…Says Nigeria already in Recession, second in four years
…Says Passage of PIB will boost Confidence and Attract Investments in the Oil Sector
…Hails Nigerians for Perseverance in these difficult times
..Says 2nd Niger Bridge, 46% Completed, Warns National Assembly Against Padding
…Defence with allocation of N121 billion, Power; N198 billion; inclusive of N150 billion for the Power Sector Recovery Plan, Transportation; N256 billion
..N128 billion for the National Assembly, N63.5 billion for NDDC
…Implement Economic Plan approved by N’Assembly, Lawan tells Executive
…Blames revenue loss on inefficiency of revenue agencies
President Muhammadu Buhari has presented a total Appropriation Bill of N13.08 trillion for 2021 to both the Senate and the House of Representatives at a Joint session of the National Assembly.
Buhari said that out of the N13.08 trillion, an aggregate sum of N3.85 trillion was expected to be available for capital projects in 2021.
Meanwhile, the President has said that the Country’s Gross Domestic Product, GDP growth is projected to be negative in the already third quarter that we are in Nigeria, just as he raised the alarm that the economy was already into recession, second in four years.
According to President Buhari, since the GDP growth rate has 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.
Buhari however said that the administration was working assiduously to ensure a rapid recovery in 2021 as well as remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years.
The President said, “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. However, 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 proposed expenditure presented yesterday to the Lawmakers with N13.08 trillion, has the crude oil benchmark price put at $40 per barrel and daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day).
He said that the budget christened, “Budget of Economic Recovery and Resilience would help accelerate the pace of Nigeria’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.
President said that parameters upon which it is based are $40 per barrel oil price benchmark , 1.86million barrel oil per day , N379 to a US dollar exchange rate , GDP growth rate of 3% and Inflation growth rate of 11.59%.
According to him, an aggregate expenditure of N13.08 trillion is proposed for the Federal Government in 2021 and this includes N1.35 trillion spending by Government- Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion, even as the Appropriation Bill contains recurrent expenditure of N5.65 trillion, personnel cost of N3.76 trillion and Debt Service of N3.12 trillion.
For 2021, 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 , 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.
President Buhari who arrived the Chambers at 11.05 am, with him reading the budget speech for 50 minutes from 11.23am to 12.13,
President Buhari while hailing the lawmakers on their readiness to pass the Petroleum Industry Bill, PIB, said that the enactment of the Bill will boost confidence and attract further investments into our oil and gas sector, as well as increase revenues.
The President who thanked Nigerians for their perseverance and continued support during these difficult times, said, “I fully understand the difficulties many of our people are going through with the implementation of our reform agenda.
“However, the measures we are implementing are necessary for sustainable public finance, better allocation of our scarce resources and improved public service delivery. As we implement these reforms, social safety nets will be implemented to cushion the effect of the most vulnerable of our citizens as well as business owners.”
The President further explained 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.
The sum of N484.49 billion the President added , is 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 which has N545billion , the Ministry of Police Affairs N441.3billion , Ministry of Health N382.21billion , Ministry of Interior N220billion etc .
But under capital expenditure projections ,the Ministry of Works has the highest votes of N440billion , followed by Ministry of Transportation with N256billion votes , Ministry of Power with N198billion , Defence N121billion , etc .
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.
In consonance with the foregoing fiscal assumptions and parameters, President Buhari disclosed that a total federally distributable revenue is estimated at N8.433 trillion in 2021 while total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion. This includes Grants and Aid of N354.85 billion as well as the revenues of 60 Government-Owned Enterprises.
According to Buhari, the deficit will be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from Privatisation Proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.
Oil revenue is projected at N2.01 trillion. Non-oil revenue is estimated at N1.49 trillion.
Ministry of Defence, more than four years in a row has taken the lead with a proposed allocation of N840billion, while Police and Education got N441.39billion and N554.10billion respectively.
The President in his presentation, said that the earmark for education ministry, represented a sixty percent increase from the 2020 budget .
