The 2020 Appropriation (Amendment) Bill on Thursday scaled second reading at the Senate.
The bill seeks to reduce Nigeria's 2020 federal budget from N10.6 trillion to N10.5 trillion.
The deliberation and passage of the bill was done shortly after the Senate President, Ahmad Lawan, read out the executive communication from President Muhammadu Buhari seeking consideration of the revised budget as well as approval for a $5.513 external loan.
The reduction is based on the global economic realities as a result of the coronavirus pandemic as well as the recent crisis in the oil market.
The new budget proposal reduces the oil benchmark from $57 per barrel to $35 per barrel while the oil production volume was reduced from 2.18 million barrels to 1.93 million barrels.
The exchange rate was also increased from N305 to N360 to a dollar. This is based on the devaluation of the naira by the Central Bank of Nigeria.
More details of the budget
Based on the new proposed budget, statutory transfers (a category into which the National Assembly budget falls), were cut from N560.47 billion to N398 billion (398,505,979,362).
Capital expenditure was reduced from N2.78 trillion to N2.2 trillion (2,230,912,585,842) while recurrent expenditure was maintained at N4.49 billion (4,928,525,467,849).
The debt service was increased from N2.7 trillion to N2.95 trillon.
Leading the debate, the Senate Leader, Abdullahi, Yahaya, noted that first-line deductions by NNPC for Federally Funded Upstream Projects/Expenditures have been significantly reduced by 65 per cent from N1.223 trillion to N424.23 billion.
These cuts, he said, include the removal of the N457.50 billion provision for Premium Motor Spirit (PMS) under-recovery, with the re-introduction of a Price Modulation Mechanism (tied to international price movement) as the basis for pricing PMS going forward.
The aggregate revenue available to fund the 2020 budget is now projected at N13.15.09 trillion (35 per cent or N278 trillion less than the 2020 Budget passed by the National Assembly), he said.
He said the federal government's expenditure budget (including grants and donor funding) is estimated at N10.51 trillion (inclusive of project-tied loan financed projects), down from N10.59 trillion in the 2020 Appropriation Act. Provisions for sinking fund to retire maturity bonds to Local Contractors/ Creditors is N272. 9 billion.
"The provisions for Personnel and Pension cost was retained at N283 trillion and $4536.72 billion respectively. The sum of N25. 56 billion (representing 1 96 of the Consolidated Revenue Fund) has been provided for the Basic Health Care provision Fund. Other critical provisions such as N22.73 billion for routine immunisation in the Service Wide Votes and N81.14 billion for the Power Sector Reform Programme has been retained.
"The aggregate amount available for the Capital Expenditures (exclusive of Capital in Statutory Transfers) in this reverse 2020 budget is N2.23 trillion."
Lawmakers took turns to make contributions.
Opeyemi Bamidele faulted the decision to reduce the budget of the judiciary from N110 billion to N99 billion, which is about one per cent of the entire budget.
He argued that there are hundreds of inmates awaiting trial across the country which translates to more work for the judiciary.
"To have the budget from N110 billion to N99 billion does not show proper understanding of bureaucrats who did the reduction... the budget should be left intact."
On his part, Francis Fadaunsi faulted the increased exchange rate. The effect of exchange rate on economy, he said, will be very severe.
The bill was, thereafter, referred to the Senate Committees on Appropriation and Finance for further legislative work and to report back on Tuesday.