Again, Nigeria’s economy has relapsed into recession, says Buhari

President Muhammadu Buhari, on Thursday, disclosed the country’s economy has relapsed into the second recession in four years, with significant adverse consequences.

Presenting the 2021 Budget tagged, “Budget of Economic Recovery and Resilience,” with a total estimate of N13.08 trillion, to the joint session of the National Assembly, President Buhari, however, said his administration was determined to lift Nigerians out of poverty through certain employment programmes over the next ten years.

He said: “The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the Coronavirus Pandemic. Real Gross Domestic Product (‘GDP’) growth declined by 6.1 per cent in the second quarter of 2020.

“This ended the three-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017. I am glad to note that, through our collective efforts, our economy performed relatively better than that of many other developed and emerging economies.

“GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences. However, we are working assiduously to ensure rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years.”

According to him, the 2021 budget proposal was computed based on key parameters & Fiscal Assumptions, namely: $40 oil benchmark; 1.86mbpd oil production (inclusive of condensates of 300,000 to 400,000 barrels per day); N379/$ exchange rate; 3.0 GDP growth and 11.95 per cent inflation rate.

Based on the foregoing fiscal assumptions and parameters, total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion, including Grants and Aid of N354.85 billion as well as the revenues of 60 Government-Owned Enterprises; while Oil revenue is projected at N2.01 trillion and Non-oil revenue is estimated at N1.49 trillion.

Other expenditures for the 2021 fiscal year include; N5.65 trillion for Non-Debt Recurrent Costs; N3.76 trillion for Personnel Costs; N501.19 billion for Pensions, Gratuities and Retirees’ Benefits; N625.50 billion for Overheads; N3.124 trillion for Debt Service; N484.49 billion for Statutory Transfers and N220 billion Sinking Fund (to retire certain maturing bonds).

Under the statutory transfers, the sum of N63.51 billion was proposed for Niger Delta Development Commission; N29.70 billion for North East Development Commission; N110.00 billion for National Judicial Council; N70.05 billion for Universal Basic Education Commission; N40.00 billion for Independent National Electoral Commission; N128 billion for National Assembly; N5.20 billion for Public Complaints Commission; N3 billion for Human Rights Commission and N35.03 billion for Basic Health Care Provision Fund.

As part of efforts geared towards enhancing national security and human capital development, President Buhari disclosed that “a major part of the 2021 recurrent cost estimate is allocated to paying salaries and overheads in MDAs providing these critical public services, including N227.02 billion for the Ministry of Interior; N441.39 billion for the Ministry of Police Affairs; N545.10 billion for Ministry of Education; N840.56 billion for Ministry of Defence and N380.21 billion for Ministry of Health.

Breakdown of the key capital spending allocations in the 2021 Budget include; N198 billion (inclusive of N150 billion for the Power Sector Recovery Plan); N404 billion for Works and Housing; N256 billion for Transportation; N121 billion for Defence; N110 billion for Agriculture and Rural Development; N153 billion for Water Resources; N51 billion for Industry, Trade and Investment; N127 billion for Education; N70 billion for Universal Basic Education Commission; N132 billion for Health; N100 billion for Zonal Intervention Projects and N64 billion for Niger Delta Development Commission.

He added that the 2021 budget deficit (inclusive of Government-Owned Enterprises and project-tied loans), is projected at N5.20 trillion, representing 3.64 per cent of estimated GDP, slightly above the 3 per cent threshold set by the Fiscal Responsibility Act, 2007.

President Buhari, however, explained that the deficit will be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from Privatization Proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.

While speaking on the current status of the country’s debt profile, President Buhari disclosed that the sum of N3.12 trillion is to be paid in 2021, representing an increase of N445.57 billion from N2.68 trillion in 2020.

He added that a total of N2.183 trillion has been set aside to service domestic debts while N940.89 billion has been provided for foreign debt service. N220 billion is provided for transfers to the Sinking Fund to pay off maturing bonds issued to local contractors and creditors.

According to him, total MDAs’ Overhead Costs and Government Owned Enterprises are projected to rise to N625.50 billion in 2021, mainly due to the inclusion of the overheads of an additional 50 Government Owned Enterprises, while Overhead provisions have also been made for newly created agencies.

Buhari added that an aggregate sum of N3.85 trillion is expected to be available for capital projects in 2021 including N1.80 trillion for MDAs’ capital expenditure; N745 billion for Capital Supplementation; N355 billion for Grants and Aid-funded projects; N20 billion for the Family Homes Fund; N25 billion for the Nigeria Youth Investment Fund; N336 billion for 60 Government-Owned Enterprises; N247 billion for capital component of Statutory Transfers and N710 billion for projects funded by Multi-lateral and Bi-lateral loans.

Appraising the 2020 Budget performance, President Buhari expressed reservations over the failure of revenue-generating agencies to meet up with expectations.

Going forward to improve independent revenue performance, President Buhari disclosed that he has since “directed that the cost profiles of Government Owned Enterprises (‘GOEs’) should be scrutinised and limits imposed on their cost-to-revenue ratios.

