2021-2023 MTEF/FSP: Senate Questions Rationale for Pegging Crude Oil Price at $40 Per Barrel

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The Senate joint committee on Finance and National Planning has questioned the rationale for pegging the nation’s crude oil price at 40 dollars per barrel in the proposed 2021-2023 Medium Term Expenditure Framework(MTEF) and Fiscal Strategy Paper (FSP) of the Federal Government.

This issue and many others relating to the 2021-2023 MTEF/FSP document are to be trashed out next Wednesday when the Minister of Finance, Budget and National Planning, Zainab Ahmed, and other heads of revenue generating agencies like Customs, Federal Inland Revenue Service (FIRS), Nigeria National Petroleum Corporation (NNPC), appear before the committee.

Chairman of the Senate committee on Finance, Senator Olamilekan Adeola, who made this known, also stressed that there was the need to examine both the rationale for pegging the price of crude oil at $40 per barrel and the projected crude oil production of 1.86 million barrels per day (mbpd) in the projected three- year document.

Adeola emphasised that there is need for thorough scrutiny of the MTEF/FSP document in view of the fluid dynamics of the world economy following the disruptive impact of COVID-19 pandemic and the vagaries of the international market for crude oil and its attendant effects on Nigeria’s sources of revenue.

He said: “There is need for all stake holders to come together to critically study the fundamentals of the “new normal” forced on the global economy by the COVID-19 pandemic. With the instability witnessed in the price of crude oil at the international market and the sluggish world economy with some nation falling into recession, there is need to assess our situation critically with a view of being realistic about our revenues sources for budgets going forward”.

According to the committee Chairman, invitation letters had been dispatched to Ministries, Departments and Agencies(MDAs) with presentations to make on the document to appear before the Joint Committee.

He stated that the process will start on Wednesday with the heads of parastatals like NNPC, Customs Service, NIMASA, among others appearing before the committee.

His words: “We are kick starting the process on Wednesday with Government Owned Enterprises(GOEs) like NNPC, NCC, NPA, Custom Service, NIMASA, DPR and others followed by the Ministry of Finance and its agencies and subsequently all revenue generating agencies”.

Adeola called on heads of ministries, departments and agencies (MDAs) to come fully prepared with rationales for their positions as the Joint Committee intends to present its report to the Senate immediately on resumption after recess “in tandem with the achieved budget cycle of January- December of the 2020 Budget before the disruption of COVID-19”.

The Senate had on July 22 referred the 2021-2023 Medium Term Expenditure Framework (MTEF) to its committees of Finance and National Planning for further legislative action.

President of the Senate, Dr Ahmad Lawan, who gave the joint committee four weeks to report back to plenary mandated the Committees to relate with all relevant revenue generating agencies in the country to smoothen the passage of the MTEF His words: “This Senate is giving the Committee four weeks within which to work very closely with the Ministry of Finance, Budget and National Planning, and particularly engagement with the revenue generating agencies where we are expecting them to meet their targets.

“We need to ensure that they have all the support that they require from the National Assembly, particularly the Senate to meet their targets.
President Muhammadu Buhari had Tuesday forwarded the 2021-2023 Medium Term Expenditure Framework and Fiscal Strategy Paper to the Senate for approval.
The MTEF/FSP document which was forwarded in July to the National Assembly for consideration and approval was accompanied by a letter read during June 20 plenary by the Senate President, Ahmad Lawan.

The President in the letter, stated inter alia: “It is with pleasure that I forward the 2021 – 2023 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for the kind consideration and approval of the Distinguished Senate.

“Let me seize this opportunity to express my deep gratitude for the cooperation, support and commitment of the leadership and distinguished members of the Senate in our collective efforts to sustain the restoration of the January – December financial year.

“In line with our commitment, we have worked very hard to achieve and earlier submission of the MTEF/FSP. This is to allow the National Assembly enough time to perform its important constitutional duty of reviewing the framework.

“I herewith forward the 2021 – 2023 MTEF/FSP as the 2021 budget of the Federal Government will be prepared based on the parameters and fiscal assumptions of the approved 2021 – 2023 MTEF/FSP. I seek the cooperation of the National Assembly for expeditious
legislative action on the submission.”


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