) to fast track export. 745 Social Investments: Health, Education and Social Welfare The Federal governmentis stepping up investment in health and education to fill the skills gap in the economy, and meet the intemational targets set under the UN's Sustainable Development Goats (SDGs). Investing in our people is one of the three core objectives of the ERGP. In furtherance of this objective, Government is taking steps to enhance human capital development, particularly health, edusation and social intervention programmes in order to reduce poverty by improving accessibility, affordability and quality of heatthcare whilst guaranteeing access to basic education for all and improved quality of tertiary and secondary education. Furthermore, Government will: * Revitalize primary health care centres and establish at least one functional primary health centre (PHC) in each ward to improve access to health care; + Fully implement the National Health Insurance Scheme to mobilize domestic resources - towards Universal Health Coverage (UHC); + Implement the provisions of the National Health Act, i * Make strategie investments in tertiary health care institutions in collaboration with the National Sovereign Investment Authority (NSIA) and other relevant stakeholders to reverse the outbound traffic for health tourism; iste | + Partner with the private sector to construct mode! health centres. + Build capacity.of health workers to improve service delivery. + Establish Intemational centres for scientific. research in collaboration with ‘manufacturers and industries. = * Collaborate with Subnational governments and the organised private sector to establish best-in-class vocational and technical institutes; * Develop incentive programmes to encourage private sector and State investment in mode! technical ang vocational education institutes; + Revive and support new post-secondary school trade centres and technical schools; + Introduce post-university skilis development institutions (PUSDIs); ‘+ Improve the quality of education by strengthening quailty assurance; * Review and restructure the education curriculum in line with international best practices; * Improve the capacity of Federal, State and Local quality assurance inspectorates; 2 Budge! Oties of he Federation | MENP 2020 ~ 2022 MTEF/ESP |+ Increase investment in Science, Technology, Engineering, Ars & Mathematics (STEAM) education; + Improve teacher quality by incentivizing performance and building capabilities + Develop and launch an ICT curriculum comprising computer science, information technology and digital fteracy for primary end secondary school students; + Partner with private organizations to organize innovative ICT competitions and subsidize professional qualifications for ICT; * Improve funding mechanisms fo incentivize education performance and increase access. Use the Tertiary Education Trust Fund (TETFUND) to incentivize high performing tertiary institutions; ‘+ Sustain and expand the home-grown school feeding to enhance school enrolment and combat stunting; ‘+ Invest in the social housing programme. ‘+ Implement and increase social safety net programmes targeted at the vulnerable; and, + Launch a national programme for the physically challenged and other vulnerable ‘groups, 7.45 Gender and Social inclusion One of the critical focus of the ERGP is investing in our people. In doing this, government is focused on doing things right while achieving 2 more inclusive and sustainable growth. Most sectors have been directed to focus on gender and social inclusion of vulnerable members of Society in developing key sectoral strategies and medium-term development plans t6 ensure that ALL citizens irrespective of Gender, ability or social classification are beneficiaries of our shared prosperity. Targeted programmes will reduce regional inequalities especiatly in the North East and Niger Delta. 