Many state governments across the country have reviewed their budgets for 2020 to reflect the new economic realities caused by the COVID-19 pandemic, findings by Daily Trust show.
About 20 states have slashed a total of N1.4 trillion from their initial budgets.
Daily Trust had in April this year reported that the coronavirus was threatening the N9 trillion naira budget of the states, forcing some to shelve the implementation of some projects and the minimum wage, while others reduced the salaries of political office holders by half.
Our correspondents report that Gombe State, for instance, had announced the suspension of the N30, 000 new minimum wage and cut the salaries of all political office holders by 25 percent. The situation is the same in Adamawa State where the government stopped paying minimum wage for workers.
How states plan to spend
In terms of size of the amount reduced, Lagos State leads the way by slashing a massive N248 billion from its N1.168 trillion budget. Though this is only 21 percent of its total appropriation, it represents the single biggest cut of all the states and brings down the state’s budget to N920.5 billion. The original budget had earlier been approved by the state’s legislature before the COVID-19 pandemic.
Rivers, which also has a huge budget, cut down its proposed spending by as much as 48 percent, shaving off a massive N230 billion from its N530 billion budget. The cut puts the current budget at N300 billion.
The state Commissioner for Finance and Supervisory Commissioner for Budget and Economic Planning, Isaac Kamalu, who disclosed this to reporters shortly after the State Executive Council meeting in Port Harcourt, said the council had approved the review of the 2020 Budget.
Ebonyi State cut down its budget by as much as 26 percent, slashing N47 billion off the initial 178.6 billion proposed for 2020 fiscal year.
The reviewed budget proposed Wednesday last week by Governor David Umahi had undergone its second reading at the state House of Assembly and might be presented to the governor for approval.
Kano’s “Budget of Sustainable Social development” was initially N206.2 billion as approved by the state House of Assembly.
However, due to the economic downturn, Governor Abdullahi Ganduje said the budget would be slashed by 30 percent to enable the continued execution of projects. This would be subject to approval from the legislature. Daily Trust estimated that this would shave off some N61 billion from the initial budget.
In Yobe, Governor Mai Mala Buni had reviewed the budget from N108 billion to N86 billion with N51.894 billion earmarked for recurrent expenditure while capital expenditure was put at N34.154 billion.
Benue State had chopped off N70 billion from its original budget of N189 billion, which is now down to N119 billion.
Governor Samuel Ortom explained that the downward review of the budget, which was forwarded to the Benue State House of Assembly, became necessary following projections of a recession that would force a contraction of the country’s economy by 3.4 percent.
Ekiti State slashed N33 billion from its own budget from the initial N124.7 billion to N91.1 billion with Governor Kayode Fayemi signing the budget into law on Monday, June 22, 2020.
The revised budget has N59 billion set aside for recurrent expenditure while N32 billion is budgeted for capital expenditure.
Kaduna State also slashed as much as N38 billion representing 14 percent from its budget. This means that the budget of N259.25 billion signed by Governor Nasir El-Rufai in December 2019 is now down to N221.54 billion.
In Katsina, the state government cut N29 billion from its budget bringing the figure down to N214 billion from the initial N244 billion.
Daily Trust gathered that the state is presently embarking on another fresh review as the state assembly is set to commence sitting on it. It is not clear what was presented by the government this time for consideration.
Governor Aminu Masari, while signing the reviewed budget, had said that the situation was “unpredictable.”
“We are still in deep trouble. We must adjust to the situation as it may get worse,” he had said at the time.
Our correspondent in Jos reports that the Plateau State Government proposed slashing as much as N80 billion from its initial budget.
The state had budgeted N177 billion before COVID-19 struck and now, the state is looking at figures below the N100 billion mark.
The state Commissioner for Budget and Economic Planning, Sylvester Wallangko, said though the difference between the already approved and the revised budget was not yet known due to the budget defence by the ministries and agencies, the state is intending to slash it to 98 or 99 billion naira.
“If not for the defence, we would have known how much we have slashed by now,” he said. “However, if all the remaining ministries and agencies, which haven’t done theirs, finish, we will know the new figure.”
The budget cut in Imo was occasioned by a change of government as former Governor Emeka Ihedioha had presented a budget of N197.6 billion before the Supreme Court ousted him from office.
His replacement, Hope Uzodimma, slashed the figure to N103 billion taking off N94 billion from the original figure. The cut represented 47.7 percent from the initial budget.
Commissioner for Budget and Planning, Dr C. C. Osuala, told Daily Trust that the budget was revised based on prevailing circumstances.
Reports from Bauchi indicated that the government had slashed N39 billion from its initial budget of N167 billion with the new figure standing at N128 billion.
