BY COBHAM NSA, ABUJA – The Federal Government on Tuesday warned that 2020 to 2022 fiscal years will be quite challenging given huge increase in personnel costs and dwindling fortunes in revenue generation.
This is even as it also directed that from Octiber 2019, staff in Ministries, Departments and Agencies (MDAs) not yet captured on the Integrated Payroll and Personnel Information System (IPPIS) will no longer receive their monthly salaries until they are enrolled.
Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed said the caution has become necessary due to rapid leap in recurrent expenditure as well as issues relating to income accruals into the national coffers.
She attributed the growth in personnel cost to the creation of new ministries and appointment of additional ministers in the current cabinet.
Speaking at the public presentation of the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) in Abuja, Mrs Ahmed noted that “personnel cost (inclusive of Pension costs) at over N3.0 trillion has continued to rise”, and government is therefore focusing on areas of cutting costs, checking wastages in the system and improving its income generation in the 2019 budget and the years ahead.
She assured that government will take firm decisions to contain rising personnel cost, saying; “The FGN is however taking steps to contain the rising personnel costs, including an October 2019 deadline by Mr. President for all MDAs to implement IPPIS.
“Any government staff not captured in the Integrated Payroll and Personnel Information System (IPPIS) by October 2019 should forget their salaries.”
The Minister said measures being put in place are critical to block leakages and reduce recurrent expenditure of government, adding; “on the expenditure side of the framework, we have tried to keep most expenditure items as low as possible.”
Mrs Ahmed also hinted that there has been ongoing engagements for debtor states to commence repayment of the bailout funds extended to them by the Federal Government in 2016.
The Minister however explained that the N650 billion bailout funds given to the states was a conditional budget support funds provided by the Central Bank of Nigeria (CBN) to help beneficiary states offset outstanding salaries, gratuities and pensions to their workers.
She said the amount will be deducted from source at the September 2019 FAAC revenue sharing and remitted to the CBN which provided the N650 billion as soft loans at nine (9) per cent with a two-year grace period.
Mrs Ahmed, who said the Federal Ministry of Finance only assisted in the funds’ disbursements with documented approval by the presidency, however, did not disclose the percentage to be deducted on a monthly basis until the debts are liquidated.
On the MTEF’s key assumptions, Mrs Ahmed said the GDP growth rate is projected to hit 2.93 per cent with a nominal GDP of N142.96 trillion while the inflation rate is expected to hover around 10.81 per cent and not more.
Other details contained the MTEF/FSP 2020-2022 indicate that there will be consecutive reductions in capital expenditure for the three-year period to N1.76 trillion, N1.70 trillion and N1.68 respectively for 2020, 2021 and 2022.
This is despite increases in total expenditure at N8.6 trillion, N8.98 trillion and N9.4 trillion during the same period
For national consumption, she said the figure is projected at N122.75 trillion with oil projection pegged at 2.18 million barrels per day at 55 US dollars per barrel.