747 Infrastructure Nigeria's Infrastruoture stock is inadequate for the size of the economy and constitute a mejor Cost and constraint for both large and small businesses. Investments in strengthening Nigeria's infrastructure will make @ significant contribution towards building a competitve economy. Increased allocation has been made toward reducing our infrastructure defiat over the past four years. Government has jump-started the construction of power, road, and rail Projects, which will be catalytic in connecting people, goods, and opportunities, Government. has embarked on inftastructure upgrades with a view to opening fresh opportunities for the private sector to participate, by way of public-private partnerships, concessions, and additional investments: The implementation of the vision for 4 modem rational rail network that connects all 36 States of Nigeria and the Federal Capital Territory is well on course, Power generation and Transmission capacity are up forty par cent ih the last three years, investments in airport and seaport upgrades are also on-going. Given the scale of investment required to deliver these outcomes, strong partnership wilh the privatd sector is expected to result in completion of strategic network of rail, road, power infrastructure including waterways, airports and broadband networks. Fo Budge! Office of he Federation / MANF 2020 ~ 2022 MTEF/ESP8.0 ANALYSIS & STATEMENT ON CONSOLIDATED DEBT & CONTINGENT LIABILITIES 8.1 __Nigeria’s Current Debt Profile B11 Debt Stock Nigeria's Total Public Debt stock as at December 31, 2018, was N24.387 trillion (US$79.435 billion), compared to 821.726 trilion (US$7'1.00 billion) as at December 31, 2017, representing an increase of about 12.24 percent in Naira terms. The increase In the Total Public Debt Stock was due fo new Domestic and Extemal Borrowing by the Federal end Sub-national Governments. In terms of composition of the Total Public Debt, Nigeria moved closer towards achieving a Ratio of 80:40 between its Domestic and External Debt as stated in its Debt Management Strategy, 2016-2019. ~ Specifically, the share of Domestic Debt dropped to 88.22% from 73% in 2017, while the share of External Debt rose to 31.78% from 27% in 2017. The Federal Government's Domestic Debt accounted for 52.38% (412.77: trilion} of the Total Public Debt, while the States & FCT accounted for 15.80% ($3.86 trilion). For the External Debt, the Federal Government's portion was 26.49% (US$21.04 billion or N6.46 trilion), while the States & FCT accounted for 5.33% (USS4.23 billion or N1.30 triton). The ratio of Nigeria’s Total Public Debt as a percentage of GDP remained sustainable at 19.09%" as at Decembsr $1, 2018, Also, the ratio wes below Nigeria's self-imposed Debt Limit of Total Public Debt to GDP ratio of 25% (up to 2020), and far below the revised WB/IMF’s recommended threshold of 55% for Nigeria's peer group countries. Figure 8.1: Trend in Nigeria’s Total Public Debt (2014 - 2018) ame F5W's Excernal Debt Sta saat States & FCT'sExtaral Debt Stock Sm Fa Sone aka SSeS rersoomerc Onc soenco ae ssenae coe 5 vommes so 2 mom ssw § 7 10,000.00 5.00 2016 2015, 2016 2007 2018, 7 sewer 04 81.2 Debt Figure 8.2: Debt Service Payments (2014-2018), * 2018 GOP Neve fom NES was used 20 Gudge! Ofce of ha Faceration / MONE ‘2026 ~ 2072 TeH/FSPWhilst the Strategy implemented by the Government in subsisting high cost short 7990 term domestic debt with low cost longer gon BExtomal Debt Senee tenured external debt, has moderated the 5° increase in Debt Service, the growth of ©" the Total Public Debt has also reflected ‘3 the corresponding increase in “debt 0% service over the years. As @ result, the 200" Total Public Debt Service payment 1000 i increased to US$7,328.39 milion as at 9 mB mal mw El December 31, 2018, from US35,288.30 zis 016m million as at December 31,2017, Scurco: MO 'n addition, the larger share of Domestic Debt relative to the External Debt and relatively higher domestic interest rates contributed to the growth in Debt Service, Given the fiscal burden associated with rising debt service payments relative to revenues, it is expected that the various on-going reforms and initatives by the Government aimed at enhancing its revenues, would reduce the level of new borrowing to finance budget deficits while also reducing the Debt Service to Revenue Ratio. 