2020 Budget: FG orders MDAs to cut capital expenditure, overhead by 25%

The federal government has directed all government-owned enterprises, Ministries, Departments and Agencies (MDAs) to cut their 2020 capital expenditure and overhead costs by 25 per cent, even where their budgets have already been approved by the National Assembly.

In a memo that was signed by the minister of Finance, Budget and National Planning, Zainab Ahmed and issued to heads of all the MDAs, the government proposed a capital spending, totalling N313 billion. The MDAs are allowed to acquire computer software, purchase computers/printers, buses/trucks/vans, motor vehicle/motor cycles, office/residential furniture and photocopying machine/ scanners/ shredding machines.

She said : “All government-owned enterprises ‘(GOEs) will also be required to cut their capital expenditure and overhead budgets by 25 per cent, even where their budgets have been approved by the National Assembly,” and called for support in implementing the cuts for the GOEs under their supervision.

The cut in the budget also affects the purchase of residential/office buildings, acquisition of land, rehabilitation of buildings and empowerment programmes of the MDAs in the 2020 budget. Others are: capacity building/training, construction and all other non-essential expenditures.

Exceptions are, however, made where such expenditures are absolutely warranted by the nature of an agency’s mandate. For example, security vehicles, ambulances and fire-fighting trucks are exempted from the cut in the provisions for vehicles. Similarly, hospital and school buildings are exempted from the cut in provisions for rehabilitation/construction of buildings.

In the memo that was obtained by LEADERSHIP, the government said that it was eliminating as much as possible non-critical capital expenditures, especially those classified as administrative capital expenditure.

Ahmed in the memo with reference number: FMFBNP/OHM/2020APACT/1 and  dated 17th March, 2020, said that “the personnel cost budgets for agencies will be maintained as currently provided but new recruitments are generally suspended. The overhead provisions will be reduced by 16.7 per cent across-board, except for security agencies, armed forces and healthcare Institutions.”

The minister said that the drastic fall in the price of crude oil well below the 2020 budget benchmark which was triggered by the global COVID-19 (coronavirus) pandemic, has negatively impacted the federal government’s revenue projections.

Mrs Ahmed, who disclosed that President Muhammadu Buhari has approved and directed the Ministry of Finance to revise the 2020 budget, stated that in doing so, “we are to prioritise growth-enhancing, pro-poor expenditures and social sector investments generally.” (Leadership)