By Emmanuel Nnaji, Abakaliki
Ebonyi State Government under the administration of Engr. David Umahi has reversed her Medium Term Expenditure Framework from N29.5 billion to 29 billion.
The State Ministry of Finance and Economic Development made this known in Abakaliki through the Commissioner, Orlando Nweze, who said the reversal was made in line with that of the Federal government, adding that the change came as a result of COVID-19 pandemic and other shortcomings beyond the control of the state government.
Nweze noted that before the reversal the ministry considered the AGDP and certain inflation rate of the state economy, thereby, adopting some necessary measures from the Federal level to enable the state adjust to an extent despite rise in price of goods mostly caused by the deadly virus.
The Commissioner said:
“Today, the 20th day of July 2020, on behalf of the Ministry of Finance and Economic Development, may I re-present to you 2020 revised budget revised from the initially approved 2020 budget of N178,136,634,975.38 to N132,002,391,626.66 with a percentage decrease of 25.9% having a total Covid-19 expenditure of N28,615,000,000.000 accounting for 21.68% of the total budget expenditure.
“The revision of the approved 2020 budget became necessary as a result of the country’s economic challenges and in extension, the dwindling financial resources of our State which are caused by;
The negative effect of COVID-19 pandemic;
The Reduction in the oil prices from the original $57 dollars per barrel to a Federal Government approved $25 dollars per barrel;
A reduction in the nation’s oil production per day from 2.187million barrel per day to 1.7million barrel per day And
A devaluation of the Naira to Dollar from a rate of N305 per $1 to a rate of N360 per $1.
“In producing the state budget, Your Excellency, we took into consideration the following indices;
A GDP of -4.42%.
With the recent prediction by the IMF that the country’s GDP is expected to shrink to -4.42% due to the pandemic, we had considered that with the effect of the spread of Corona Virus, it is very difficult for the State to realize the earlier considered GDP of 2.93%. In the 2020 revised budget, the state-aligned herself in line with the FG GDP of -4.42%.
An inflation rate of 14.13%.
In our 2020 approved budget, we adopted the FGN inflation of 11.02%. As expected Your Excellency, due to the Pandemic, prices of goods and services have skyrocketed and the 11.02% can no more be realistic. IMF has projected an inflation rate of 13.4% for Nigeria by December 2020 and the FG has adopted an inflation rate of 14.13%. This we also took into consideration to align Ebonyi State’s rate with the FG.
“Your Excellency, in preparing the 2020 revised budget, we took into consideration a reduction in the expected receipts as follows;
The total gross statutory allocation from FAAC.
“In 2018 and 2019 Ebonyi state received an average allocation of N33.3B and N36.9B respectively. In the past 5 months, an average of N3B per month has been received which should translate to about N36B in 12 months. However, in the present FG Medium Term Expenditure Framework (MTEF), Ebonyi state upper limit projection for the year is N29.5. The state has therefore revised hers to N29B to align with the FG MTEF projections.”
He further noted that though all sectors were affected in the executed adjustments, focus was centred on the sector of Millennium Development Agencies who in one way or the other bear more weight of the crisis.
“In our adjustments, we had reduced and in some cases removed various items from different MDAs in the approved 2020 budget to meet up with the expected revenue.
“In coming up with the 2020 revised budget, all Sectors were affected in the earlier mentioned adjustments, however, special attention was paid to the MDAs that has direct dealing with either the COVID-19 crisis our designed response.” He stated.