8.2 _Debt Management Strategy The implementation of the DMO's Debt Management Sirategy, 2016-2018, is still on-going, and alms at achieving a target composition of 80:40 for Domestic to Extemal Debt and attai the Domestic Debt mix of 75:25 for long and short-term debt. The Strategy emphasises a shift to the relatively cheaper external financing, by maximising access to the Multilateral and Bilateral sources. Nigeria in 2018, aocessed the International Capital Market (ICM) for a total sum of US§5.368 billion through Eurobonds. As at December 31, 2018, the ratio of Domestic to External Debt had appreciably improved {0 88:52, irom its position in 2017 of 73:27. This has helped to moderate the cost of borrowing, Create more space for other borrowers in the domestic debt market, and extend the average: tenor of the debt stock. Other benefits include the reduction in Refinancing Risk and increase in Extemal Reserves, which has helped to support the Naira Exchange Rate. For the restructuring exercise of the Domestic Debt portfolio, between December 31, 2017 and December 31, 2018, the Goverment was able to redeem matured N976.908 billion NTBs with relatively cheaper External Borrowing (Eurobonds). The structure of the domestic debt portfolio has also progressively improved in terms of the ratio of long-term to short-term, from 70:30 in 2016 to 72:28 in 2017, and 77:23 in 2018, respectively. The continued implementation of this Strategy wil further improve the structure Of the public debt portfolio, 8.3 Nature and Fiscal Implications of Contingent Liabilities 'n View of the large amount required to finance infrastructure development, the Goverment has introduced @ number of ways to develop infrastructure apart from direct financing by the Government. One of such ways is thé use of the Public-Private Partnership (PPP) which may involve the issuance of Sovereign Guarantees fo support Private Sector operetors involved in PPP projects. The Federal Government has improved its ability to monitor and manage the a Budget Offce of the Federation / MNP 2020 ~ 2022 MTEETESP i i { |ectualization of the Guarantees. As at December 31, 2018, the Contingent Liabilities of Government amounted to N1.92 trillion, representing 1.50% of GDP, compared to N1.15 trillion or 1.91% of GDP in 2017, Provision is being made in the annual budgets to offset some of the Contingent Liabilities, such as pension obligations, In the case of local contractors’ debt, a Sinking Fund financed though the provisions in the federal budget was created to amortize these bonds. AAs part of efforts to account forthe full exposure of FGN to Contingent Liabilties, and to ensure proper management of same, a Policy Framework on Contingent Liabilities is being developed. Table 8.1 shows the Contingent Liability profile of the Federal Government for the period 2018 and projected liability for the medium term. Contingent Liabilities that could arise from these projects, and mitigate against the | | | | | | Table 8.1: Ht IA Tease Woe ye pee % Bee [eure tnNo | Geaotssnse] —samamnn| — samomann| COA Kamina | TonRGRONS]| _TaoRNaial _Temenoee 7 Base ow ae Ca ~ [| Hesoaomne:) uemnsooma| venemnoc ee atl sR One | aseamn| uansasam lamermen| amsewan| eaaaeam ohoetteme TWEET | sosnoas| aussie] soamacseer| —womsnasaco| rannasessr] ri geea URS amram eseo| sams saes| samnoemne| 2anaansrarian| Lesa AAD ussraeme| Teeronmcce| suancerrrco| sainsriaan| _aaeman aoe E wenaninen| waaavac| wamseives| manana msm Ire jrimazgiezazs|_ sersc0snesd_sameriaseas]_aeysae7s7e4]_«ri7penaneae Nu lnc amin hts rs ord tap a UB Oe = Source: oO 9.0 RISKS TO THE MEDIUM-TERM OUTLOOK ~ The Nigerian economy is susceptible to a number of recurring risks or shooks that may pose setbacks to FGNs revenues, planned expenditure, constrain economic growth ot siow the Pace of achieving some of the development abjectives.as set out in the ERGP. These risks exist both within the domestic environment and the global economy, and may have some effects on the medium-term economic forecasts set in the ERGP. Therefore, in preparing the 2020-2022 fiscal strategy paper, efferts have been made in identifying some of the ortical risks. These will be reviewed and assessed, and mitigating strategles proposed in this section. §.1__ Global Economic Trends & Geo-Polilical Tensions ‘The proionged contentious Brexit negotiations between the UK and the EU has ied the IMF to forecast ‘anemic growth’ in the Euro zone largely due to uncertainties stemming from trade tensions, Italy anc Brexit with plans for stimulus from the European Central Bank (ECB). Political tensions between the United States and the Islamic Republic of Iran has continued 32 Buds! Offeo of he Federation / MENP | 2020 ~ 2072 MTEF/F8° |unebated with war of words between both leaders, with American officials stating a ‘military option remain on the table. The US Maritime Administration reported that US commercial ships including oll tankers sailing through key Middle East waterways could be targeted by Iran in one