President Muhammadu Buhari on Thursday presented the N13.08 trillion budget estimates for the 2021 fiscal year, to the joint session of the National Assembly.
The estimate is N2.28trn higher than the 2020 revised budget of N10.805trn.
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It has a total aggregate revenue projection of N7.88trn with a deficit of N5.20trn.
The budget proposal is predicated on N379 per dollar exchange rate; oil benchmark of $40 barrel per day; and oil production volume of 1.86 million per day.
Inflation growth rate was projected at 11.95 percent; while Gross Domestic Product growth rate was fixed at 3 percent.
The president said the 2021 Appropriation Bill, themed the ‘Budget of Economic Recovery and Resilience’, was designed to further deliver on the goals of the Economic Sustainability Plan.
“It is expected to accelerate the pace of our economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion,” he added.
- Budget highlights
The total capital expenditure projected in the budget is N3.85trn, representing 29% of the aggregate expenditure.
This is an improvement over the 24 percent projected in budget 2020, with N2.69trn capital allocation.
The budget breakdown shows that N5.65trn is for recurrent (Non-Debt) expenditure; N3.76 trillion for Personnel Costs; and N501.19bn for Pensions, Gratuities and Retirees’ Benefits.
Overheads has N625.50 billion; Debt Service N3.124 trillion; Statutory Transfers N484.49 billion; and Sinking Fund N220 billion.
Buhari said capital expenditure in 2021 remains focused on the completion of as many ongoing projects as possible, rather than the commencement of new ones.
- Defence Ministry gets lion’s share
The breakdown of the budget estimates showed that the Ministry of Defence got the lion’s share in the sectoral allocations.
In the recurrent expenditure, Ministry of Defence topped the list with N840.56bn followed by education, N545.10bn; Police Affairs, N441.39bn; Interior N227.02bn and Health, N380.21bn.
In the capital allocations, the Ministry of Works and Housing got the lion’s share with N404bn vote; Transportation, N256bn; Power, N198bn; Defence, N121bn; Agriculture and Rural Development, N110bn; Water Resources, N153bn.
The sum of N51bn was projected for Industry, Trade and Investment; N127bn for Education; N70bn for Universal Basic Education Commission; N132bn for Health; N100bn for Zonal Intervention Projects and N64bn for the Niger Delta Development Commission.
Buhari said personnel cost was still the largest single item of expenditure.
“In the seven months to 31st July 2020, it accounted for 34 percent of total Federal Government spending and is projected at 33 percent of 2021 expenditure,” he said.
- National Assembly allocation increased by N3bn
Buhari said the National Assembly would get N128bn in the 2021 budget proposal, representing an increase of N3bn over the N125bn in the revised 2020 provision.
The Niger Delta Development Commission was projected to get N63.51bn; the North East Development Commission, N29.70bn; the National Judicial Council, N110.00bn; the Universal Basic Education Commission, N70.05bn; the Independent National Electoral Commission N40.00 billion;
Public Complaints Commission N5.20 billion; Human Rights Commission N3.00 billion; and Basic Health Care Provision Fund N35.03 billion.
Buhari said in compliance with the Fiscal Responsibility Act 2007, all beneficiaries of Statutory Transfers would be required to provide the Budget Office of the Federation with periodic reports on the allocation and expenditure of funds for inclusion in the quarterly Budget Implementation Report.
He said the total revenue available to fund the 2021 Federal Budget was estimated at N7.886 trillion.
The projected revenue comprised of oil revenue projected at N2.01trn; and non-oil revenue, N1.49trn.
Buhari said the deficit of N5.20trn, representing 3.64 percent of estimated GDP, would be financed mainly by foreign and domestic borrowings totaling N4.28trn.
He said N205.15bn would be sourced from Privatization Proceeds and N709.69bn in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.
He said the format of the 2021 Appropriation Bill had been modified to include budgeted revenues, no matter how small, for each MDA, to focus on internal revenue generation.
Buhari urged the federal lawmakers to pay as much attention to the revenue component as they do to the expenditure side.
- N3.12trn for debt servicing
The government would spend N3.12 trillion in 2021 to service debts, representing an increase of N445.57bn from the N2.68trn budgeted to service Nigeria’s debts in 2020.
Buhari said N2.183trn had been set aside to service domestic debts; and N940.89bn for foreign debt service.
He said N220bn was provided for transfers to the Sinking Fund to pay off maturing bonds issued to local contractors and creditors.
- Recession looms
President Buhari said the country economy may slide into the second recession in four years due to the declining gross domestic growth.
Buhari said the Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the coronavirus pandemic.
“Real Gross Domestic Product 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,” he said.
Buhari noted that 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.”
He, however, said with strict measures taken to tackle the expected challenges, the country would recover as things get better.
“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,” he said.
Meanwhile, Senate President, Ahmad Lawan, said the National Assembly was ready pass the 2021 budget proposal before the end of this year to enhance productivity and efficiency in the management and application of the nation’s resources.
Also, the speaker, House of Representatives, Femi Gbajabiamila, assured that the same dedication and commitment shown last year during the 2020 appropriation process would be exhibited to deliver a good budget on time.
“We cannot afford a return to the old practices, and we must do everything in our power to avoid such an outcome,” he said.
- Expert speaks
Director-General, Lagos Chamber of Commerce and Industry, Muda Yusuf, said the budget was ambitious, adding that revenue would continue to be a challenge that the government must tackle.
He urged the government to utilise revenue to reduce the deficit and debt burden.
He said: “Generally, the budget looks a bit ambitious in my view given the prevailing economic situation and given the fact that it will take some time for the economy to fully recover from the pandemic.
“All of this will depend on how we progress with the economy and how we are able to create an enabling environment for investors for businesses to be able to prosper and be able to support the government in terms of revenue.
“Revenue is very key and very central to the budget.
“Revenue is a major issue.
“If you look at the last three years, there have been large variances large negative finances in the revenue targets and it is not likely that what we have in the 2021 budget will be any significantly different,” he said.