N13.08trillion 2021 Budget: Expectations as Senate begins debate on general principles

President Muhammadu Buhari presenting 2021 budget at the National Assembly

Debates on general principles of the N13.08trillion 2021 budget, presented to the Joint Session of the National Assembly Thursday last week by President Muhamnadu Buhari, will commence in the Senate today, writes TAIYE ODEWALE.
The planned expeditious consideration of the Appropriation Bill according to the President of the Senate , Ahmad Lawan, is to sustain the January to December budget implementation cycle started this year by passage and signing of the 2020 Appropriation Bill in November and December respectively last year.

Lawan who stated this in his opening remarks before President Buhari’s presentation of the budget estimates  said : “Mr. President, a year ago, Tuesday, 8th October, 2019, when you presented the 2020 Budget Estimates to the first joint session of the ninth National Assembly, we promised you and Nigerians our readiness and determination to consider and pass the budget before the end of the year. We considered that necessary in order to reverse the irregular and unpredictable budget cycle that had impacted adversely on our economy over the years, to the more desirable January – December cycle. 
“The eventual passage of the Appropriation Bill 2020 and signing into law in record time was a clear testimony of the benefits of the legislature and the executive working together for the good of the people.
“The National Assembly is again ready to pass the 2021 Budget before the end of the year. This will continue to enable planning and enhance productivity and efficiency in the management and application of our resources. We can all bear witness to the salubrious effects of the early passage of the budget on our economy”.

Thereafter, President Buhari presented the 2021 budget estimates based on the following critical assumptions and parameters (i)  $40 per barrel oil price benchmark , ( ii) 1.86million barrel oil production per day, (iii) N379 to a US dollar  exchange rate , ( iv)  GDP growth rate of 3% and  (v) Inflation growth rate of 11.59%. 
 Highlights of the aggregate expenditure of N13.08trillion christened “Budget of Economic Recovery and Resilience “, as stated by the President are ÷ 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; StatutoryTransfers of N484.49billion;
Sinking Fund of N220 billion and Capital expenditure proposal of N3.85trillion .

The sum of  N484.49 billion earmarked for Statutory Transfers in the 2021 budgetary proposals as explained by  the President, represents  an increase of N56.46 billion (or 13 percent) over the revised 2020 provision.

Specifically , the projected statutory transfers cover N56.4billion for Niger Delta Development Commission ( NDDC), N29.7billion for North East Development Commission ( NEDC) , N110billion for National Judicial Council ( NJC),  N70.05billion for Universal Basic Education Commission ( UBEC), N40billion for the Independent National Electoral Commission ( INEC), N128billion for National Assembly ( NASS), N5.2billion for Public Complaints Commission ( PCC ) etc .

Though the President in the budget presentation, raised the alarm that the country may slide into recession again , going by negative growth rate of the Gross Domestic Product ( GDP),  which  has remained in the negative since the first quarter of the year till now , but the areas of concerns expressed by many of the federal lawmakers after the presentation are the N5.2trillion deficit and N4.28 trillion projected borrowings to finance the deficit. 

President Buhari in his explanation on the N5.2trillion budget deficit said is inclusive of Government Owned Enterprises and project-tied loans which represents 3.64 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal Responsibility Act, 2007.
He explained further that the deficit will be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from Privatization Proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.
But some of the lawmakers in their reactions to the projections , expressed fear that the N5.2trillion deficit and N3..124 debt servicing, have already taken the chunk of the entire proposal which is about N8.3trillion , leaving the balance of about N5trillion which will be consumed by the projected Non – debts N5.65trillion recurrent expenditure .

Though accordimg to them , the projected N 3.85trillion capital expenditure , will be financed from N4.28trillion borrowings but clearly shows that if the trend continues, in few years time , Nigeria may also be financing her recurrent component of the budget from borrowings .

Specifically, Senator Gabriel Suswam in his remarks, said the trend of recurrent expenditure getting far above capital expenditure on yearly basis , is not financially healthy for the country.
“If this trend continues , without corresponding increase in revenue generation at the home front , the problem of debt servicing, which is increasing on yearly basis, may further shrink the financial capacity of government to the point of even using part of the borrowed money to fund some aspect of recurrent expenditure .

“Some revenue generating agencies of government need to be taken out of the yearly budgetary provisions and seriously monitored for remittance of revenues generated into the federation account as discovered during the recent interface the National Assembly  joint committee on Finance and National Planning had with them”, he said .
Senator Obinna Ogba in his remarks , made similar submission by declaring that since the President himself in the budget presentation, said revenue generation has remained the biggest challenge for the country in yearly budget implementation , required attention should be focused on that to prevent the country from being a highly indebted nation in the nearest future with little or nothing to show for it .
Similar point of view was raised by the President of the Senate , Ahmad Lawan even before the budget presentation by  President Buhari .
Lawan had in his speech before the presentation said: “Mr. President, as our revenues plummeted, we have resorted to borrowing to fund the development of some critical infrastructure. Our revenue generation, collection and remittances need to be critically examined. 
“Recent interactions between our Committees on Finance and National Planning and Economic Matters, with over 200 revenue generating and collection agencies have revealed so much inefficiencies in their systems. It was revealed that government loses so much money as a result. 
“Similarly, there are so much leakages of monies that could have easily been available for national development”.

Having raised the observation before President Muhamnadu Buhari himself, will the federal lawmakers rejig the budgetary proposals along that direction as they start legislative consideration on them this week, or will it be a case of garbage in , garbage out , at the end of the day? Time will definitely tell .

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