of the threats to US interests posed by Tehran, There will be implications to crude oll prices on account of this geopolitical risk. The markets can expect prices to rally if there is any other trigger between the US and Iran, which could disrupt Middie East output and drive ol prices higher. Following the seizure of a British flagged oll tanker in the strait of Hormuz, the UK is also retaliated with a counter seizure of an Iranian vessel. With tensions now reaching heightened levels, the UK has now joined a US led mission ‘0 protect ships travelling through the Strait of Hormuz from Iranian threat. However, the US ~ China trade wer worries will keep pressure on prices at current levels. The last 20 meeting on the other hand; came'to an end with no big joint - statements on how to Protect the freedom of navigation in the Strait of Hornuz. Considering a total of about 20% of global oil shipments pass through the Strait of Hormuz and only a small proportion of this total could be rerouted via pipelines, there will be significant price movements should the tensions plummet into a full-blown confit, 2.2 _ International Oll Market Developments 8.24 OilPrices Volatilty of olf prices has remained a major recurring risk which distorts govemments revenue cuttums and overall budget performance, considering the contribution of oll to govemments revenues. A sharp deciine in oll prices below the projected benchmark price may oreate financing problems If low prices are sustained over a long period. The Brent averaged §71.3 Per barrel in 2018. Prices have however, traded fat with some volatlty within a broad range following drawdown on US stockpile There were intial upward movement of oil pres following the June 13 attack on oil tankers in the Gult of Oman, but overall, the response of oil prices to the attack fas been relatively “suedued’ or ‘fat’, Notwithstanding OPECs intervention, oil prices could stall with the global Sconomy projected to skewdown resulting In demand squeezes and with US ramping Breduction to alltime highs, with April production numbers hiting 1218mbpet exiging past Russia and Saudi Arabia to become largest cnide oll producer. This.boost in production has, been largely dus to the use of fracking technology in shale formations. As the rest of the world step up investments in Oil for divestment away from fossil fuel, there ‘seem ‘o be an aggressive ramping up of non-OPEC suipplias in the medium term, especially from US shate oil production as earlier mentioned. Hence, the medium-term outlook is for Brices fo remain at 2019 leveis averaging $80 - $85 per barrel mark. To mitigate this tisk, Govemment will continue to adopt a conservative benchmark for oil price in its budget formulation and build up buffers to safeguard against price and quantity shocks and will stay within the $55 doliar per barre! benchmark price for FY 2020 as Mexico hedges at $55pbl. 9.2.2 Oil Demand & Supply Risks The Organisation of Petroleum Exporting Counties (OPEC) at its July 2, 2019 meeting member countries agreed to restrain oll Gutput to support oll prices. Prior to this, Russia and 2 Budget Offcs of the Faceration / MBNP 2020 ~ 2022 TEPSaudi Arabia had announced at the end of the G20 summit in Japan, their intent to extend by ix to nine months a deal with OPEC to restrain output cuts of 1.2 millon barrels per day (or 1.2% of global demand) until December 2019 or March 2020, The US escalated its tariff war with China in 2019 by increasing levies to 25 per cent for $200 billion worth of Chinese goods, The tensions between the two countries has inereased fears of slowdown in global demand as US and China both accounted for up-to 34 per cent of global oil consumption in Qt 2019. On Supply side, Russian exports have been hit by contamination in Russia's Druzhba oil Pipeline, It remains @ key channel for crude oil ( milion barrels per day capacity) into Eastem Europe and Germany, further putting a floor under crude markets. Further declines and supply shortages are expected in Mexico of up fo anather 1 million barrels per day, as oil producers begin evacuation from Gulf of Mexico amid concems that tropical storm Bary could detail crude oll production in the region. Falling Venezuelan and iranian exports continues to raise concems over tightening global supply as fighting subsist in Libya. Nigeria has not been able to meet its oll production targets 2s set out in the ERGP over the