By Emmanuel Uffot
President Muhammadu Buhari on Friday August 8, 2020 presented a budget of N13.08 trillion for the 2021 fiscal year to a joint session of the National Assembly.
The budget is predicated on a deficit of N5.15 trillion, exchange rate of N379 to a dollar and oil benchmark of 40 dollars and estimated oil production of 1.86 million barrels,while N3.12trillion is earmark for debt servicing. Similarly the whopping sum of N7.886 trillion is expected as total revenue to be recoup from grants and aids.
Going by the budget estimate, expected oil revenue is put at 2.01 trillion while N1.49trillion is expected from non-oil revenue sources.
Under key sectoral allocations, works and housing had the largest chunk of N404 billion, an indication of federal government intention to carry out more road construction across the country while transportation will gulp N256 billion. Power has been allocated N190 billion, defence N121 billion, Agriculture and rural development got N110 billion, Water Resources N153 billion, Trade and Investment has been allocated N51 billion, Education N127 billion, Health N132 billion, NDDC was also allocated N64 billion.
Instructively the allocation of N128 billion to National Assembly has raised eyebrows as the amount is higher than N127 billion allocated for Education, N110 and N121 allocated to Agriculture and Rural Development and Defence respectively
Prior to the presentation of the budget, the Minister of Finance, Budget and National Planning, Hajia Zainab Ahmed had given an insight into what the 2021 budget will look like during her meeting with civil society organisations, organised private sector and the general public on the 2021-2023 Medium term expenditure framework , MTEF, in Abuja.
Making the presentation during a virtual consultative session with civil society organisations, organised private sector, OPS, and the general public, the minister gave the aggregate projected total revenue for 2021 at N6.988 trillion, and total fiscal deficit at N5.16 trillion.
The 2021-2023 MTEF/FSP is the pre-budget statement by the government to provide the framework for the development of the 2021 budget.The minister had said the MTEF was being framed against the backdrop of a challenging global macroeconomic environment as well as other domestic factors.
She had explained that government was not only determined to keep the deficit level in the budget within the 3 per cent ceiling over the medium term, but also working on identifying new revenue sources as well as adopt new cost reduction strategies to support the budget.
With the current global economic conditions, the minister had said that key parameters and other macroeconomic projections driving the medium term revenue and expenditure framework have been revised in line with emerging realities.
The current output capacity, the minister further explained, was in compliance with the subsisting Organization of Petroleum Exporting Countries (OPEC+) production quota cut announced in May 1, this year when about 300,000 barrels per day output of condensates was added to Nigeria’s oil production. These was said to have increased the country’s total output to about 1.7 million barrels per day.
But with the World Bank forecasting that crude oil prices would rise gradually from an average of $42 per barrel in 2021, the minister disclosed that the federal government would base the year’s budget on the benchmark oil price of $40 per barrel.
Oil price is projected to grow to about $44.5 per barrel in 2022, and $47 per barrel in 2023, with the Energy Information Agency (EIA) expecting Brent crude oil prices to average $41 per barrel during the second half of 2020; $50 per barrel during 2021, and about $53 per barrel average by the end of 2021.
“With oil price projected to remain low and volatile in 2020, and Nigeria’s compliance with the OPEC cuts by reducing base production to between 1.412 million BPD and 1.579 million BPD from June to end of the year, growth in Oil gross domestic product (GDP) is expected to decline in 2020,” the minister had saiThe 2021 budget on records is the largest in the history of Nigeria in naira terms.
The 2020 budget was N10.33 trillion with the total revenue at N8.15 trillion leaving a deficit of over N2 trillion.Recall when the Katsina state born Nigerian President signed the 2019 budget into law on 27 May, 2019, the total expenditure was put at N8.92 trillion. Before then the 2018 budget of N9.12trillion was the largest and it represented an increase of 23.6 percent from that of 2017.
Previously, it was the 2018 budget that was famed to be the largest in the history of Nigeria with an aggregate spending of N9.12 trillion, revenue of N7.17 trillion and a deficit of N1.95 trillion.The pattern in these budgets is the widening deficits and the government’s penchant to borrow to finance it; a pattern which the 2021 proposed expenditure has taken to an alarming level with a deficit of over N5 trillion.
However, of concern is the fact that the borrowing is throwing the nation into a vicious cycle of generating revenue not for Nigerians but for the creditors.Many concerned Nigerians have raised issues about the borrowing pattern of the Buhari government which they described as unprecedented despite several expansion of revenue outlets like increase in Value Added Tax,VAT, Stamp duty and others.
The allocation of N3.12 trillion for debt servicing tells clearly shows that the government had always being under pressure to generate revenue so that it can pay debts to the country foreign creditors which had translated to more taxation of the organised private sector and Nigerians in business and small trade. A key example is the recent increase in VAT.
Again, in a situation that government continues to hype its intention to diversify the economy with more emphasis on agriculture, the paltry sum of N110 billion allocated to agriculture as against N128 billion to National Assembly experts argue make nonsence of efforts to promote agriculture as a way of diversifying the revenue base of the country.
A financial expert, Dr Glenn Prince-Abbi, on Monday urged the Federal Government to map out strategies for proper monitoring and evaluation of national budget to ensure enhanced performance.Prince-Abbi, the Chief Executive Officer ,CEO, of Espera Global Corporation, said this in an interview with the News Agency of Nigeria ,NAN, in Lagos, while reacting to 2021 budget proposal.
He said that government should put in place tough monitoring and evaluation mechanisms to ensure budget performance.
He noted that previous budget performance assessments had not been impressive.Prince-Abbi added that government needed to apply more drastic measures to prevent a repeat of past experiences in the 2021 fiscal year.He said that revenue generating agencies must be compelled to perform optimally on their revenue target deliverables.
he opined that theHowever the concern of many Nigerians is on the issue of budget implementation that had always been the bane of successive .governments.