Lawmakers in both chambers of the National Assembly will resume this week to continue work on the 2020 N10.33 trillion budget proposal presented to them last Tuesday by President Muhammadu Buhari.
While lawmakers in the Senate are expected to continue debate on the fiscal proposal, their counterparts in the House of Representatives are expected to begin the real work of considering the figures in the budget at the level of their committees, having the passed the budget for second reading before they adjourned plenary last Thursday.
Last Friday, President Buhari further firmed up the the desire to ensure the passage of the budget with directives to heads of ministries, departments and agencies of Federal Government not to travel outside of the country to enable them honour the summons of lawmakers for the defence of allocations to their organisations.
While presenting the budget, President Buhari told lawmakers that the budget was expected to increase to the pace of growth of the economy.
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Some of the assumptions in the budget include crude oil production of 2.18 million barrels a day and an oil price of $57 per barrel.
“The 2020 budget is expected to accelerate the pace of our economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion,” said the president.
With the allocation of N262bn, the Ministry of Works and Housing got the highest allocation in budget.
The Ministries of Power, Transportation and Defence got N123bn, N112bn and N100bn, respectively in the N10.33tn budget proposal for the 2020, which is N1.4tn higher than the N8.9tn approved by the National Assembly for the 2019 fiscal year
According to the president, N8.155tn had been estimated as the total Federal Government’s revenue in 2020, comprising oil revenue (N2.64tn), non-oil tax revenues (N1.81tn) and other revenues (N3.7tn).
But not a few analysts believe that the most of the assumptions by the president are not realistic.
Analysts pointed out that the president himself had at the budget presentation put the revenue performance of the 2019 budget at only 58 per cent due to the under-performance of both oil and non-oil revenue sources.
“Specifically, oil revenues were below target by 49 per cent, as at June 2019. This reflects the lower-than-projected oil production, deductions for cost under-recovery on supply of Premium Motor Spirit, as well as higher expenditures on pipeline security/maintenance and frontier exploration,” the president had noted.
In the same vein, he had noted during his budget speech that daily oil production averaged 1.86 mbpd as at June 2019, as against the estimated 2.3 mbpd that was assumed.
Analysts who spoke to The Nigerian Xpress last w eek said the 2.18 mbpd assumption in the budget may also not be achievable, especially given the restrictions imposed on the country’s oil production by Organisation of Petroleum Exporting Countries and slowdown of investments in the sector by oil companies due to non- passage of the Petroleum Industry Bill.
This, they said would also mean that most of the allocations, especially for the capital project cannot be met.
Pessimism about the assumptions in the budget as presented to the National Assembly by the president came to the fore when Senators debated the general principles of the fiscal document tagged: “Budget of Sustaining Growth and Job Creation.”
Leading the debate, Majority Leader, Senator Yahaya Abdullahi, noted the budget to GDP ratio as very small and incapable of stimulating needed investment.
He said: “You could see the kind of programme that we have and the major problem that we have is that the economy is very short of revenue. We have an economy with a GDP of about N140 trillion out of which we can only get about 10 per cent or less. Now when you look at the budget to the GDP ratio, it is very low. The total Federal Government’s revenue is N8.155 trillion. If you add the deficit, the budget comes to about 10.7 trillion.
“The capital budget to GDP ratio is too small. It is just two per cent of the GDP. This is a very low figure indeed and when we look at it as an issue of investment, it is a mere drop in the ocean, therefore, incapable of stimulating the economy to a higher growth trajectory. That has been the problem of the national economy for more than 30 years.
“We have been tethering on the edge, any small disturbance either in the domestic or international scene will bring economic crash. When we realised the need to diversify the economy away from oil we also refused to accept the fact that we have to change our approach to revenue generation and even approach to budgeting.”
In his own contributions, Minority Leader, Senator Enyinnaya Abaribe, noted that the debt service component of the 2020 budget is higher than capital expenditure at N2.14trillion for capital expenditure and N2.4 trillion for debt servicing.
He added: “The projected growth as read by the President is 1.9% less than the population growth of 2.6% so if you look at it globally we are still struggling that is why I was very happy when the Senate leader said we may have to take over and redirect the economic policy of this government, having seen that they have not done anything and that they have failed.
“Let me go next to the assumptions, two assumptions that are critical for this budget. One is the assumption on oil prices. I know that our people were very happy when there seemed to be a little problem in the Middle East with Iran, which will lead to a slide in oil prices, which means that our projection for the cost of oil may also be off the mark.
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“Second one is our projection for the oil production levels daily. Last year, the average oil production level was 1.8 million barrels of oil per day. Why won’t we keep it there? Why must we go to 2.18 million barrels only to be disappointed at the end of the day?
“Mr. President, I know that you have promised the executive that you are going to work very well with the executive to produce the budget. But I plead with my colleagues, look at the facts. You can’t run away from the facts. The facts say that this is not a sustainable budget. The facts also tell us that where we are going, if we need to change we must be able to look at the critical fundamentals of this budget and make adjustments as deemed necessary,” Abaribe said.
Senator Gabriel Suswam noted that the 7.5 per cent Value Added Tax (VAT) rate proposed in the Financial Bill that came with the budget is on the high side.
“If we are trying to raise 7.5 from VAT, it is a double edged sword and it will undermine small scale enterprises,” said Suswan, who added that the Nigerian National Petroleum Corporation (NNPC) should be specific in its daily oil production rate to enable the government monitor its revenue.