last two years, and as such @ conservative approach will also be applied to production figures to reflect actual average Productions over the last three years rather than existing production capabilities. Overall, on balance, supply is projected to outstrip demand in the medium term even though Ro major disequitiorium in supply and demand is expected in the global cil industry over the medium term with OPECs continuad intervention with supply cuts. 9.3 Exchange Rate Risks Exchange rate depreciation poses a key risk to the fiscal position. Crude ol! production and export contributes over 90% of Nigeria's foreign exchange earnings. In effect, depreciation of the Naira against the US Dollar is oné of the key exchange rate risk in the event of a prolonged oll pice shock, given that oll revenues are in US dollars. Businesses that rely heavily.on forex for imports of production inputs and capital could also be constrained. To address these risks, as in the past, the Central Bank of Nigeria will continue to manage the demand for forex through sanctioned channels, With the’CBN significantly improving its foreign reserves over the years to be able to enhance its ability to manage exchange rate risks. 9.4 Risks to Non-Oil Revenue a Low non-oil revenue mobilisation remains a key risk that the FGN continues to monitor. In recent years, there have been a number of reforins to improve Nigeria's revenue profile, particularly at increasing earnings from non-oll revenues: Full implementation of the Performance Management Framework over the medium term are expected fo significantly improve non-cil contrisution fo overall FGN revenue profil. In addition to that, operational efficiencies and cost-to-income ratios, and génerally ensuring these GOEs operate in a more fiscally responsible manner. Plugging leakages remain key in improving non-oil revenue and efforts will be targeted at compliance within the FGN independent revenue value chain Efforts to increase the number of tax payers and the tax base shall be pursued vigorously in the short to medium term, rather that increasing the tax _ Tate (this will be subject to a medium to tong term review). in addition, ongoing strategies such as the elimination of muttiple taxes and deployment of trained tax officers to collect revenues wil be sustained. Customs revenues are also targeted for increase as leaks are plugged and modernisation reforms in the Nigeria Customs Service are implemented e.g. the National 4 Budgel Office of he Federation / MBNP 2020 ~ 2022 MIEEYFSP‘Trade window, 9.5 _ Sensitivity of Budget aggregates to Macro-economic conditions The 2020 ~ 2022 MTEFIFSP relies on macroeconomic and fiscal forecasts which are important for FGNs policy and decision making. The macroeconomic and fiscal forecasts in this document in adtition to the 2020 Budget to follow therefrom, are based on avaliable data and information for modeling at the time of preparation, which also takes into consideration assumations and professional judgments of historical patterns. ‘Should the economic outlook differ from key assumptions and paramaters presented in the 2020 ~ 2022 MTEFIFSP, the revenue and expenditure estimates and projections would also change, as the revenue and expenditure estimatas end projections contained in this document and the planned 2020 budget to follow thereon, are based on a number of economic and other parameters. Govemment may have to reduce planned expenditure in the event that unanticipated changes in economic conditions occur, by way-of managing budgetary Pressures, should the impact of such change(s) flow through to FGNs expenditure and revenue forecasts. The impact of this risk is high, given the significant share of non-discretionary expenditure to total expenditure. To mitigate this risk, the medium-term revenue forecast relies significantly on observed historical relationships between the variable factors, The analysis of the above risks, as well as others, is summarized in Table 9.1 Table 9.1; Risks Likelihood, impact and Mitigation Sirategies Riek: ie Ampact. | Mitigation Bek ng ee POHL RRS en aE West African ECO -TM H Following the adoption of the ECO by the Risk of hurried Implementation of WA single Currency ECOWAS as a single monetary zone, the key conditionality for full scale implementation which is a single digit inflation of less than 8% and a budget deficit to GDP ratio of 4%. Most member stateshave conflicting