FG targets N8.155trn revenue in 2020 fiscal year
proposes N512bn for power, roads, housing in 2020
President Muhammadu Buhari, on Tuesday, formally presented an expenditure framework of N10.33 trillion and N8.155 trillion revenue to the joint session of the National Assembly for legislative scrutiny.
As stipulated in the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) approved by the National Assembly last week, Federal Government adopted a conservative oil price benchmark of US$57 per barrel, daily oil production estimate of 2.18 mbpd and an exchange rate of N305/$ for 2020 and 2.93% GDP growth of 2.93% driven largely by non-oil output, as economic diversification accelerates, and the enabling business environment improves while inflation is expected to remain slightly above single digits.
Breakdown of the revenue, the proposed N8.155 trillion revenue comprises oil revenue N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenues of N3.7 trillion representing 7 per cent higher than the 2019 comparative estimate of N7.594 trillion inclusive of the Government Owned Enterprises.
The expenditure estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers). Debt service is estimated at N2.45 trillion, and provision for the Sinking Fund to retire maturing bonds issued to local contractors is N296 billion.
From the sum of N556.7 proposed for Statutory Transfers, N125 billion is for National Assembly; N110 billion for Judiciary; N37.83 billion for North East Development Commission (NEDC); N44.5 billion for Basic Health Care Provision Fund (BHCPF); N111.79 billion for Universal Basic Education Commission (UBEC) and N80.88 billion for Niger Delta Development Commission (NDDC) while allocation to National Human Rights Commission was increased from N1.5 billion to N2.5 billion, representing 67 percent increase.
President Buhari also informed the lawmakers of his administration’s resolve to roll-over capital projects that are not likely to be fully funded by the end of 2019 into the 2020 Budget. We are aware that the National Assembly shares our view that these projects should be prioritised and given adequate funding in the 2020 Appropriation Act.
Breakdown of allocation for capital expenditure showed that: total sum of N262 billion is for Works and Housing; N127 billion is for Power; N123 billion is for Transportation; N112 billion is for Universal Basic Education Commission; N100 billion for Defence; N100 billion for Zonal Intervention Projects; N83 billion for Agriculture and Rural Development; N82 billion for Water Resources while N81 billion is for Niger Delta Development Commission.
The sum of N48 billion is for Education; N46 billion is for Health; N40 billion is for Industry, Trade and Investment; N38 billion for North East Development Commission; N35 billion for Interior; N30 billion for Social Investment Programmes; N28 billion for Federal Capital Territory and N24 billion for Niger Delta Affairs Ministry.
According to him, the sum of N2.18 trillion debt service (representing 1.52 percent of estimated GDP) including drawdowns on project-tied loans and the related capital expenditure for year 2020, adding that the deficit will be financed by new foreign and domestic borrowings, Privatization Proceeds, signature bonuses and drawdowns on the loans secured for specific development projects.
From the sum of N2.45 trillion proposed for debt service in 2020 budget, 71 per cent is to service domestic debt which accounts for about 68 per cent of the total debt while the sum of N296 billion is provided for the Sinking Fund to retire maturing bonds issued to local contractors.
While speaking on the Non-Debt recurrent expenditure, President Buhari proposed the sum of N3.6 trillion for personnel and pension costs, an increase of N620.28 billion over 2019.
“This increase reflects the new minimum wage as well as our proposals to improve remuneration and welfare of our Police and Armed Forces. You will all agree that Good Governance, Inclusive Growth and Collective Prosperity can only be sustained in an environment of peace and security.
“Our fiscal reforms shall introduce new performance management frameworks to regulate the cost to revenue ratios for Government-Owned Enterprises, which shall come under significant scrutiny. We will reward exceptional revenue and cost management performance, while severe consequences will attend failures to achieve agreed revenue targets.”
Mr President also expressed optimism that the “increasing share of non-oil revenues underscores our confidence in our revenue diversification strategies, going forward. Furthermore, in our efforts to enhance transparency and accountability, we shall continue our strict implementation of Treasury Single Account (TSA) to capture the domiciliary accounts in our foreign missions and those linked to Government-Owned Enterprises.”
To this end, President Buhari reiterated his administration’s resolve towards aggressive and re-energised revenue drive will maintain debt-revenue ratio at acceptable and manageable levels, through the adoption of innovative borrowings instruments such as Sukuk, Green Bonds and Diaspora Bonds.
Under the National Social Investment Programme, Federal Government proposed N65 billion for the Presidential Amnesty Programme and N37.83 billion for North East Development Commission with the view to fast-track the rebuilding efforts in the North East region.
