Buhari’s budget of consolidation, debt burden, Niger Delta question

EZREL TABIOWO, in this piece, captures reactions trailing the recent presentation of the 2018 budget by President Muhammadu Buhari.
Budget of consolidation
Exactly two weeks ago, President Muhammadu Buhari presented before a joint session of the National Assembly, the 2018 budget profile of N8.612 trillion, a figure which is about 16 percent on the N7.44trillion 2017 budget.
Out of the aggregate expenditure of N8.612trillion proposed as 2018 budget profile by the President, a whooping N2.014trillion is set aside for debt servicing aside from the N2.005trillion deficit in the budget to be financed by external borrowing and proceeds from privatized government establishments.
Other highlights of the budget christened by the President as budget of consolidation are the N3.494trillion earmarked for recurrent expenditure, N2.652trillion for capital expenditure, and N456billion for statutory transfer.
The budgetary proposals, according to the President, are based on key parameters such as $45 per barrel oil price benchmark, projected oil production of 2.3m barrels per day, exchange rate of N305 to a US dollar, Real GDP growth of 3.5 percent, and Inflation Rate of 12.4 percent.
President Buhari explained further that a total sum of N11.983 trillion is estimated to be the total collectible revenues for the federation in the fiscal year out of which the sum of N6.387 trillion is expected to be realised from oil and gas sources, while total receipts from the non-oil sector are projected at N 5.597 trillion.
Specifically, President Buhari in the budget presentation, stated that the total estimated revenue for the federal government in the projected N8.612 trillion 2018 budget is N6.607 trillion which, according to him, is about 30 percent more than the 2017 target.
“As we pursue our goal of revenue diversification, non-oil revenues will become a larger share of total revenues. In 2018, we project oil revenues of 2.442 trillion Naira, and non-oil as well as other revenues of N4.165 trillion.
“Non-oil and other revenue sources of 4.165 trillion naira, include several items including: Share of Companies Income Tax (CIT) of 794.7 billion Naira, share of Value Added Tax (VAT) of 207.9 billion naira, Customs & Excise Receipts of 324.9 billion naira, FGN Independently Generated Revenues (IGR) of 847.9 billion naira, FGN’s Share of Tax Amnesty Income of 87.8 billion naira, and various recoveries of 512.4 billion naira, 710 billion naira as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of 678.4 billion naira”, he explained.

Revenue losses
However, he lamented heavy revenue losses in the 2017 budget proposals which, according to him, impacted very negatively on the budget implementation. Further, he said out of the N605.8billion projected as independent revenue for the budget only N155.4billion was realized as at September this year indicating 74 percent shortfall.
The President said the consolidation profile of the 2018 budget is hinged on its projected capital expenditure which is 30.8 percent of the entire budget estimates.
He said: “To consolidate on the momentum of the 2017 budget’s implementation, many ongoing capital projects have been provided for in the 2018 budget. This is in line with our commitment to appropriately fund ongoing capital projects to completion.
“By allocating 30.8 percent of the 2018 budget to capital expenditure, the federal government is also demonstrating its strong commitment to investing in critical infrastructure capable of spurring growth and creating jobs in the Nigerian economy”.
He added that key capital spending allocations in the 2018 budget include: Power, Works and Housing: N555.88 billion; Transportation: N263.10 billion; Special Intervention Programmes: N150.00 billion; Defence: N145.00 billion; Agriculture and Rural Development N118.98 billion.
Others are Water Resources: N95.11 billion; Industry, Trade and Investment: N82.92 billion; Interior: N63.26 billion; Education N61.73 billion; Universal Basic Education Commission: N109.06 billion; Health: N71.11 billion; Federal Capital Territory: N40.30 billion.
The rest are; Zonal Intervention Projects N100.00 billion, North East Intervention Fund N45.00 billion, Niger Delta Ministry N53.89 billion, and Niger Delta Development Commission N71.20 billion etc.
Other critical allocations projected in the budget are N500billion for social intervention programme, N9.8 billion for the Mambilla Hydro Power project, including N8.5 billion as counterpart funding, N12 billion counterpart funding for earmarked lines and substations, N35.41 billion for the National Housing Programme, N10.00 billion for the 2nd Niger Bridge, and about N300 billion for the construction and rehabilitation of the strategic roads.
He noted that Nigeria has in the last 30 years witnessed fire disasters involving critical facilities accounting for colossal loss of lives and valuable property.

Alarm over rising debt burden
But a former Deputy Governor of the Central Bank of Nigeria, Professor Kingsley Moghalu, while reacting to the federal government’s decision to embark on external borrowing to fund the its annual budget, advocated for a more efficient, effective and innovative fiscal management of Nigeria’s needs.
He argued that state and federal governments should generate revenue internally.
“The federal government recently requested the approval of a 5.5 billion dollar foreign loan from the National Assembly, but when you consider that more than sixty percent of revenues earned in Nigeria already goes into debt servicing, the country is clearly moving into dangerous territory”, he said.
Emphasizing the importance of policy readjustments in Nigeria, Professor Moghalu stated that when countries continue to borrow, there is very little left to fund services and development, which in turn affects important social infrastructure such as health and education.
“Nigerian governments consistently claim to be focused on lots of physical infrastructure, but they fail to deliver excellently in terms of the quality of such projects. The percentage of Nigeria’s spending on development is one of the lowest in Africa. But that does not mean we have to increase taxes. We can stimulate the economy and build infrastructure by improving tax collection. All of these can be achieved when there’s good leadership and citizen accountability”, added Professor Moghalu.

Reactions over Niger Delta budget
On the issue of militancy and ensuring development of the Niger Delta region, some lawmakers in reaction to the recently presented 2018 budget have openly criticized this administration for neglecting the region despite its huge economic contribution to the nation’s revenue profile.
One of such lawmakers, who is a member of the Senate Public Accounts Committee, Foster Ogola (PDP Bayelsa State), said the non-challant attitude of the federal government is responsible for fuelling activities of militants in the Niger Delta.
Speaking to journalists immediately after presentation of the 2018 budget by the President, he said: “The (2018) budget will not bring about emancipation to our people, we pray that God will intervene to enable us have a government that will take care of our needs,” he said.
In his budget presentation, the President had budgeted for the Ministry of Niger Delta the sum of N53.89 billion as well as N65billion for amnesty programme. However, the lawmaker wondered why the cleanup of Ogoni land is yet to commence, 18 months after the federal government formally launched the clean-up of oil spills in Ogoni land.
But another lawmaker, Ovie Omo-Agege (APC, Delta State), who also hails from the Niger Delta, commended the President for increasing allocation to the Ministry of Niger Delta from N34.20 billion in 2017 to N53.89 billion in 2018.
He said: “The President has demonstrated that he is up to the task for the remaining term, he also demonstrated that he is capable of running another campaign and govern this country for another four years. We believe in his vision for this country. We are his foot soldiers.
“The increase funding for NDDC, I am excited about that. There is adequate funding for the Itakpe-Alaja rail line, the N150 billion set aside for the social intervention for direct cash transfer, I am excited about that”.
Though he, however, expressed dissatisfaction with the implementation of the 2017 budget, the lawmaker commended the President for increasing the Sovereign Wealth Fund from $1 million to $500 million.
On his part, Deputy Chief Whip, Francis Alimikhena (APC, Edo State) said the Senate would approve the 2018 to 2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) before considering the 2018 budget.

 

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