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FG mulls N10t for 2020 budget, 7.2 percent VAT

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THERE are indications that federal government is proposing an estimate of N10 trillion for 2020 budget.

Minister of Finance, Budget and National Planning, Zainab Ahmed, dropped this hint yesterday while fielding questions from State House Correspondents in Abuja on preparations for 2020 budget after the weekly Federal Executives Council (FEC) meeting.

According to Ahmed, FEC approved 2020-2022 Medium Term Expenditure Framework and Fiscal Strategic Paper which would soon be presented to the National Assembly for approval, stating specifically that about N10.07 trillion had been proposed.

The minister said that total expected revenue for 2020 was N7.5 trillion out of which N2.09 trillion will be accruing to the Federation Account and the VAT respectively.

She also disclosed that approval was given for 7.2 per cent as new Value Added Tax rate for the country, up from the current five per cent. But a decision has yet to be taken on the effective date of the new rate to ensure that an ongoing consultation among critical stakeholders and government agencies over when the new rate would apply is fully exhausted.

However, she indicated that VAT Act would also have to be amended by the National Assembly before the commencement of the new rate, which she said could be sometime in 2020.

“We also reported to council and council has agreed that we start the process towards the increase of the VAT rate. We are proposing and council has agreed to increase in the VAT rate from five per cent to 7.2 per cent.

This is important because the Federal Government only retains 15 per cent of the VAT; 85 per cent is actually for the states and local governments. The states need additional revenue to be able to meet the obligations of the minimum wage,” she said.

Throwing light on performance of 2019 budget, Ahmed stated that recurrent expenditure scored 100 per cent since the implementation began with about N300 billion released for capital expenditure so far.

“The Federal Government will be receiving proposed aggregate of N4.26tn from the federal account and the VAT pool, while the states and the local governments are expected to receive N3.04tn and N2.27tn respectively.

The 2020 budget has a debt service estimated at N2.45tn and a sinking fund to retire maturing obligations issued to local contractors and other creditors in the sum of N296bn. So, there is a total sum of N3.43tn that is provided for personnel and pension cost inclusive of N218bn for the top 19 government-owned enterprises in the country,” Ahmed said.

It will be recalled that the country’s budget for 2019 was N8.912tn.

Similarly, FEC also approved about N183 billion for road projects across the country, including the extension of Lagos-Badagry Expressway to Benin-Nigeria border, which had a provision of N15.2 billion.

Minister of State for Works and Housing, Abubakar Aliyu, disclosed this while listing about e 14 other roads that were approved.

Equally speaking to newsmen, Minister of Transportation, Mr Rotimi Amaechi said that approval was also given for the revised estimate for the rehabilitation of Itakpe-Ajaokuta rail line.

“The contract was awarded for $122 millio but we requested for a total of $56 million additional work, which was broken into $38.8 million additional work and $17.2 millio variation, bringing the contract of Itakpe to Warri to a total of $178.7 million.

Then we also requested for Lagos to Ibadan with extension to Lagos port complex in Apapa; we asked for additional work for $374 milion with another variation of $282 milion which totalled to $656.8 million. This will be added to $1.5 billion that the contract was initially awarded,” he said.

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