By Henry Boyo
The 2020 Appropriation bill, was laid before the National Assembly, on October 8, 2019, by President Muhammed Buhari, who, also instructed all Heads of Ministries and key Departments and Agencies, to make themselves available to defend their respective budgets before Parliament; consequently, budget defence by MDAs is currently ongoing, while the National Assembly Leadership have suggested that their work on the budget should be completed for the President assent, before 31st of December, so that implementation can commence promptly, from January 1st 2020; evidently, such timely enactment of the budget would be an unusual feat in recent years!
Notwithstanding, the possibility of a timely budget assent, the critical question must however be whether or not the social welfare, particularly of the 100million plus Nigerians, who are poor, can be redeemed from the oppressive, social and economic deprivations they currently endure. However, any reasonable expectation for success must be guided by the expected impact of the strategic mix of variables in the proposed 2020 budget. These variables will, hereafter, be discussed in interrogative prose to facilitate comprehension. Please read on.
The N10.33trn 2020 budget, is arguably Nigeria’s largest budget so far, should we therefore expect that Government will have more money to spend, to address our huge infrastructural deficit?
The 2020 budget of N10.33trn is nominally, the highest budget so far, but it is by no means the highest in real value terms; the N6.08trn 2016 budget, for example, which was passed, before the Naira crashed from N160=$1 to N305=$1 in 2017, is probably higher, in real value terms, than the present N10.33trn 2020 budget, which is conversely predicated on current exchange rate of N305=$1; in this event, the clearly bloated, proposed 2020 budget, is what may be described as money illusion.
Are you saying that we may not expect significant enhancement in critical infrastructure and social welfare from such a ‘huge’ budget?
In retrospect, if the N6.08trn budgeted in the 2016 budget did not elevate the quality and spread of infrastructure, it would be unrealistic to expect that the proposed N10.33trn 2020 budget will have meaningful impact, especially when Nigeria’s population has since grown by over 10million.
Capital Expenditure, was N2.652trn last year, but has decreased unexpectedly to N2.46trn in the proposed 2020 budget. Does this mean that Government is not seriously committed to addressing the huge infrastructural deficit?
You are right, it is inappropriate to reduce Capital Budget, particularly when there is a crying need, nationwide, for better roads, free flowing portable water and steady power supply, etc, etc; however, with the current inflation rate of about 11 per cent, the net real value of the 2020 Capital Budget will be further reduced from N2.42trn to less than N2.2trn!
Government could however, demonstrate its commitment to rapid and consistent provision of quality social infrastructure, if Government reduces consumption expenditure, which has remained around 70 per cent of annual budgets for over a decade. Furthermore, despite the adoption of the Integrated Payroll and Personnel Information System (IPPIS) and the alleged elimination of tens of thousands of ghost workers from Government payroll, recurrent expenditure has, inexplicably, consistently remained very high while the wage bill appears irrepressible!
Consequently, our prolonged expectation for equity in the provision of social infrastructure will remain, just that, unless Government firmly resolved to allocate at least 50 per cent of annual budgets to Capital Expenditure and provision of critical Social Welfare Programmes.
Government continues to defend its present debt profile as sustainable despite several warnings of an imminent Debt trap! Do you agree that the present debt burden is sustainable?
Although the Finance Minister has suggested that revenue consolidation rather than the debt level is our real challenge, Government must, however, restrain itself from further debt accumulation, particularly, when over N50 out of every N100 government income is presently applied to debts service! This year (2019), for example, total debt service charge was N2.14trn, while in the 2020 budget, debt service has increased to N2.45trn. In practice, external debts, are generally more hazardous in fragile economies, like ours, and it is therefore disturbing that total foreign debt has doubled to about $22.08bn in the last 4 years. This debt burden will invariably, further spike with the latest $2.5bn IMF loan to improve our power infrastructure.
Ultimately, our sovereignty will become seriously compromised by further External debt accumulation; and we may have walked back into another Colonial subordination with wide open eyes.
Despite the significant shortfall in projected revenue in 2019, Government still expects to collect a higher sum of N8.155trn in 2020. Why then is government so optimistic about its revenue sources for next year?
Surprisingly, the abiding shortfalls, in revenue projections in earlier budgets, have never seemed to advise, the wisdom of, constructive and realistic revenue estimates. Ultimately, critical infrastructure projects will still receive inadequate allocations or Government will be, conversely, compelled to overload an already very heavy debt burden, which future generations will unfortunately inherit.
However, in its quest for rapid increase in revenue, Government has, lately proposed to increase the VAT rate by 50 per cent to 7.5 per cent, with an additional tax also on beverages and phone calls. In contrast, some critics, suggest fiscal prudence and advise instead that the present bloated and disproportionate cost of running Government, should be significantly pruned to make politics unattractive as a business, as is presently the case. Other critics have lately also, decried the increasing tax burden on Nigerians, particularly, when victims of poverty, have steadily increased beyond 100million. Perhaps, Government will be better advised, to actively concentrate on retrieving the hundreds of billions of dollars which have been stolen and continue to be reportedly, stolen from Government’s porous treasuries annually; similar chest of potential revenue sources, include the alleged $100bn outstanding debt owed by some oil majors operating in the Niger Delta; similarly, there are reports of over $60bn stolen oil cargoes from Nigeria which have been traced to ports of Discharge in the USA and elsewhere.
Furthermore, although we are often regaled with news of recoveries of huge sums of both property and cash loot from corrupt politicians and civil servants, somehow, the value and application of the liberated loot is always hard to trace in annual budgets, similarly, the hundreds of millions of dollars recovered from Swiss Banks and other safe havens, for example, are also still to be accounted for!
Curiously, there is no allocation for petrol price subsidy in the 2020 budget. Does this mean fuel subsidy will be abolished?
Fuel subsidy value ranging from about N1trn to above N2trn have always been accommodated outside annual budgets provision, invariably, if such a huge expenditure is also captured, the level of deficit will swell outrageously and significantly increase our debt burden, or, conversely, further reduce the relatively paltry sum that we currently allocate to the enhancement of physical and social infrastructure for our people.