State Commissioner of Budget and Economic Planning, Dr. Aminu Hassan Gamawa, said that the new proposal, with a 23 percent cut, would be sent to the State House of Assembly for approval after which Governor Bala Mohammed Abdulkadir will assent to it.
He said the government will now only focus on affordable projects.
While Delta State earlier approved N395 billion, it had cut the figure by N116 billion to N279 billion representing a 29.2 percent cut, Governor Ifeanyi Okowa said in a letter to the state Assembly.
Sokoto State also reviewed downward its budget from N202.4 billion to N153 billion, representing a 24.4 percent cut.
Health sector gets boost
In most of the revised budgets, Daily Trust observed that while states cut down on other sectors like education, the health budget in most states had risen. Forensic accountant and Managing Director at Qeeva Advisory Limited, Matthew Ogagavworia described the decision by the states as “common sense.”
“Once you know from day one that a budget will not perform because businesses are suffering from economic reversals, it just makes sense to go back to the drawing board and look at the different tax heads,” he said.
Speaking to the possibility of the government cutting down on personnel to save cost, the forensic accountant said: “We have seen from 1999 that cutting personnel is a ‘no-no’ for most administrations because they will never get votes during elections.”
Reacting to the moves by the government to revisit the Steve Oronsaye Report recommending the rationalisation and restructuring of federal ministries, departments and agencies as a way of cutting cost, he said; “that talk will be on to keep us busy. They will not announce any retrenchment.”
‘Capital projects will suffer set back’
An economist, Malam Hussaini Umar, said it was sad the COVID-19 had caused serious setbacks for states. “The budget outlook of most of the states ahead of the coronavirus was impressive because they made good provisions for capital projects.
“However, what we now have are provisions for overheads in form of payment of salaries and supporting the vulnerable. Of course, it is good to support the poor but states require infrastructure in order to strengthen the economy.
“I want to advise that while our governors are pushing for loans, they should nonetheless give priority to enduring legacy that will liberate the people from poverty.
Why Buhari is yet to sign revised 2020 FG budget
At the federal level, Daily Trust reports that despite the National Assembly passing the Revised 2020 Appropriation Bill on June 11, President Muhammadu Buhari is yet to assent to the bill.
The lawmakers had increased the budget from the N10.509 trillion submitted by the executive to N10.801 trillion.
A breakdown of the figure showed that the sum of N2, 488,789,433,344 is for capital expenditure and recurrent non-debt expenditure has N4, 942,269,241,984.
The executive also allocated N422, 775,979,362 for statutory transfer, while N2, 951,710,000,000 was budgeted for debt service.
In the same vein, N500 billion was earmarked as intervention funds for the fight against COVID-19, while the health sector got N186 billion allocation. They also increased the price of crude to $28 per barrel from the $25 proposed by the executive.
Senior Special Assistant to the President on National Assembly Matters (Senate), Sen. Babajide Omoworare said, “The National Assembly has transmitted the revised 2020 budget for assent. The same is receiving adequate attention pursuant to Section 59 of the Constitution by Mr. President.”
His counterpart, the Senior Special Assistant to the President on National Assembly Matters in the House of Representatives, Umar Ibrahim El-Yakub, confirmed the development while speaking to our reporter on the phone on Monday.
“The revised 2020 Appropriation Bill was transmitted back to the president. He has to be advised by relevant bodies that work on budgets on what to do on it,” he said.
“As the National Assembly scrutinised the revised budget when it was sent to them from the Presidency (Executive), it will also be looked at once again to see the adjustments made to it and passed,” he said.
The presidential liaison also disclosed that constitutionally the president has up to 30 days to study, assent or decline any bill sent from the National Assembly.
“Passage of the Revised 2020 Appropriation Bill by the National Assembly was done on time. Both the transmission to the President as well as his reconsideration of the bill after passage are still within the period allowed by law. So, there is nothing to worry about. It is not late,” he said.
Report by: Abubakar Adam Ibrahim (Abuja), Ibrahim Baba Saleh (Damaturu), Nabob Ogbonna (Abakiliki), Hope Abah Emmanuel (Makurdi), Raphael Ogbonnaiye (Ado-Ekiti), Victor Edozie (Port Harcourt), Sunday Michael Ogwu, Abdullateef Aliyu (Lagos), Tijjani Ibrahim (Kano), Lami Sadiq (Kaduna), Habibu Umar Aminu (Katsina), Ado Abubakar Musa (Jos), Jude Owuamanam (Owerri), Hassan Ibrahim (Bauchi) & Victor Sorokwu (Asaba)