Dissecting PMB’s 2020 Budget

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As reactions continue to trial the 2020 budget proposal presented to the National Assembly on Tuesday by President Muhammadu Buhari, MARY AMODU examines some of the highlights and projections.

The 2020 budget proposal as been generating reactions since it was laid before a joint session of the National Assembly by President Muhammadu Buhari on Tuesday.

Hopes have continued to rise among many Nigerians, particularly the unemployed who immediately gazed the title of the budget: ‘Budget of Sustaining Growth and Job Creation’, and as such, are expecting meaningful impact of the budget in their lives.

In the N10.33 trillion proposal, Buhari set aside N2.45 trillion for debt servicing, while Sinking Fund to retire maturing bonds issued to local contractors had N296 billion.

The budget proposal also included statutory transfers of N556.7 billion and non-debt recurrent expenditure of N4.88 trillion.

The President noted that N8.155 trillion was estimated as the total federal government revenue in 2020. This, according to him, included oil revenue (N2.64 trillion); non-oil tax revenues (N1.81 trillion); and other revenues (N3.7 trillion).

The 2020 projection, according to the President was seven per cent higher than the 2019 comparative estimate of N7.594 trillion, inclusive of the Government Owned Enterprises.

Buhari said budget deficit was projected to be N2.18 trillion in 2020, adding that it will be financed by new foreign and domestic borrowings, privatization proceeds, signature bonuses and drawdowns on the loans secured for specific development projects.

According to him, government had 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 per US Dollar for the 2020 budget proposals as the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) set out the parameters.

Despite government’s assurance that it will not embark on new projects, Works and Housing sectors take the lion’s share of the proposed budget, which is followed with N262 billion.

It was followed by Power (N127 billion); Transportation (N123 billion); Universal Basic Education Commission (N112 billion); Defence (N100 billion); Zonal Intervention Projects (N100 billion); Agriculture and Rural Development (N83 billion); Water Resources (N82 billion); and Niger Delta Development Commission (N81 billion).

Education had (N48 billion); Health (N46 billion); Industry, Trade and Investment (N40 billion); North East Development Commission (N38 billion); Interior (N35 billion); Social Investment Programmes (N30 billion); Federal Capital Territory (N28 billion); and Niger Delta Affairs Ministry (N24 billion).

In his speech, the president said the main emphasis will be the completion of many ongoing projects as possible rather than commencing new ones, adding that Ministries, Departments and Agencies (MDAs) were not allowed to admit new projects into their capital budgets for 2020, unless adequate provision had 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 prioritized and given adequate funding in the 2020 Appropriation Act.

“Therefore, I will once again commend the 9th National Assembly’s firm commitment to stop the unnecessary cycle of delayed annual budgets. I am confident that with our renewed partnership, the deliberations on the 2020 Budget shall be completed before the end of 2019 so that the Appropriation Act will come into effect by the 1st of January,” he said.

The sum of N556.7 billion, which was provided for Statutory Transfers in the 2020 Budget, had N125 billion for the National Assembly; N110 billion for the Judiciary; N37.83 billion for the North East Development Commission (NEDC); N44.5 billion for the Basic Health Care Provision Fund (BHCPF); N111.79 billion for the Universal Basic Education Commission (UBEC); and N80.88 billion for the Niger Delta Development Commission (NDDC), which is now being supervised by the Ministry of Niger Delta Affairs.

The president had said the non-debt recurrent expenditure includes N3.6 trillion for personnel and pension costs, an increase of N620.28 billion over 2019, saying the increase reflected the new minimum wage as well as proposals to improve remuneration and welfare of the police and armed forces.

Experts disagree with budget, VAT increment

However, economic pundits have disagreed on the increment in budget and Valued Added Tax which was recently announced, and examined how impactful it would be on the lives of average Nigerians.

Speaking on the increment of the budget and VAT, the Lead Director, Centre for Social Justice, Eze Onyekpere noted that Increment of VAT is long overdue, adding that Nigeria may be the country that pays lowest tax in the World and according to him, it has enhanced lower budget.

“We have the lowest VAT rate in the whole of the World and West Africa. You cannot make an omelette without breaking an egg. Nigerians need to understand that we need to contribute more.

“I am agitating for the removal of fuel subsidy because it has become an engine of fraud. Under the government of GEJ NNPC was claiming subsidy of 35million litres a day, fastfarward we have a new government who says that subsidy is a fraud who is now claiming subsidy of 55/60million an additional 20/25 million litres per day,” he said.

When asked whether he agreed with the perception that the 2020 budget proposal will in any way improve the economy or rather impoverished Nigerians, he stressed that its impact depends on the budget implementation.

He said, “I am not looking at it whether it would improve or impoverish Nigerians. It depends on how well it is implemented. It also depends on the political will to plug the leaks.”

On his part, Political analyst and columnist of Premium Times, Hon. Majeed Dahiru while speaking with LEADERSHIP on the telephone, raised some questions, expressing doubt on the positive impact of 2020 budget on the lives of average Nigerians.

Dahiru, who also backed budget increment sequel to growth in Nigeria’s population, condemned increment of VAT and stressed that it is expedient Nigeria expands its revenue base through viable investments rather than inflicting more pain on already impoverished Nigerians.

He said, “Beyond the yearly ritual of budget presentation to the National Assembly by the President, the major question is, how implementable is it? Is the revenue projection of 8million achievable? How sustainable is the 2.4trillion enmarked for debt servicing also sustainable?

“If you consider all these factors, you will agree with me that the budget will not achieve much in the next political year. So, there is urgency to expand Nigeria’s revenue base because it cannot be expanded through revenue taxation.

“However, we need to review the national revenue to reflect a sizable budget for 200million population.

“We have an adequate budget and government spend in a manner that boosts the economy through the position of infrastructure, increase in wages, salaries of workers and other spending to reflect the economy only that if we have enough businesses that are actually taxable but the first thing is to create wealth.

“Nigeria needs to think of how to create wealth and this can only be done through an expanded window of an increase in Nigeria’s exports competitiveness as well as overseas investments or else it will remain a yearly ritual and this does not take us anywhere. We need to question our fiscal position, so we need to work harder to get a progressive Nigeria.”

Another political analyst, Opeyemi Duke while expressing his view tagged the budget as ‘Budget of corruption’, saying this administration has not shown any commitment to a workable budget.

According to him, “The budget is about 10.33 trillion out of this, the country is servicing over 2.5trillion. Now what is left will be the most challenging part of the budget. If you look at it, the ministry of Agriculture where the government has been talking of diversification is about 8million while a new ministry was given 38million for take off, this is enough reason to be worried while the ministry of education, health are nothing to write home about”.

Budget defense

Senate President Ahmed Lawan and Speaker Femi Gbajabiamila of the House of Representatives, in their separate remarks, expressed readiness of the National Assembly to work with the Executive toward the passage and implementation of the budget.

Lawan said only this October was set aside for all government agencies to defend their 2020 budget estimates to enable the passage of the document in December.

“We have earmarked the month of October to be the sole window for all budget deference activities this year by all MDAs. In this regard, our committees will be expected to conclude their work on budget defense within October, this year.

“The subsequent necessary legislative work will be carried out in November and December, leading to eventual passage before the end of this year,” Lawan said.