Buhari signs new appropriation act into law, explains why Nigeria needed to borrow more money amid COVID-19 pandemic and fall of oil prices

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President Muhammadu Buhari made the remarks at the signing into law of the Appropriation (Repeal and Amendment) Act, 2020.

He said the 2020 Appropriation Act he signed into law on December 17 was no longer sustainable amid COVID-19 pandemic and the collapse of oil prices.

Nigeria borrowed $3.4 billion from the International Monetary Fund (IMF) at 1.05 percent interest rate repayable within five years. The country also borrowed billions of dollars from the World Bank, the African Development Bank and elsewhere, to beat COVId-19.

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Mr. Buhari said the money and loans were needed because oil prices crashed from $72.20 per barrel in January to about $20 per barrel in January, and have since remained around $40.

Assistant Secretary of State for African Affairs Linda Thomas-Greenfield greets Nigerian President Muhammadu Buhari before U.S. Secretary of State John Kerry hosted a working lunch for the President and his delegation at the U.S. Department of State in Washington, D.C., on July 21, 2015. [State Department photo/ Public Domain]
Assistant Secretary of State for African Affairs Linda Thomas-Greenfield greets Nigerian President Muhammadu Buhari before U.S. Secretary of State John Kerry hosted a working lunch for the President and his delegation at the U.S. Department of State in Washington, D.C., on July 21, 2015. [State Department photo/ Public Domain]

“Nigeria’s crude oil production quota has been reduced as part of the efforts of the Organization of Petroleum Exporting Countries (OPEC) to strengthen the oil market. Global trade has generally been disrupted as almost all economies were locked down for protracted periods in the wake of the COVID-19 Pandemic.

“It is therefore imperative to adjust our expected revenues, considering the widespread disruptions in domestic and international economic activities due to the COVID-19 Pandemic, and the containment measures taken in response thereto.

“The 2020 Amended Budget, which I have just signed into law today, underscores our Administration’s firm commitment to effectively contain the spread of COVID-19 and protect the lives and livelihood of our people. With these budget amendments, as well as our recently launched N2.3 trillion Stimulus Programme, we are well-positioned to safeguard the economy,” Mr. Buhari added.

It is my pleasure and honour to sign the Appropriation (Repeal and Amendment) Act, 2020 into law today. I thank the Distinguished Senate President, the Right Honourable Speaker of the House of Representatives, and all the Distinguished and Honourable Leaders, and Members, of the National Assembly for the prompt review and passage of the amendments to the 2020 Appropriation Act.

You will recall that I signed the 2020 Appropriation Act into law on Tuesday, 17th December 2019. However, it became necessary to revise the Appropriation Act 2020 in response to recent developments, in particular, the COVID-19 Pandemic. Crude oil prices in the world market declined sharply from a high of $72.20 per barrel in January 2020 to below $20 per barrel in April 2020, and have since remained around $40 per barrel.

Nigeria’s crude oil production quota has been reduced as part of the efforts of the Organization of Petroleum Exporting Countries (OPEC) to strengthen the oil market. Global trade has generally been disrupted as almost all economies were locked down for protracted periods in the wake of the COVID-19 Pandemic.

All these developments are plunging the global economy into recession, and Nigeria has not escaped the impact of this. In effect, the assumptions underlying the 2020 Appropriation Act are no longer sustainable.

It is therefore imperative to adjust our expected revenues, considering the widespread disruptions in domestic and international economic activities due to the COVID-19 Pandemic, and the containment measures taken in response thereto.

Understandably too, we needed to reallocate resources in the Appropriation (Repeal and Amendment) Act, 2020 to ensure effective implementation of required health and emergency measures, as well as to mitigate the negative socio-economic effects of the COVID-19 Pandemic.

The 2020 Amended Budget, which I have just signed into law today, underscores our Administration’s firm commitment to effectively contain the spread of COVID-19 and protect the lives and livelihood of our people. With these budget amendments, as well as our recently launched N2.3 trillion Stimulus Programme, we are well-positioned to safeguard the economy.

Considering recent budget implementation challenges, I have directed that efforts be made to ensure effective implementation of the Appropriation (Repeal and Amendment) Act, 2020 in order to realise its laudable objectives.

All Ministers are to ensure that their Ministries, Departments and Agencies intensify capital project delivery efforts and fully cooperate with the Ministry of Finance, Budget and National Planning to achieve the laudable objectives of the Budget.

We have, nevertheless, made some progress in the implementation of the Appropriation Act 2020. As at 31st May 2020, the sum of N253.33 billion have been released for the implementation of capital projects.

The Federal Ministry of Finance, Budget and National Planning is in the process of effecting budgetary releases that will ensure that all Ministries, Departments and Agencies receive at least 50 per cent of their amended capital budgets by the end of this month.

The Appropriation (Repeal and Amendment) Act, 2020, that I have just signed into law, provides for aggregate expenditures of N10.81 trillion, which is an increase of N216 billion over the level of expenditure initially proposed in the 2020 Appropriation Act. The Honourable Minister of Finance, Budget and National Planning will provide further details of the 2020 Amended Budget.

I wish to acknowledge the efforts of the Ministry of Finance, Budget and National Planning, particularly the Budget Office of the Federation, and everyone who collaborated and worked conscientiously to produce the Appropriation (Repeal and Amendment) Act, 2020 that I have signed today.

I thank all Nigerians for their understanding and unflinching support, especially during these difficult times.

Thank you and may God bless the Federal Republic of Nigeria.

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