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Published On: Fri, Oct 11th, 2019

Pros, cons of budget 2020

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President Muhammadu Buhari on Tuesday presented the Appropriation bill of N10.33 trillion to the National Assembly for consideration and eventual passage into law.
With the renewed camaraderie between the lawmakers and the President as well as the perceived enthusiasm with which the President was received in the National Assembly ahead of his presentation, one could only hope that the consideration and passage of the Appropriation Bill into law will be hitch free.
This expectation could be hinged on the ease with which the Presidency accommodated the adjustments made by the National Assembly to the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
The seamless working relationship between the the Ninth Assembly and the President signals the beginning of harmonious intercourse between the two important arms of government, legislature and executive, in recent times. The ability of both arms to strike a similar cord on the MTEF and FSP gives an impression of good things to come.
The timely consideration of the Appropriation Bill by the Extraordinary Federal Executive Council (FEC) to ensure that the document gets to the lawmakers on time shows the determination of the Executive to return the nation’s budget cycle to January-December.
In the recent past, the Executive had found it difficult to present the Appropriation Bill earlier than December even when the Legislature had been insisting that budget presented to it later than September of every year would not be passed earlier than March. It is perhaps the determination of the executive to return the fiscal cycle to January-December calendar that the Buhari’s administration decided to ensure that the budget was presented early to the parliament this year.
With the early presentation of the money bill to the parliament, it is expected that the lawmaker will expeditiously, but meticulously, treat the bill with a view to passing it into law without drawing the usual acrimonious banter from the executive.
A critical perusal of the synopsis of the budget given by the President in his speech indicated an ambitious projection of a prosperous economy in 2020. With a benchmark for oil price at $57 per barrel; daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per US Dollar for 2020, the projections are by no means realistic.
All things being equal, it is expected that the price of crude, currently above $70 per barrel will continue on the upward swing for some time; daily oil production targets can be achieved provided that the slim peace in the Niger delta region is consolidated while maintaining the exchange rate could be hassle-less.
The President’s categorical declaration that his administration would concentrate on the completion of ongoing projects and those other abandoned ones signals his determination to ensure continuity. Infrastructural projects, especially roads and rail, hitherto abandoned are going to receive funding for completion in 2020.
He said “The main emphasis will be the completion of as many ongoing projects as possible, rather than commencing new ones. MDAs have not been allowed to admit new projects into their capital budget for 2020, unless adequate provision has been made for the completion of ALL ongoing projects.
Accordingly, we have rolled 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.”
This, of course is a good news for the beleaguered citizens who have had to live with life threatening infrastructures that have made life not only short but brutish.
There seems to be a directive for paradigm shift from the old patterns as the President has indicated that performances of all government enterprises entitled to revenue rations would now be measured. He said “We will reward exceptional revenue and cost management performance, while severe consequences will attend failures to achieve agreed revenue targets.”
He equally showed his administration’s determination to checkmate institutionalized corruption in the civil service by ordering all government ministries, departments and agencies to be captured on the Integrated Payroll and Personnel Information System (IPPIS) platform by the end of October 2019.
Indiscriminate recruitments by government agencies where nepotism walks on all fours has been halted with the directive that they must get necessary approvals before embarking on their usual ‘under-table’ recruitments.
Still on cost saving measures, the MDAs have been ordered to ensure strict adherence to government regulations regarding expenditure control measures. “The proliferation of Zonal, State and Liaison Offices by Federal Ministries, Departments and Agencies (‘MDAs’), with attendant avoidable increase in public expenditure, will no longer be tolerated,” he said.
The proposed reforms in the oil and gas sector promises to attract investors with a view to creating thousands of jobs. To this extent, the President had promised to forward to the lawmakers two Petroleum Industry Bills (PIB) aimed at reviewing the fiscal terms for deep offshore fields to reflect current realities in the industry in order to attract more revenues into government coffers.
According to the President, the passage of the PIB could generate at least 500 million US dollars additional revenue for the Federal Government in 2020, and over one billion dollars from 2021.
According to the President, the 2020 Budget is expected to accelerate the pace of the nation’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion. “We are optimistic of attaining higher and more inclusive GDP growth in order to achieve our objective of massive job creation and lifting many of our citizens out of poverty,” he assured.
The efficiency of port operations will also be enhanced by implementing a single customs window, speeding up vessel and cargo handling and issuing more licenses to build modern terminals in existing ports, especially outside Lagos, he added.
Ambitious as the proposal may promise, the budget has received knocks from the opposition as it has been described as a strangulating law that will only entrenched poverty in the land.
The inclusion of the proposed increase in the Value Added Tax (VAT) from 5 to 7.5 percent by the government has not been spared. This is notwithstanding the fact that the President attempted to explain that the additional revenues will be used to fund health, education and infrastructure programmes.
Already, lawmakers are divided on the decision of the government to increase VAT with its expected consequential inflationary effects. Increase in taxes will definitely increase the sufferings of the people.
While the government in its resolve to allocate funds to priority areas of infrastructure, the opposition, particularly the People’s Democratic Party (PDP) had carpeted the Buhari’s administration for misplacing its priorities.
For instance, Works and Housing (N262 billion); Power (127 billion); Transportation (123 billion), according to the opposition were conduits to divert public funds. This, it maintained, had been allocated huge funds in the past without commensurate results.
The opposition therefore called on the members of the National Assembly to redirect the budget by allocating more funds to education and health currently allotted N48 billion and N46 billion respectively. The Social Investment Program (SIP) also got a paltry N30 billion.
The amount allocated to debt servicing has been taking flaks from critics. They argue that earmarking a huge chunk of N2.45 trillion, approximately one quarter of the entire budget, for debt servicing is outrageous and unconscionable.
In any case, the ball is right now is the court of the parliament. The lawmakers statutorily have the right to the nation’s purse and being the closest to the people, know exactly which areas should attract government priorities and investments”
Since the Appropriation Bill is not cast in stone, the parliament is expected to do the needful by meticulously scrutinizing the document with a view to enacting a law that will be of benefit to the sheer majority of Nigerians in the 2020 fiscal year. Nothing less is expected.

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