Capital Market Professor and President of the Capital Market Academics of Nigeria, Uche Uwaleke, has described as worrisome the budget deficit of N4 trillion in the 2021 budget.
Reacting to the budget approved by the federal executive council (FEC), Uwaleke explained that the amount if approved by the National Assembly will go into consumption.
“…If the projected budget deficit is over N4 trillion against a capital spend of about N2 trillion. It means part of the money to be borrowed to finance the deficit is going into consumption.
The Federal Executive Council (FEC) had on Wednesday approved a budget estimate of N13.08 trillion for the 2021 fiscal year.
Speaking to State House correspondents at the end of the council meeting on Wednesday, Minister of Finance, Budget and National Planning, Zainab Ahmed, said the budget is predicated on key assumption which includes: 379 to a dollar exchange rate, oil benchmark of $40 barrel per day, oil production volume of 1.86 million per day, Gross Domestic Product growth target of three per cent; and inflation rate of 11.95 per cent.
“The budget assumptions that were presented to the council today include: one, crude oil price benchmark at $40 per barrel; two, oil production at 1.86 million barrels per day; three, exchange rate of N379 to $1; four, Gross Domestic Product growth target of three per cent; and five, inflation rate of 11.95 per cent,” she said.
Uwaleke noted that the over N2 trillion allocated to capital budget was small compared to the size of the budget.
“I must add however, that the sum of slightly above N2 trillion allocated to capital expenditure out of a total budget size of over N13 trillion is quite disproportionate.
“This is worrisome and so I expect the National Assembly to take a close look at these critical budget areas with a view to ensuring that the developmental aspects of the budget receive priority attention,” he added.
He commend the Executive arm for submitting the budget proposal in good time as it will allow the National Assembly sufficient period to consider and pass the appropriation Bill.
“I think the assumptions and budget parameters are realistic except for the Exchange rate that may not hold due to the on-going process of unifying Exchange rates across all forex windows by the CBN consistent with the IMF prescription.”