Besides, the President warned lawmakers against including projects in the budget that would be difficult to implement.
“Let me re-emphasize that Nigerians expect that the the 2021 budget, will contain only implementable and critical projects, which when completed, will significantly address current structural challenges of the economy”, he stated in his concluding remarks on the budget.
Buhari said that N1.80 trillion is for Ministries, Departments and Agencies (MDAs’) capital expenditure; N745 billion for Capital Supplementation; N355 billion for Grants and Aid-funded projects; N20 billion for the Family Homes Fund; N25 billion for the Nigeria Youth Investment fund.
According to him, the 2021 capital budget is N1.15 trillion higher than the 2020 provision of N2.69 trillion, adding, “At 29 per cent of aggregate expenditure, the provision moves closer to this Administration’s policy target of 30 per cent.
“Capital expenditure in 2021 remains focused on the completion of as many ongoing projects as possible, rather than the commencement of new ones.
“We have also made efforts to ensure equity in the distribution of projects and programmes in the proposed budget.
“I will be providing the National Assembly a list of some of the most critical projects which we must work collectively to ensure they receive adequate funding.
“Until projects reach completion, they do not deliver the dividends of democracy that Nigerians rightly deserve,” the President said.
“In our efforts to enhance National Security and human capital development, a major part of the 2021 recurrent cost estimate is allocated to paying salaries and overheads in MDAs providing these critical public services.
“These include N227.02 billion for the Ministry of Interior; N441.39 billion for the Ministry of Police Affairs; N545.10 billion for Ministry of Education; N840.56 billion for Ministry Defence and N380.21 billion for Ministry of Health.”
Buhari said that key capital spending allocations in the budget included Ministry of Works and Housing getting N404 billion; Power; N198 billion; inclusive of N150 billion for the Power Sector Recovery Plan, Transportation; N256 billion, Defence; N121 billion.
“Agriculture and Rural Development; N110 billion,
Water Resources; N153 billion, Industry, Trade and Investment; N51 billion, Education; N127 billion, Universal Basic Education Commission (UBEC); N70 billion; Health; N132 billion, Zonal Intervention Projects; N100 billion; N128 billion for the National Assembly and N63.5 billion for the Niger Delta Development Commission(NDDC).
Earlier in his rwmarks, President of the Senate, Senator Ahmad Lawan urged the Executive to implement the Economic Sustainability Plan approved by the National Assembly so as to strengthen the economy in view of the resultant impact occasioned by Covid-19 pandemic.
Lawan said that there was the urgent need by government to sustain programmes aimed at economic diversification, not only because of the unpredictable nature of oil revenue, but due to recent uncertainties arising from the coronavirus.
The President of the Senate who noted that sufficient injection of funds into such programmes would give a boost to the nation’s economy, said, “Mr. President, the implementation of the 2020 Budget has shown a remarkable improvement over the previous years.
“Certainly, the injection of funds for the various programmes and projects had helped our economy. We expect that before the end of this fiscal year, the 2020 Budget would have been implemented 100 percent. This will be a historic feat.
“The impact of the COVID-19 Pandemic is a global affliction that every country needs to address through various measures.
“The National Assembly approved the Nigerian Economic Sustainability Plan (NESP), a Plan of the Federal Government, to address the economic challenges of today.
“All efforts should be made to implement the plan, as a number of schemes are designed to keep our Micro Small and Medium Enterprises (MSMEs) afloat.
“Mr. President, it is our hope that the 2021 Budget will be targeted at consolidation of gains made by the 2020 Budget. The 2020 Budget was targeted at sustaining growth and jobs. We need to not only protect jobs but create more.
“The COVID-19 Pandemic has revealed the ultimate vulnerability of our economy, as a monolithic, oil dependent economy.
“The sudden crash in the price of crude in the world market, and the consequent impact on our economy, should spur us into genuine search for the diversification of our economy, for other revenue sources.”
The Senate President while pledging the National Assembly’s readiness to pass the 2021 budget before the end of the year, said doing so “will continue to enable planning and enhance productivity and efficiency in the management and application of our resources.
