By Charles Ike-Okoh
THUR, OCT 08 2020-theG&BJournal- President Muhammadu Buhari said his administration’s 2021 N13.8 trillion budget provides a clear road map for the country’s ‘’post-coronavirus economic recovery, and it is expected to accelerate our economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.”
He presented the budget proposal to the members of the National Assembly (NASS) today, and implored them to complete deliberations on the budget before the end of 2020 ‘’so that the Appropriation Act will come into effect by January 2021.’’
The President told Assembly members that he has directed the Minister of Finance, Budget and National Planning to finalize the Finance Bill and ‘’to forward it for your kind consideration.’’
‘’The Finance Bill is to support the realization of our 2021 revenue projections and to enhance the efficiencies of fiscal incentives.’’ He added that in ‘’accordance with the Fiscal Responsibility Act 2007, we will prepare and publish a tax expenditure statement for 2019. The 2019 statement will be the first of these annual statements setting out the estimated costs of tax exemptions, incentives and rebates provided under Nigeria’s Revenue and other Laws. The 2019 statement is expected to contribute to public discussion on the use of our tax policies and systems to achieve socio-economic development.’’
The N13.8 trillion budget include N1.35 trillion spending by government owned enterprises.
The budget expenditure comprise of
1-Non-debt recurrent cost of N5.65 trillion
2 -Personnel cost of N3.76 trillion
3- pension, gratuities and retirees benefits of N500.19 billion
4-Over heads of N625.5 billion
5-Debt Service provision of N3.124 trillion
6- Statutory transfer of N484.49 billion.
7-Sinking fund of N220 billion to retire certain maturing bonds
The 2021 government deficit, inclusive of government owned enterprises and projected loans, is projected at N5.2 trillion. This represents 3.64% of GDP slightly above the 3% thresh hold set by the Fiscal Responsibility Act 2007.
‘’It is however to be noted that we still face the existential challenge of coronavirus pandemic and its aftermath. I believe that this provides a justification to exceed the thresh hold as provided for by this law,’’ the president said.
The President said the deficit will be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from privatization proceeds and N709.69 billion in draw downs on multilateral and bilateral loans secured for specific projects and programmes.
The sum of N484.49 billion provided for statutory transfers in 2021 represents an increase of N56.46 billion or 13% over the revised 2020 provision.
The components of the statutory transfers are:
1-Niger Delta Development Commission N63.51 billion
2- The North East Development Commission N29.7 billion
3- National Judicial Council N110 billion
4-Universal Basic Education Commission N70.05 billion
5-Independent Electoral Commission (INEC) N40 billion
6-National Assembly N128 billion
7-Public Complaints Commission N5.2 billion
8-Human Rights Commission N3 billion
9-Basic Health Care Provision Fund N35.03 billion.
‘’In compliance with Fiscal Responsibility Act 2007 all beneficiaries of statutory transfers will be required to provide the budget office of the federation with the periodic reports on the allocations and expenditure of funds for inclusion in the quarterly budget implementation report,’’ the President said.
In efforts to enhance national security and human capital development, a major part of the 2021 recurrent cost estimate is allocated to pay severance and over heads in MDAs providing these critical public services.
These allocation include
-N227.02 billion for the Ministry of Interior
-N441.39 billion for the Ministry of Police Affairs
-N545.1 billion for the Ministry of Education
-N840.5 billion for Ministry of Defence
-N380.21 billion for Ministry of Health
Personal cost is still the largest single item of expenditure, accounting for 34% of total federal government spending in seven months and it is projected to account for 33% of 2021 expenditure.
The president directed that all agencies ensure that they obtain all necessary approvals before embarking on any fresh recruitment. ‘’Any breach of this directive will be severely sanctioned,’’ he said.
The sum of N3.12 trillion is provided for debt service ‘’because we remain committed to meeting our debt service obligation,’’ according the President. This represents an increase of N445.57 billion from N2.68 billion in 2020.
A total of N2.183 trillion is set aside to service the domestic debts while N940.89 billion is provided for foreign debt service. N220 billion is provided for transfer to the sinking fund for maturing bonds issued to local contractors and creditors.
The total over head cost of MDAs and government owned enterprises are projected at N625.5 billion in 2021 mainly due to the inclusion of the overhead of additional 15 government owned enterprises.
An aggregate sum of N3.85 trillion is expected to be available for capital projects in 2021. This is N1.15 trillion higher than the 2020 provision.
The president said the capital expenditure is focused on the completion of as many on-going projects as possible rather than the commencement of new ones.
The power sector is allocated N198 billion inclusive N150 billion for the power sector recovery plan in the capital expenditure. N440 billion is allocated to Works and Housing Ministry. The Transport sector gets N256 billion to cover for projects such as the Lagos-Ibadan-Kano rail line, Abuja-Kano line, Port Harcourt-Maiduguri line and the Itakpe-Ajaokuta-Warri line.
The defence is allocated N121 billion and Agric and Rural Development gets N110 billion. The Water Resources Ministry will get N153 billion. Industry, Trade and Investment will receive N51 billion, Education Ministry allocation is a 65% increase to N127 billion, Universal Basic Education Commission N70 billion, Health N132 billion, Zonal Intervention projects N100 billion and the Niger Delta Development Commission N64 billion.
The provision of N65 billion for the Presidential Amnesty Programme is retained in the 2021 budget in addition the sum of N63.5 billion is been appropriated for the Niger Delta Development Commission and 24.47 billion is been provided for the capital project of the Ministry of the Niger Delta Affairs.
‘’These allocations is to further support the development of the region while facilitating the completion of important on-going projects such as the East-West road,’’ the President noted, adding that the government is implementing several measures to overcome fiscal constraints in addition to the strategic growth initiative, ‘’we are leveraging technology and automation as well as more effective monitoring of independently generated revenues.’’
The Fiscal parameters in the proposed budget include:
-Benchmark oil price of N40$ per barrel
-Exchange Rate of N379/US$
-GDP growth rate of 3%
-Daily Crude oil production of 1.86 mbpd inclusive of condensates of 300,000-400,000 per day and
-Inflation at 11.95%
-Total federally distributed revenue is estimated at N8.433 trillion in 2012. The total revenue available currently fund the 2021 is estimated at N7.886 trillion. These include rents and aids of N354.85 billion as well as revenues of government or enterprises.
Oil revenue is projected at N2.01 trillion and non-oil revenue is estimated at N1.49 trillion.