FG approves MTEF for 2018-2020, reduces borrowing by $3bn

The federal government has approved the Medium Term Expenditure Framework (MTEF) and fiscal strategy paper for 2018-2020.

This is even as the federal government has disclosed that it is planning to reduce its borrowing by $3billion.

The MTEF is a macroeconomic projection of the federal government for the next three years. It is also contained in the Economic Recovery and Growth Plan (ERGP).

The approval was made on Wednesday during the weekly Federal Executive Council (FEC) meeting presided by the Acting President Yemi Osinbajo at the Presidential Villa, Abuja.

Speaking after the meeting, Minister of Budget and National Planning, Sen. Udoma Udo Udoma, said that the federal government was committed to achieving a 7 percent growth rate at the end of the three-year plan by 2020.

Udoma said; “Today, Council approved a memorandum that was submitted by my ministry and approved the 2018-2020 MTEF, as we know we have been having extensive consultation in the last few weeks with the governors, members of the public, leadership of the National Assembly about the MTEF.

“So, we submitted it and was approved by council. The highlight of it is that we have committed to achieving a 7% growth rate by 2020 at the end of the three -year plan in accordance with the Economic Recovery and Growth Plan.

“MTEF is based on the economic recovery and growth plan and in terms of the trajectory of getting the 7%, we have approved a slightly different trajectory in the sense that by next year our target 3.5% in 2018, in 2019 it will be 4.5% growth rate and of course in 2020 it will be 7% growth rate.

“In terms of crude oil production, our estimate projection for next year is 2.3 million barrels per day. We expect it to be broken down to 1.8million barrels per day regular crude and 500 thousand barrels per day in terms of condensate. The price we projected for next year is $45. We are also committed in the MTEF to explore ways of raising additional revenue to reduce debt service to revenue ratio.”

Meanwhile, the Minister of Finance, Mrs Kemi Adeosun, has said that the federal government has reduced government’s borrowing by $3billion.

Adeosun told State House Correspondents that as part efforts to restructure the country’s debt portfolio, the Council has also approved the memo she submitted in that regard.

She noted that with the approval, government would be able to finance treasury bills as they mature, adding that the government would financed treasury bills in dollars up to $3billion.

She said, “As the naira treasury bills mature, we will be issuing dollar instrument.

“We are not increasing our borrowings we are simply restructuring,instead of owing naira we will be owing dollars and the advantage to that one is cost reduction, the average rate we borrow internationally doesn’t exceed 7% . Our treasury bills were paying between 13.6 and 18.5.

“We got an approval in June to restructure our debt profile, we will borrow less in naira and more in foreign currency because it’s cheaper and we want to prevent crowding out the private sector, we want to create room for the private sector so that they can borrow and create more jobs.

“We are trying to relieve the pressure on debt services . As you know there are a lot of controversies that our debt profile is very high. And one of the things we are trying to do to relieve is to refinance.

“The second thing to extend the maturity. all our treasury bills mature maximum 364 days. We will be taking that borrowing to 3 years and the expectations is that as the economy recovers and grows, we will be in a much better position to repay instead of rolling over the debt which we are doing at the moment.

“So that was the approval that was given and that is part of our overall strategy which aims to reduce borrowing.”

Mathew Dadiya, Abuja