He however lamented that the Federal Government had resorted to borrowing to fund critical projects in the budget due to inadequate revenue at its disposal.
Lawan blamed government’s low revenue profile owing to leakages on the inefficiency of revenue generating agencies.
“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 moneys that could have easily been available for national development.”
“Due to inadequate revenue, government has to borrow in order to finance its projects. It is equally important that we should diversify our sources of funding of our programmes and projects.
“We need to encourage and promote more private sector participation in developing some of our physical infrastructure.
“We could explore the Public Private Partnership (PPP), Build Operate Transfer (BOT), and many other funding options. This is with a view to reducing our level of borrowing,” the Senate President advised.
In his remarks, Speaker of the House of Representatives , Hon 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 , will not be allowed to enter the premises of the National Assembly with any form of arms and ammunition during the sessions.
Speaking further, President Buhari however, commended the National Assembly for its “tremendous efforts in approving the revision of the 2020 – 2022 Medium-Term Expenditure Framework and Fiscal Strategy Paper, and passage of the 2020 Appropriation (Repeal and Amendment) Act, in response to the Coronavirus Pandemic”.
He said, “Today marks an important occasion in our quest to accord the federal budget process the seriousness it deserves. In line with our commitment, we have worked extra hard to ensure early submission of the 2021 –2023 Medium-term Expenditure Framework and Fiscal Strategy Paper, as well as the 2021 Appropriation Bill. It is my sincere hope that the National Assembly will pass this Bill into law early enough to enable implementation by 1st January 2021, given the collaborative manner in which the budget was prepared”.
According to him, “The 2021 Budget was prepared amidst a challenging global and domestic environment due to the persistent headwinds from the Coronavirus Pandemic. The resulting global economic recession, low oil prices and heightened global economic uncertainty have had important implications for our economy.
“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. I am glad to note that, through our collective efforts, our economy performed relatively better than that of many other developed and emerging economies.
“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. However, 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.
“As skills’ deficits limit employment opportunities in the formal economy, various skills’ development programmes are being implemented simultaneously to address this problem frontally. For instance, the Government is implementing the Special Public Works programme to provide employment opportunities to 774,000 youths across the 774 local government areas of Nigeria. We have also recently introduced the N75 billion Nigeria Youth Investment Fund, of which N25 billion have been provided in 2021 Budget”.
He thanked “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”.
Performance of the 2020 Budget
“Distinguished and Honourable Members of the National Assembly, you will recall that the 2020 ‘Budget of Sustaining Growth and Job Creation’ was amended in response to recent fiscal pressures. I am glad to report that these efforts enabled us to effectively respond to the public health challenge of Coronavirus outbreak and moderate economic impact.
“Pursuant to our revised assumptions, the amended 2020 Budget was based on a benchmark oil price of 28 US Dollars per barrel; oil production of 1.80 million barrels per day; and exchange rate of N360 to the US Dollar.
“Based on these budget parameters, aggregate revenue of N5.84 trillion was projected to fund N10.81 trillion in expenditure. The projected deficit of N4.98 trillion, or 3.57 percent of GDP, is expected to be financed mainly by borrowing.
“In 2020, average daily oil production was 1.88 mbpd up to June, as against the revised estimate of 1.80 mbpd for the entire year. However, the market price of Bonny Light crude averaged 40.79 US Dollars per barrel, significantly higher than the revised benchmark price of 28 US Dollars.
” As at July 2020, the Federal Government’s actual revenue available for the budget was N2.10 trillion. This revenue performance was only 68 percent of our pro-rated target in the revised 2020 budget. At N992.45 billion, oil revenue performed well above our budget target, by 168 percent. Non-oil tax revenues totaled N692.83 billion, which was 73 percent of the revised target.
“To improve independent revenue performance, I have directed that the cost profiles of Government Owned Enterprises (‘GOEs’) should be scrutinized and limits imposed on their cost-to-revenue ratios. Supervising Ministers have also been directed to ensure closer monitoring of the revenue generating activities and expenditures of the Government Owned Enterprises.