intemal dynamics = To mitigate this risk, a number of fiscal measures would be put in place as early implementation issues are exoecied Domestic oil production | L shocks : ‘Gquemment is reviewing investment opportunities which support medium term aspirations such as Owowo, Bos! Boriga South-wesvAparo, Ayala & Madu, Nnwa DoreyBolia Chota fieid developments are expected to boost production, this will help to mitigate this risk. In addition, government remains committed to dialogue, as shown in its engagement strategy in the Niger-Delta which has led to significant reduction to incidence of crude oil shut ins to oil production due to militancy. This wil! be sustained over the medium term, while implementing lasting solutions to the Niger i Suggs! Offce of ho Federation / MONP 20m) = 2022 MTEF/FSP aDelta agitations and oll the. Its expected that production outs due to miltancy and theft will become history soonest, except in the event of technical breakdown or force majeure, Olt price shacks The FGN shall seek to achieve revenue stabilization through intemational commosity agreements where applicable. The main fiscal tool to address this however, remains the continued adoption of a conservative oil price benchmark for fiscal projections over the medium term, Supply / Rate Risk Foreign Exchange | M The exchange rate gap has continued to |narrow, With earings from . crude off | stabilising, the CBN policies to liberalize the FX market has curb speculative activities, meeting forex demands while building extemal reserves, which has grown significantly over the last two years, revenue projection | Failure to meet non-ol | M iw Collection efficiency of major revenue generating agencies will be improved upon. The FIRS is working to increase the tax payers database from the current 20m to 45m before the end of 2018, In adition, efforts are on-going to improve GOEs' revenue performance by full implementation of a Performance Management Framework for the GOEs whilst reviewing their operational efficencies and cost-o-income ratios and generally ensuring they operate in more fiscally responsible manner, Insecurty in parts oi j country ifthe | M This is affecting economic activities in some states. Governments ongoing efforts in restoring order, enforcement, and socio- economic interventions shail continue and are expected to mitigate this risk Food shortage du factors. farmers herders clash and other environmental ie to] L This likelihood of this risk has now been reviewed downwards from the previous year. However, increased security deployments to crisis prone areas, working with states and focal communities to deploy peace-building & dialogue mechanisms are stil ongoing with new strategies adopted to forestall any reoceurrences, The National Food Security council, with Mr. President as Chairman will continue to provide oversight in this regard. | Natural disaster i H Aside flooding, there is no imminent Natural disaster warning for Nigeria from any of the relevant agencies monitoring such Nevertheless, the FGN maintains a N20bn minimum balance _in the ecological funds Budget Offcs oft 2020 = 7022 MTER/FSP ration / MBNP 6| | ‘eccount for immediate emergency response in the event of a natural disaster in any part of the country. [Insurgenoy [M.A The mitigation action largely remains the same from previous year, a twin track approach of dialogue and military force shall be deployed in the event of an upsurge in major securty breaches. Failure of Power Sector | H Recovery Programme ‘A 600bn_ Payment Assurance Facilliy ‘extension has been approved by FEC until June next year. In addition, an accountability framework has been finalized with conditions precedents which will guide the drawdown on the $2bn World Bank facility (of which $1bn is a performance — based loan) to support the implementation of the FGN PSRP will be finalized over the medium term. Tariff review shall also be considered over the medium term, subject to NERC’s review of the Multi Year tariff Order (MYTO) Bucgei Offs of tye Fecteration / BNP 2020 2022 TE /FSP ry wa Budge! Offce of the Federation / MNP 2020 2022 MTERYESPLa Grn Pee Fre IDE Fao Budget OW Production Volume Net Ineremental On Free [Arrears (abpa T [Projected Budge Henchiark Price Qs per barry ap 0 300 | [ 5 Average xchange Rate (USS) ——— = 350] ase 3050 [ as [PS a é 7 |Join Ventures ce ott ‘ast | Daze cms 7] | Altorative Funding 7 : : a 9 | Modified Cary Arrangement EEE Eee 0.068 | 0.081 | 9.066 [| 9 10 | Exte Financing Poe EB 0.004 a 0.050; 0.058 w MW Production Sharing Contracts Pee Hee 0.900 0.856 PEE 0.967 u 12 | Independents Eee HEE 0315 0.339 _ 0355] [12 13 | Service Contracts: Spee 0.004 0.003 0.003 0.00 | 13 i |" “Marginal Fielis foe 0.085 0.065 0.059 ~_ 0053 {| ia IS {Repayment Arears® oisI 0.162 ost aise [ [15 | 16 7 6 us (Grose Minerals Revere 358592040945 | RADGSSITESSA | ROUTSRATSISS | BDGCGR CRE HeRT TT | Gross Oil Revenue (See Line liom 93) ~—|__ 9.326,953.585.207 7,234,301,523,829 7,515,045,025,580 8.648 648,963,446 || 19 [Dividend Payment (NLNG) (See Line hem 171) a BIA 748.538, 400,000 258.786.400.000 | 160,031,300,000{] 0 | Solid Minerals (NENG) (See Line Item 126) 3.052,694,002 | __-4,515,25,139 4,966,747,653 5,463,422.419 [| 2 Signetoe Banus (See Line Tem I3ip ~ 173,666.998.726 | ai9 00.083 385 0,000,006 153,500, 000,000 25 [Otter Revenue (Gross) a $364247, 458005 |" 6370 430,505,874] 7,986.498 546,073 | —838.594.314596 Har 24 | Gross Non-Oil Revenue (See Line lem 149) a 4.911, 508,033,885 5.885,198.643,241 | __7,127,650,011,203 7,710,865,646.567 || 24 | 25 | "NowFederation Account Levies for Targcied Expendiame 157 523,434,120 192,062,985,007 | ___216,730,455,380 43,465,199,665 | | 25 26 | Education Tax _L. 273,398,200,000 271,024,798,007 |___323,287,939,274 377,27.025.133 || 26 | 27_| _ National Information Technology Development Fund 11. 16,144,079,019 | __*18,840,140.216 21,986,443,632 || 27 | 28 [rota Federally Collectible Revenwe 14,797,085,677.428 | 15,694,046,719,306 | F7320,78,000.861 TTR B 0 30_|GROSS FEDERATION ACCOUNT INFLOWS ISB O8 2210 | 1a 647.661,754A87 | — Te a649T8,032ATT 3_|OTL REVENUE cE Sees! Poo a 32 Profit Oil from Crude Oil & Gas Sales He 1,590, 449,580,635 745,143,790,393 | ___891,098,654,378 1,288,381,907,892, NNPC JV Grude Oi & Gas (Profit Of) EEE 670,978, 748,837 | 14,178.65, 763 178,479, 789,286 MCA Chde Oil Gas Pea Oy \m TIR.653 401,551 99.496.855,178 31.415,195,70 || 38 | EF Crude Oil & Gas (Profit Oi 50,932,126, 779 “G1,384,352,720 70,521,253,205 [| _ PSC Crude Oil & Gas (Profit 400,829,104,083 | __ 392.213.365.113 500,048,564,688 | | 36 | PSC Crude Oil & Gas (New Terms) 160,000,000,000 320,000,000,000 457,500,000,000 | | 37 SE Chie O1& Ges Prost OID eee 350.553,217 485.774 299 417,104. 950 [| 3 |[Budget Oit Production Volume Net Incremental Oi! Prodution for Repayment 94 Derinetions 730 2 2361] lArrenes tp) 4 [Projected Budget Benchmark Price (USS per barrel) oO cH 55.00 55.00 4 3 [Average Bxchonge Wate (N7USS) 3080 ~a0s0 wise six [5 AT [Petroleum Profits Tax on OWL Gas “4301.180578.787 |__30077R9;0en,6K | Saar TORANGAIS | ——_anaARETaNTS | | A 42 | NNPCIV PPT. 659.929,286,017 STH,5R5,716,472 625.207.935.449 | 690,856,173,272 {| 42 45 [JV Partner PPT. A 475,432,926.485, 415,013,401 889 453,987,089,127 | ___501,612,553,329 || 45 [ax Pescrrr — 767,002,358911 | 7,475.076321,352 | 10 Tea02, 509,684] ~_1,595,052,126365 3 ScrPr - T4207873.716 61K 648 asana72.2it [732 ndenendon Produced Tax 75 56RU95.ATS | 6,000. 149.493 | 68S 705,095,342 7i9.353582.955 [| 32 MCA Profits Tax 109,009.440,000 | 125,804,477,625 113,677,767, 902 92.730,798,795 [| 35 External Financing Profits Tax 6.AN2.320,000 34,001.735,475 70,133,233, 790 80.322,746.638 | | 56 Marginal Ficlds Profi Tax BE2,1GT79,565 | —Vos.774.604.268 | TaRST1.366.150 isadm022957 || 37 Repayment Avears(Partne® Tax) 259,578,099,569 | 268 162,670585 | 261.713.511.152 nap, ia1as785 | SR PT Recovery from ersvhie Pioneer O Gonpanies 5,000,000,000 5 Seca |e = [fa ‘&_[Gas come @ 30% CITA (Neuf Cost rezvery) 695,008,065,084 | SSTATAIEITS | __SaesaIIIS | INARDARAAIO || «2 64 [_NNPCIV Gas Income Tox 375 124,653,505 [149,705 904.654 | —768.650,436.550 | 308 781.717.7956 | 6 6 [IV Princ Gas Income Tax Sere 27025i,123.277 | —108,677.590.292 | ——T9s.06,t43.244 | 290,567 54,208 || 68 (| independ Producer Gas come Tax i W2@.951272 "DATAAATB Baar ATIAI | 86550-96807 || 09 FF_[OI& Gas Royalties aa 2,198,064,028,735 | 1860, 765 672876 | —_aatawianiss | Bons.29.098.370 || 72 73_|_NNPCIV Royaly = eeeee FA7,465,222,184 | _552,734,853,573 '580,978,273,408 604,671,164,235 || 73 Ta [HV Parner Royalty : 338,496,450,391 [401,326,608 | a7 35097501 a79,035,876.018 ]| TIS PSC Royalty : : 17,152,892,458 | 172.905.783.214 | 7178904 153.800 708.255.736.595 [| 75 76 | SC Roynity a ~ A,819,259,350 3,794,235,509 3,102,772,371 2.saaa7a 34d [| 76 77 | ~nependen redacrt Royaly 46.290,006,780 | __3B1 487.7135] 700.855,575.789 | _apa.tanaThet [| [ia | Marginal Fide Rosalty 52.704,671150 FIOTADIOSIS F3.275,092.619 39 948,116,157 [| 78 7D [_MCA Royalty Hnb0.200.200[ —110,762.950.307 92,880,714 253 76,001,085.245 [| 79 WEP Royalty ry 4988.250,500 7585.40.38 51-02. 