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While giving the overview of the country’s economy performance so far, President Buhari explained that “Nigerian economy thus far has recorded nine consecutive quarters of GDP growth. Annual growth increased from 0.82 percent in 2017 to 1.93 percent in 2018, and 2.02 percent in the first half of 2019. The continuous recovery reflects our economy’s resilience and gives credence to the effectiveness of our economic policies thus far.
“We also succeeded in significantly reducing inflation from a peak of 18.72 percent in January 2017, to 11.02 percent by August 2019. This was achieved through effective fiscal and monetary policy coordination, exchange rate stability and sensible management of our foreign exchange. We have sustained accretion to our external reserves, which have risen from US$23 billion in October 2016 to about US$42.5 billion by August 2019. The increase is largely due to favourable prices of crude oil in the international market, minimal disruption of crude oil production given the stable security situation in the Niger Delta region and our import substitution drive, especially in key commodities.
“The foreign exchange market has also remained stable due to the effective implementation of the Central Bank’s interventions to restore liquidity, improve access and discourage currency speculation. Special windows were created that enabled small businesses, investors and importers in priority economic sectors to have timely access to foreign exchange.”
In his remarks, the Senate President, Senator Ahmad Lawan who reiterated the 9th Assembly commitment towards ensuring accelerated passage of the 2020 budget “in a good and desirable time”, expressed optimism that the cordial relationsip between the Executive and Legislature will provide those laudable objectives of physical infrastructure and socio-economic services to Nigerian citizens.
“The public, as well as the private sectors need a reliable Budget cycle that is predictable, and reliable for planning and execution of their fiscal and financial policies and programmes. It is therefore, necessary that the present cycle is changed to a January-December cycle. In this regard, the National Assembly, and the Executive must work together to ensure the realization of this important objective.
“The National Assembly after the receipt of the Budget Estimates today, will swing into swift action, to start work. Both Chambers of the National Assembly have constituted their Committees, we are therefore, ready to start processing the Budget estimates.
“The 9th National Assembly has shown capacity, commitment and willingness to treat legislative matters that will impact on the lives of our citizens with dispatch and every sense of urgency. This was clearly demonstrated last week, when we received, processed and passed the request of Mr President on the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).
He assured that the National Assembly will treat the 2020 Budget Estimates with the same commitment or even more. In our effort to pass the Budget, we will also be guided by the legislative requirement of a thorough scrutiny.
To this end, he assured that the National Assembly Committees are “ready to receive the Honourable Ministers and other heads of government agencies for the defence of the Budget estimates of the various MDAs. In order for timely passage, all MDAs are expected to appear before the Committees for the defence of their Budget estimates within the month of October. We have earmarked the month of October to be the sole window for all Budget defence activities in this year, by all MDAs.”
Senator Lawan who underscored the need to ensure prudence, economy and value for money in the delivery of services to the citizenry, maintained that “over the years, our public procurement process appears to be encumbered by a lengthy bidding process and inadequate mobilisation of funds, amongst other limitations of the Public Procurement Act 2007, as amended.
“These tend to delay execution of Government programmes and projects, or even stalled achieving the execution at all. The National Assembly will fast track the amendment of the Act, to ensure effective and efficient implementation of our Budgets.
In his remarks, the Speaker of the House of Representatives, Hon. Femi Gbajabiamila who observed that there are significant structural flaws in the process of passage and implementation of our annual national budgets, pledged the resolve of the 9th Assembly towards addressing “these past imperfections and to leave a legacy of budgets that are enacted without rancour, implemented diligently and that achieve the objectives of national development for which they are intended.
“We fully intend to return to a January to December budget cycle and to put an end to the policy instability and economic uncertainty that is a consequence of an unpredictable budget cycle.
“We recognise that our highest ambitions and the collective best interests of our nationhood can only be achieved when the legislature and the executive work together in pursuit of our shared ambitions. Therefore, we will make every effort in this 9th assembly to achieve constructive collaboration with the executive on all matters of appropriation, implementation and oversight.
“We will seek collaboration, but we will not yield on our constitutional obligation to ensure faithful compliance with the letter and spirit of the Appropriation Act by the Ministries, Departments and Agencies of the government. We will strive for big wins, resisting the temptation to bask in the false allure of mediocre achievements because this moment calls for nothing short of grand ambition, and transformative ideas. Above all else, we will hold ourselves in the legislature and others, to the highest standards of probity because to fall short of excellence will be to betray the calling of leadership to which we all have answered,” he urged.