The government’s new fiscal projections have been revealed in the Medium-Term Expenditure Framework (MTEF) 2020-20221. The GDP growth projection was revised downwards from 3.6% to 2.9% for the 2020 fiscal year. Benchmark crude price was also
revised from $60 to $55 per barrel, which could weigh on expected revenues. However, while recurrent expenditure is expected to rise in 2020, capital expenditure is projected to fall. The new MTEF shows a projected budgeted increase in recurrent expenditure from NGN4.3 trillion in 2019 to NGN4.7 trillion in 2020 (excluding debt service payments); and downward revision of capital expenditure to NGN1.7 trillion in 2020. While the early design of the MTEF could influence a return to the January-December budget cycle which will improve budgetary predictability for line ministries, the reduction in capital expenditure will likely lead to a deterioration in the much-needed infrastructure and other long-term investment. Failure to meet these needs will likely hinder economic growth in the long run.
