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Published On: Fri, Oct 9th, 2020

2nd recession imminent before December ends – Buhari warns

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  • Vows to lift 100million out of poverty

  • Releases N2.1trn for 2020 capital projects

  • Proposes N3.85trn for 2021 Capital projects

  • Recurrent expenditure gulps N5.65trn

  • N100bn for Constituency projects

  • Budget deficit stands at N5.2trn

  • N4.28trn to be borrowed, N484.49 for statutory transfer

  • Defence gets lion share of N840.56bn

  • Amnesty programme receives N65bn

 

By Ikechukwu Okaforadi, Musa Adamu and Christiana Ekpa

Amidst cheers and excitement, President Muhammadu Buhari yesterday laid before a joint session of the National Assembly, the 2021 budget of N13.08trillion, during which he cautioned Nigerians to brace up for the second wave of recession which he said will hit the country’s economy before the end of December.

He however vowed to pursue his administration’s goal of lifting one hundred million Nigerians out of poverty, even as he disclosed that the government has released N2.1trillion for capital projects in the 2020 budget.

Speaking further, the President said about N3.85trillion has been earmarked for capital projects in the 2021 fiscal year, while the non debt recurrent expenditure for next year will gulp N5.65trn. He said this is N1.15trillion higher than what was budget for capital in 2020.

In addition, he budgeted N100 billion for Constituency Projects of the lawmakers of both Chambers of the National Assembly, just as N128 billion has been slated for statutory transfer to the National Assembly for payment of salaries and allowances next year. This will therefore form part of the proposed N484.49billion transfers to other budget stakeholders.

A study of the 2021 budget breakdown as submitted by the President indicated that the Minister of Defense received the lion share of N840.56billion, followed by Ministry of Education, which received N545.10billion, while the Ministry of Health received N380.21billion in the 2021 money Bill.

Giving insight into the proposed borrowing plans to sustain the economy, the President said the 2021 budget will operate at a deficit of N5.2trn, just as N4.28trilion will be borrowed to finance the budget deficit.

The parameters & fiscal assumptions underpinning the 2021 appropriation included: Benchmark oil price of 40 US Dollars per barrel; Daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day).

Exchange rate of N379 per US Dollar; and Gross Domestic Product growth projected at 3.0 percent and inflation closing at 11.95 percent.

“Based on the foregoing fiscal assumptions and parameters, total federally distributable revenue is estimated at N8.433 trillion in 2021. Total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion. This includes Grants and Aid of N354.85 billion as well as the revenues of 60 Government-Owned Enterprises.

“Oil revenue is projected at N2.01 trillion. Non-oil revenue is estimated at N1.49 trillion. As you will observe, the format of the 2021 Appropriation Bill has been modified to include budgeted revenues, no matter how small, for each MDA, to focus on internal revenue generation. Accordingly, I implore you to pay as much attention to the revenue side as you do to the expenditure side.

“An aggregate expenditure of N13.08 trillion is proposed for the Federal Government in 2021. This includes N1.35 trillion spending by Government-Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion. For 2021, the proposed N13.08 trillion expenditure comprises:

“Non-debt Recurrent Costs of N5.65 trillion; Personnel Costs of N3.76 trillion; Pensions, Gratuities and Retirees’ Benefits of N501.19 billion; Overheads of N625.50 billion; Debt Service of N3.124 trillion; Statutory Transfers of N484.49 billion; and Sinking Fund of N220 billion (to retire certain maturing bonds).

“The 2021 Budget deficit (inclusive of Government Owned Enterprises and project-tied loans), is projected at N5.20 trillion. This represents 3.64 percent of estimated GDP, slightly above the 3 percent threshold 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 threshold as provided for by this law.

“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.”

STATUTORY TRANSFER TO GOVT ARMS AND AGENCIES

The sum of N484.49 billion has been provided for Statutory Transfers in the 2021 Budget, representing an increase of N56.46 billion (or 13 percent) over the revised 2020 provision. It includes:

Niger Delta Development Commission (N63.51 billion); North East Development Commission (N29.70 billion); National Judicial Council (N110.00 billion); Universal Basic Education Commission (N70.05 billion); Independent National Electoral Commission (N40.00 billion); National Assembly (N128.00 billion); Public Complaints Commission (N5.20 billion); Human Rights Commission (N3.00 billion); and Basic Health Care Provision Fund (N35.03 billion).

RECURRENT EXPENDITURE TO MDAs

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.

ON DEBT SERVICE

The President said in its commitment to meeting the government debt service obligations, the budget provided N3.12 trillion for this in 2021, representing an increase of N445.57 billion from N2.68 trillion in 2020.

He said 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, just as N220 billion is provided for transfers to the Sinking Fund to pay off maturing bonds issued to local contractors and creditors.

OVERHEAD COSTS

Speaking on overhead costs, the President said total overhead costs of MDAs 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. He added that overhead provisions have also been made for newly created agencies, urging MDAs to adhere to extant expenditure controls as a measure to keep a tab on running costs.

CAPITAL EXPENDITURE

While indicating that an aggregate sum of N3.85 trillion is expected to be available for capital projects in 2021, he gave the details as:

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.

He said Capital expenditure in 2021 remains focused on the completion of as many ongoing projects as possible, rather than the commencement of new ones, adding “We have also made efforts to ensure equity in the distribution of projects and programmes in the proposed budget. I will be providing the National Assembly a list of some of the most critical projects which we must work collectively to ensure they receive adequate funding.

HIGHLIGHTS OF THE 2021 CAPITAL PROJECTS

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

Meanwhile, the President said to maintain the peace in the Niger Delta region for economic and social activities to thrive, the provision of N65 billion for the Presidential Amnesty Programme has been retained in the 2021 Budget.

“In addition, the sum of N63.51 billion has been appropriated for the Niger Delta Development Commission and N24.27 billion has been provided for the capital projects of the Ministry of Niger Delta Affairs. These allocations should further support the development of the region by facilitating the completion of important ongoing projects, such as the East-West Road”, he said.

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, Social Housing Programme. N75 billion Survival Fund Programme to support and protect businesses from potential vulnerabilities. N100 billion to households and small businesses; N100 billion to the healthcare and pharmaceutical industry; and N1 trillion to large agricultural and manufacturing businesses, according to the President.

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