293.268 AT.589.467 [| 8D RT| Repayment Aveare (Royall) ANP ToRds3.129.96% 7460 316850 99488,478,39 91.67.9651 [|B 82 [Repayment Anas (Royals) “JV Parner TRAST TRON TTRAST TBS26ADS 143 ws. THAAD || 84 [Concessional Rentals 1,929,125,000 2,551.267,813 [| 84 8S. Gas Flared Penalty aoe 44,697,806,035, '53,106,459,463 || 85 AG_| Miwcalonasns Pipeline Foss ee) : 1,773,00,000 iRaskn0,000 20.203 206,000 || 6 [87 |fexchango Gain 2592476300 307287AI.I1S 37534 87.568 || 87 [9 incidental Oit Revenue (Royalty Recovery © Marginal Feld L Zi SEXSU175,51 | 323.300,000,000 Bar69s,o1624 || A | ‘90 | Royalties Recavery and Marginal Fields. 80,671,975,351 = = on 31_[ Good and Valiabie Consertion of Bivenied Aas 285,650,000,000 | 32 0EDNRLAO Brasoea | 91 32 [ Recovery of Back Taxes rom NFDC 19,200,000,000 : 3. Total Oil & Gas Revenue BSLGISSASIOT | TAM, R29 | TSIROR MER | AOR TTR DIATE | 95 1,222,967, 927,105 70,744,757 483 1,008,356,586,432 | [94riscaLitems @ Budget Oil Production Volume Net Incremental Prodution for Repayment ply tN a Cy @::: ata Pra 230 ZI naz 236]] 3 rears tmbpay 4 [Projected Bi dget Benchmark Price (USS per bar fa 7 A 55.00] } 4 3 [Average Fxchange Rate (N7USS) — 08 TS | 95 | "Fiscal Deductions (Base FV Cash Gall EP TCA RAY cil ara : - 13s 96 | Other Federaly Funded Upstream Project —_ S85 9117257 | Tanapergaiis | —arnsna7ai as | MeN |b 90 37-| National Domestic Gas Development =f 5 101,006,552.900 | ‘T7060, aR4 786 170,773,986,035 {| 97 88_[ Gas nfncrveture Deveney 128635000000 | ——iadoon.ac7.som | ——laao0- 47 s00 €92095.400.500 || 98 —99. |" Bras ENG Gas Supply Projecig [88,500,000 823,500,000 | $23,500,000 | 423,500,000 | | 99 LOD | “Chude Oi Pre-Lxpet inspection Agenay Expenses ESS) 75,250,00,000 15,250,000,000 | —~i3.2s0-omn,000 15,350,000,000 | 100 LOE [Frontier Exploration Serfons (UPS Dast3o1719 75,095 000 980 75,095,069,980,| — 7S o9s;000980"[ Tat HO | “Renewable Energy Development (RED) — 6.62.500.000[ — — S0snna. on 3.050,000.000-| ——s.9sn.o0000-] | 103 Pipeline Scuriiy& Mefutenance Cos ae 530.286500,000,| ~~ T06.995 000.090" | Toe. 995.000,a00 156,95,000.000 [| Yo Pre-Expori Financing Peace 68.250, 852.578 120,597,336,708 | ___171. 860,835,216 67,123,567.917 || 106 In a 305,000.000,000 | —487,300.600,000 | ——As7-sontna.ne T5750. 000"| | TOF Refinery Reliabilitation Sore — | 706-50: 000,000 106,750,000,600, 30,300,900,600 | | 19 “Nigeria Morocco Pipeline — snail —1,000,000,000 | —, 8.15900, 000 9,170.000,000 | | 110 [1% Nerivation sine TaIaT3 367.574 | HI, TSD.0RAT 395,c28,009.012 || TI necinl Federation Transfers 143 350,000,000 Presidential Power Initiative 51.000,000.000 Nigeria Sovereign investment Authority (NSTAY 82,350,000.000 Net Oi & Gas Revenue after Costs, Dedu 5,086,510,229,150 | __6,649,664,368,002, DIVIDEND HY COMPANIESTNVEST MENTS 1 BBS A000 258,786,400 000 160,031 300,000 [SOLID MINERAL & OTHER MINING REVENUI i Royalties 0 aaa 1,964,635. 181 2B IBGE 2,.901,952,170 3192, 107.387 “Trxes on Minerale & Other Mining a - T_ Soe - Mining Rents, Premium & Fees aan TAT TORR 808 | 2064 7OSART 2771,375,052 | | 125 Total Solid Minerals Revenue 3082 694,002 4.515,225,139 4,966,747. 6 5.463.422.8419 || 126 Less 1596 Deri i 7 396850220 | saa 979.268 GST. 195 —Tinpaagia | 128 Net Solid Minerals after Derivation 658,843,782 928,248,571 a321070.855 40753,177,504 | | 129 casas ee Hoot inal ee oe _1T 130 SIGNATURE RONUS — He 173,666,909,726 | — 939 S0nriaa sa 328 50,000,000 153,500,600,000 | 131 NON-O1L REVENUE, eH se EE Peet 133 Corporate Tax i eae 11 S217 [Tse aca | —aa0sawIpsa7eT| —Famrpetaataan fT Companies ineame Ta ae EATASES.A77-415 |” TT 1572.433.935.857 | 1,958,348.497.601 | 2ossodeTme RR TP TS NENG Tax oe 249.490 550,000 232,628474,163 | 313.866.817.615 344,096, 105,640 | | 136 Stamp Fe 24741.221,367 F737.140,000 18.463.322,629 19,585,100.687 | | 137 ce _ 2.779.800.000 15,854,170.000 | 16,199,202. 849 15045 496455 139 [WaiesAdded Tax ae Zia. i00.4 [—2385,609 960977 | — Fue 394586,079 | ——apoieep ise | Fs 40 |Surchorge on Luxury Fem ae 500, Sule - =f [a iat See a 512.507.733.013 242.c96.as4A02 | "1.306 609,758.98 | 1317 aaa | Lai