“On the expenditure side, as at end of July 2020, a total of N5.37 trillion had been spent as against the pro-rated expenditure of N5.82 trillion. Accordingly, the deficit was N3.27 trillion. This represents 66 percent of the revised budgeted deficit for the full year.
“Despite these challenges, we met our debt service obligations. We are also up to date on the payment of statutory transfers and staff salaries, while overhead costs have been significantly covered.
“For the first time in recent years, we commenced the implementation of this year’s capital budget in the first quarter. As at 15th September 2020 a total of about N1.2 trillion had been released for capital projects. Every Federal MDA has received at least 50 percent of its 2020 capital expenditure budget, in line with my earlier directives.
” 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.
Key Achievements in the 2020 Fiscal Year
“Over the last year, this Administration has implemented several priority projects. I am happy to report that much progress has been made on several fronts and our Government has delivered on key policies, programmes and projects in these priority areas.
“In agriculture, we have recorded appreciable success in rice and other crops mainly through the Anchor Borrowers Programme and the Presidential Fertilizer Initiative, anchored by the Central Bank of Nigeria and the Nigeria Sovereign Investment Authority, respectively. We are also accelerating the construction of 337 rural roads around key agricultural corridors to enhance access to market and reduce post-harvest losses. These efforts have reduced the adverse impact of Coronavirus on our food availability, prices and security.
“We have made progress on the railway projects connecting different parts of the country. The Lagos-Ibadan Line will soon be operational. The Abuja-Kaduna Line is running efficiently. The Itakpe-Ajaokuta Line was finally completed after over 30 years since it was initiated and commissioned in September 2020.
“Arrangements are underway to complete the Ibadan-Kano Line. Also, work will soon commence on the Port Harcourt-Maiduguri Line and Calabar-Lagos Coastal Line, which will connect the Southern and Eastern States to the North, and the South-South as well as South-East to the North, and South-West, respectively.
“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.
“To bridge the infrastructure deficit, we are also implementing innovative financing strategies to pull-in private sector investment. The Infrastructure Company, which I recently approved, will become a world-class infrastructure development vehicle, wholly focused on making critical infrastructural investments in Nigeria. This Infrastructure Company will raise funding from the Central Bank of Nigeria, the Nigeria Sovereign Investment Authority, the Africa Finance Corporation, pension funds as well as local and foreign private sector development financiers.
“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;
“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.
“To enhance good governance, we strengthened our anti-corruption agencies to ensure they work independently and jointly, while respecting the rule of law. We have also worked to address emergent cases of insecurity and insurgency, nationwide, with innovative approaches. Our security operations in the Niger Delta, North Central and North West are yielding desired results. We are determined to get rid of bandits, kidnappers and criminal behaviour from our midst.
Theme & Priorities of the 2021 Budget
“Distinguished Senators; Honourable Members; let me now turn to the 2021 Appropriation Bill, which is designed to further deliver on the goals of our Economic Sustainability Plan. This Plan provides a clear road map for our post- Coronavirus economic recovery as a transitional plan to take us from the Economic Recovery and Growth Plan (2017 – 2020) to the successor Medium-Term National Development Plan (2021 – 2025).
“In view of the many challenges confronting us, we must accelerate our economic recovery process, promote social inclusion and strengthen the resilience of the economy. The 2021 Appropriation has, therefore, been themed the ‘Budget of Economic Recovery and Resilience’. It is expected to accelerate the pace of our economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.
Parameters & Fiscal Assumptions Underpinning the 2021 Appropriation
” Distinguished Members of the National Assembly, the 2021 – 2023 Medium Term Expenditure Framework and Fiscal Strategy Paper set out the parameters for the 2021 Budget, which include:
- Benchmark oil price of 40 US Dollars per barrel;
- Daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day);
- Exchange rate of N379 per US Dollar; and
- GDP growth projected at 3.0 percent and inflation closing at 11.95.
VANGUARD