“Supervising Ministers have also been directed to ensure closer monitoring of the revenue-generating activities and expenditures of the Government Owned Enterprises.”

President Buhari also unveiled government plans to mitigate the unfolding recession and frustration of his administration development goals occasioned by the pandemic, Coronavirus.

“The Ministry of Agriculture and Rural Development will facilitate the integrated development of its sector by promoting crops’ value chains; as well as providing rural roads, water and sanitation, veterinary and pest controls, grazing, food and strategic reserves, and access to inputs and extension services.

“The 157 per cent increase in the capital allocation to the health sector is to enhance the capacity to deliver healthcare services through the procurement of equipment, vaccines and other facilities. Two centres of excellence, as well as one Accident and Emergency Centre, will be equipped in Federal Teaching Hospitals in each geopolitical zone.

“Some of the key intervention funds implemented so far include; Special Public Works programme aimed at providing employment opportunities to 774,000 youths across the 774 local government areas of Nigeria as well as the introduction of N25 billion Nigeria Youth Investment Fund.

“In furtherance of our inclusiveness agenda, the sum of N420 billion has been provided to sustain the Social Investment Programme. N20 billion has also been set aside for the Family Homes Fund, our Social Housing Programme.

”We have expanded our National Social Register, to include an additional one million Nigerians following the onset of Coronavirus. We recently introduced the N75 billion Survival Fund Programme to support and protect businesses from potential vulnerabilities.

“Furthermore, the Central Bank of Nigeria is reducing the interest rate on its intervention facilities from 9% to 5% with a 1-year moratorium till 31st March 2021, to provide concessional lending of N100 billion to households and small businesses; N100 billion to the healthcare and pharmaceutical industry and N1 trillion to large agricultural and manufacturing businesses.”

Meanwhile, the House of Representatives is expected to commence debate on the general principles of the 2021 budget proposal next Tuesday and Wednesday.

Giving the Vote of Thanks after the budget presentation, the Speaker of the House of Representatives, Honourable Femi Gbajabiamila assured that the National Assembly would give thorough and speedy consideration to the 2021 budget estimates presented by President Muhammadu Buhari.

Honourable Gbajabiamila said the promise that members of the 9th Assembly made to return the country’s annual budget to the January to December cycle, which they achieved last year, remained sacrosanct, hence the resolve to ensure a thorough job on the budget at hand.

While assuring that members of the National Assembly would hold themselves to the highest standards of integrity in the budget process, the Speaker reiterated the resolve of the Parliament to work with relevant government agencies to ensure that the budget meets the yearnings and aspirations of the Nigerian people.

“We have once again just experienced the beauty and majesty of our democracy – The Laying of the Budget proposals before the Legislature for consideration and approval.”

“I believe I speak on behalf of the entire National Assembly, in assuring you that this proposal will receive thorough and speedy consideration.

“We will collaborate with the Ministries, Departments and Agencies of the Executive to deliver a budget that meets the needs and matches the ambitions of the Nigerian people.

“And we will hold ourselves in the Legislature to the highest standards of integrity so that our deliberations and contributions to this process are motivated only by considerations of the best interests of the Nigerian people.”

He said: “When just over a year ago, we gathered in this chamber to receive the budget proposal and begin the appropriation process, we made specific commitments to the Nigerian people. We promised that we would pass the budget promptly, free of the rancour that had bedevilled the process in time past. We delivered on that promise.

“I thank my colleagues in the National Assembly for the dedication and commitment they showed last year during the appropriation process.

“Senators and members of the House of Representatives toiled night and day, sometimes through the night and into the wee hours of the morning, to ensure that we achieved our commitment to return to the January to December budget cycle as envisaged by the constitution.

“I do not doubt that we will exhibit the same commitment to nation-building and deliver a good budget on time. We cannot afford a return to the old practices, and we must do everything in our power to avoid such an outcome.

“We also promised to pass a budget that reflected our priorities – healthcare, education, public infrastructure and the development of an economy that is less dependent on fossil fuels and gives to all Nigerians, the ability to achieve their dreams equal to their effort and commitment.

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“We kept that promise too. We recognise that more needs to be done, and I assure all the Nigerian people that we will continue in this regard.”

The Speaker announced that “henceforth, all Ministries, Departments and Agencies who come to defend their budget proposals, will do so without their security details present.

“We must take this course of action to prevent the unacceptable proliferation of sidearms in the hearing rooms during such engagements.

“Additionally, the House intends to adhere to the Covid-19 social distancing protocols, and we need to be able to limit the numbers of people in these hearing rooms at any time.

“The world changes quickly, often without notice, and always with consequences. We have learned this lesson at a high cost in the past few months, and we must ensure that the lessons learned are reflected in the budget that emerges from this appropriations process. We must make sure that we are better prepared for next time because there will be the next time.”

Speaking after the budget presentation, Chairman, House Committee on Media and Public Affairs, Hon. Benjamin Kalu assured that the Parliament will not fail to re-direct the budget to critical areas that will benefit the citizens, adding that it will not be “garbage in – garbage out.”

NIGERIAN TRIBUNE