Post Views: 503 • Focus On Peace In N’Delta, Don’t Borrow To Buy Cars, BudgIT Cautions President Muhammadu Buhari, on Tuesday presented the N8.612tr A...
• Focus On Peace In N’Delta, Don’t Borrow To Buy Cars, BudgIT Cautions
President Muhammadu Buhari, on Tuesday presented the N8.612tr Appropriation Bill for the 2018 fiscal year before the combined sitting of the National Assembly, representing a rise of 16%, with recurrent expenditure of N3.494tr, or 40.57%; and capital expenditure (excluding the capital component of statutory transfers) of N2.428tr or 28.19%, with projected deficit is N2.005tr or 1.77% of GDP, down from N2.356tr this year, which is to be financed through domestic and external borrowing.
To finance the deficit, the Federal Government, he said, hopes to undertake new borrowings of about N1.699tr, shared equally between external and domestic sources, while the balance of N306bn would be financed from proceeds of privatization of some non-oil assets by the Bureau of Public Enterprises (BPE).
“Our medium-term strategy is to reduce the proportion of our domestic debt to 60% by the end of 2019 and increase external debt to 40 percent. It is noteworthy that rebalancing our debt portfolio will enhance private sector access to domestic credit. In addition, annual debt service costs will reduce as external debts are serviced at lower rates and repaid over a longer period than domestic debt,” he added.
Perhaps realizing that 2018 is the onset of the election year, the Federal Government set a target of January 1 for the passage of the budget, which forecast a GDP growth of 3.5% for the year, just as it was based exchange rate of N305/$ and a projected oil output of 2.3m barrels per day, slightly above the previous 2.2mbpd at a benchmark price of $45 per barrel, as against this year’s $44.5pb. Inflation was also forecast at 12.4% for the year. Debt service is projected at N2.014tr or 23.38%.
By all standards, he assured, the “2018 is expected to be a year of better outcomes. The tepid economic recovery is expected to pick up pace and the global political terrain is expected to stabilize,” he said, urging the legislators to swiftly consider and pass the Appropriation Bill. This, he stressed, is part of the determination to return to the January to December budget cycle, unlike the situation where the 2017 budget was signed into law on June 12, half way into its lifespan.
He reiterated that a new era is here, “the old Nigeria is surely disappearing. We must work together to sustain this change,” he told the legislators
A breakdown of the capital spending plan showed that the Power, Works and Housing Ministry gets the lion’s share of N555.88bn; followed by transportation, N263.1bn and Defence, N145bn; while the interior ministry is to take the largest chunk of the recurrent expenditure of N510.87bn; followed by education and Defence Ministries with N435.01bn and N422.43bn respectively.
Reviewing the 2017 budget, President Buhari said revenue collections have come 14% below target as of September, due to shortfall in non-oil revenues, especially the Independent Revenues that has recorded a 74% shortfall, contributing a “disappointing” N155.14bn of the projected N605.87bn.
Reacting to the budget presentation, BudgIT, a civic organization that intersects citizen engagement with institutional improvement, applauded the focus on improved tax administration and the resolve to end the cycle of poverty through some form of social intervention.
With plans to finance most of the year’s N2.42tn capital expenditure by debts, BudgIT in a statement by Abiola Afolabi, its Communications Lead, warned against borrowing “to buy cars, computers, retrofit office buildings at the detriment of the critical mass needed to end the cycle of poverty and improve the economy.”
Instead, it hopes “the biggest proportion of capital allocation will go into improving infrastructure, expanding access to education, health among others.”
While agreeing with the set $45pb oil price benchmark, BudgIT also called for excessive caution to sustain the fragile peace in the Niger Delta which is a crucial element in ensuring optimal production, at a time when one militant group- the Niger Delta Avengers recently called off its ceasefire agreement.
It also challenged government on the need for more transparency about its finances by availing more information on actual recoveries of loot purportedly returned by former public officials, “given that the biggest proportion of government projected revenue will come from the non-oil sector.”