Strong indication emerged Thursday that the Nigerian economy may again slide into recession as Gross Domestic Product ( GDP) growth rate remained in the negative since the first quarter of the year.
The indication was given by President Muhammadu Buhari while presenting the 2021 Appropriation Bill to the joint session of the National Assembly Abuja.
In the bill, Ministries of Defence, Education, Police and Works got the lion shares of the N13.08 trillion budget estimates.
Presenting the budget, President Buhari hinted that since GDP growth rate had been in the negative since the first quarter of the year up to the just ended third quarter, Nigeria may slide into another recession again four years after the first occurrence.
“The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the Coronavirus Pandemic. Real Gross Domestic Product (GDP) growth declined by 6.1 percent in the second quarter of 2020.
“This ended the 3-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017. GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences,” he said.
He, however, assured Nigerians that strategic efforts were being made to insulate the Nigerian economy from consequences of such recession.
“We are working assiduously to ensure a rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years,” the president assured.
Breakdown
In the budget christened “Budget of Economic Recovery and Resilience,” President Buhari said the parameters upon which it is based are $40 per barrel oil price benchmark, 1.86 million barrel oil per day, N379 to a US dollar exchange rate, GDP growth rate of 3% and Inflation growth rate of 11.59%.
He said an aggregate expenditure of N13.08 trillion was proposed for the Federal Government in 2021. This, the president said, includes N1.35 trillion spending by government-owned enterprises and grants and aid- funded expenditures of N354.85 billion.
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 N484.49billion; and Sinking Fund of N220 billion (to retire certain maturing bonds).
Fiscal balance
The N5.2trillion budget deficit, according to the president, was inclusive of Government Owned Enterprises and project-tied loans which represent 3.64 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal Responsibility Act, 2007.
He further explained that the deficit would be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from Privatisation Proceeds and N709.69 billion in draw-downs on multilateral and bilateral loans secured for specific projects and programmes.
The sum of N484.49 billion, the president added, was provided for Statutory Transfers in the 2021 Budget representing an increase of N56.46 billion (or 13 percent) over the revised 2020 provision, while an aggregate sum of N3.85trillion is estimated for capital expenditure.
The Statutory Transfer provisions as broken down by the president from the N13.08 aggregate expenditure are; Niger Delta Development Commission (NDDC) N56.4billion, North-East Development Commission (NEDC) N29.7billion, National Judicial Council (NJC) N110billion, Universal Basic Education Commission (UBEC) N70.05billion,Independent National Electoral Commission (INEC), National Assembly ( NASS), N128billion , Public Complaints Commission (PCC) N5.2billion etc .
Under sectoral allocations within the recurrent expenditure component, the Ministry of Defence has the highest votes of N840.5billion followed by the Ministry of Education with N545billion, the Ministry of Police Affairs N441.3billion, Ministry of Health N382.21billion and Ministry of Interior N220 billion among others.
But under capital expenditure projections, Ministry of Works has the highest votes of N440billion, followed by Ministry of Transportation with N256billion votes, Ministry of Power with N198billion and Defence getting N121billion.
Other traditional projections like N100billion for Zonal Intervention projects , N65billion for Amnesty programme in the Niger Delta, N64billion for NDDC and N124billion for the Ministry of Niger Delta Affairs, were captured in the budgetary proposals.
Buhari gives hope
The president appreciated the difficulties Nigerians were going through in the implementation of reforms agenda of the federal government like the deregulation of the oil sector.
He, however, assured Nigerians that provisions had been made in the 2021 budget for required cushioning effects.
President Buhari further said series of Social Safety Nets had been put in place in the budgetary proposals and would be implemented judiciously .
“We thank all Nigerians, for your perseverance and continued support during these difficult times. We remain unwavering in our commitment to actualize our vision of a bright future for everyone,” he said.
The president also lamented that revenue generation had been the major challenge facing the country on yearly basis as far as implementation of budgetary provisions are concerned, but assured that the challenge would be surmounted in 2021 fiscal year.
“Let me emphasise that revenue generation remains our major challenge. Nevertheless, Government is determined to tackle the persisting problems with domestic resource mobilization, as there is a limit to deficit financing through borrowing.
“The time has come for us to maintain a healthy balance between meeting our growing expenditure commitments and our long-term public financial health,” he said .President Buhari specifically mentioned the 2nd Niger Delta Bridge as one of the projects to be funded by capital component of the budget .
The project, according to him, had attained 46% implementation level and would be completed before expiration of his tenure in May 2023 .
“The Second Niger Bridge is at about 46 percent completion. We hope to commission the project before the end of our tenure in 2023. We have awarded several contracts to rehabilitate, reconstruct and construct major arterial roads, in order to reduce the hardship to commuters and increase economic activity.
“Under the Road Infrastructure Tax Credit Scheme, we are undertaking the construction and rehabilitation of over 780km of roads and bridges, nationwide, to be financed by the grant of tax credits to investing business. Ongoing projects under this scheme include: Construction and Rehabilitation of Lokoja-Obajana-Kabba-Ilorin Road Section II (Obajana-Kabba) in Kogi and Kwara States.
“Others are, Construction of Apapa-Oworonshoki-Ojota Expressway in Lagos State; and Construction of Bodo-Bonny road with a Bridge across the Opobo Channel in Rivers State.”
Lawan assures on speedy passage
Earlier in his remarks, President of the Senate Ahmad Lawan assured the president that the budget would be given expeditious consideration as done in 2019.
Also, Speaker House of Representatives Femi Gbajabiamila called on heads of MDAs to cooperate fully with relevant committees of both Chambers during budget defence sessions.
He warned that security details of heads of government agencies would not be allowed to enter the premises of the National Assembly with any form of arms and ammunition during the sessions.
