The Federal Government yesterday announced strategic buffers to curtail the impact of falling prices of crude oil at the global market.

Minister of Finance, Budget and National Planning, Zainab Ahmed, briefing State House Correspondents after the federal executive council meeting presided over by President Muhammadu Buhari at the Presidential Villa, sought to allay fears of an uncontrollable crisis, stressing that the government was committed to maintain economic stability despite the headwinds.

 According to her, the N10.8 trillion 2020 budget will only be reduced by N1.5 trillion.

 Also, the oil benchmark of $57 in this year’s budget has been slashed to $30, while there will be no recruitments or replacements by government agencies till further notice except in the security sector.

The minister said, however, that the government was not contemplating downsizing of the workforce as, according to her, President Muhammadu Buhari has directed that salaries and pensions of workers should be promptly paid despite the current economic downturn.

The Minister explained: “What we have done is that we have written every ministry and given them guidelines on how these adjustments will be made to enable us to have detailed inputs from the ministries.

‘‘But I can just say that the bulk cut is about N1.5 trillion reduction in the size of the budget. This includes N457 billion from PMS under-recovery. It affects the federally funded upstream projects with about 25 percent cut. We work out the exact amount when we get inputs from the Ministries, Departments and Agencies (MDAs).”

On concerns of the economy slipping back into recession, she acknowledged that the government has concerns, saying: “This is resulting in about 40 to 45 percent reduction and also it will affect the states because it means the Federation Account Allocation Committee (FAAC) will be significantly reduced.

‘‘FAAC is just a pool of funds and we share what is realized, so it will affect the states as well. So, we are expecting the states to take similar measures to amend the plans that we have made and bring them down to current realities. It is just a question of deferring some nonessential expenditure so that when things turn we might actually go back to our plans.’’

On plans to reverse the recently increased Value Added Tax (VAT) and excise duty, Mrs. Ahmed said that she would not make any commitment on that right now because: “these are provisions in the law in the Finance Act and as you know, we will in the amendment to the MTEF and the budget, have to engage with the National Assembly.”

‘‘The fiscal authorities are working on with the fiscal authority team and we will get Mr. President’s approval before we come up with what we will announce to the public.”

On the directive to stop recruitment into government jobs, the minister said: “What the agencies have been doing is replacement but even that is being suspended. When things improve, we will go back to the issue of recruitment, but for now, our wage bill is already very high.

‘‘The President has directed that salaries and pensions must be paid unfailingly, so we are not looking at downsizing in anyway. We are to maintain our workforce as it is, but we are just stopping the increase in the size of the nominal roll.”

On benchmark, she said that the Federal Government was working on the worst-case scenario of $30 per barrel “and also we are holding to the production numbers of 2.18 million barrels per day.”

‘‘This you will remember is approved by the National Assembly. This is our own analysis and we will start engaging the National Assembly,” she added.

On the implications for deficit, she said, “what this means is that our deficit will increase. Our current deficit in the 2020 budget is N1.8 trillion. ‘‘With the decline in revenue and even with the adjustment in expenditure the deficit increases. That is why we have to engage the National Assembly to ensure we stay with the fiscal limits as defined in the fiscal responsibility act.”

She further explained that the budget deficit might go up by N1.5 trillion but that also depends on the details of the cuts being known.

‘‘We might also decide to amend the threshold but on the fiscal side we have decided to consider the worst case scenario and that is $30 per barrel. You know that today (Wednesday) the price has gone up to about $32 per barrel but we are still staying at $30 to be on the safe side,” the Minister said.