MDAs to appear for 2020 budget defence in October – Lawan
Reps commence debate today; •APC, CUPP divided over budget prospects
PDP tasks NASS on 2020 Budget; challenges Buhari to make Presidency allocation public
By Henry Umoru, Levinus Nwabughiogu, Joseph Erunke, Omeiza Ajayi, Dirisu Yakubu & Tordue Salem
WORKS and Housing Ministry got the lion’s share of President Muhammadu Buhari’s proposed N10.33 trillion 2020 ‘’budget of Sustaining Growth and job creation.”
Sectors heavily favoured in the budget presented to the joint session of the National Assembly include Power, N127 billion; Transportation, N123 billion; Universal Basic Education Commission, UBEC, N112 billion; Defence, N100 billion; and zonal intervention projects, N100 billion
The 2020 Budget is N1.4 trillion higher than the N8.9 trillion budget of 2019.
President Buhari said the 2020 Budget had been designed to be a budget of fiscal consolidation, to strengthen macroeconomic environment; invest in critical infrastructure, human capital development and enable institutions, especially in key job-creating sectors.
According to him, it is also aimed at incentivising private sector investment essential to complement the government’s development plans, policies and programmes; and enhance social investment programmes to further deepen their impact on marginalised and most vulnerable Nigerians.
President Buhari said the expenditure estimate would include statutory transfers of N556.7 billion; non-debt recurrent expenditure of N4.88 trillion; and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers).
He said debt servicing was estimated at N2.45 trillion, while provision for Sinking Fund to retire maturing bonds issued to local contractors is N296 billion.
President Buhari put estimated 2020 Federal Government revenue at N8.155 trillion, made up of oil revenue N2.64 trillion; non-oil tax revenues, N1.81 trillion; and other revenues N3.7 trillion.
He said this was seven per cent higher than the 2019 comparative estimate of N7.594 trillion, inclusive of government-owned enterprises.
The President, who noted that investing in critical infrastructure was a key component of fiscal strategy under the 2020 Budget Proposals, said that an aggregate sum of N2.46 trillion (inclusive of N318.06 billion in statutory transfers) had been proposed for capital projects in 2020.
He said: “Although the 2020 capital budget is N721.33 billion (or 23 per cent) lower than the 2019 budget provision of N3.18 trillion, it is still higher than the actual and projected capital expenditure out-turns for both the 2018 and 2019 fiscal years, respectively.
‘’However, at 24 per cent of aggregate projected expenditure, the 2020 provision falls significantly short of the 30 per cent target in the Economic Recovery and Growth Plan, ERGP, 2017-2020.”
The President noted that Budget deficit was projected to be N2.18 trillion in 2020 and that this would include draw-downs on project-tied loans and related capital expenditure.
He stressed that this represents 1.52 per cent of estimated GDP, well below the three per cent threshold set by the Fiscal Responsibility Act of 2007, and in line with the ERGP target of 1.96 per cent.
According to him, the deficit will be financed by new foreign and domestic borrowings, privatization proceeds, signature bonuses and draw-downs on loans secured for specific development projects.
President Buhari, who told the lawmakers that Nigeria was committed to meeting its debt service obligations, said further: “Accordingly, we provided the sum of N2.45 trillion for debt service. Of this amount, 71 per cent is to service domestic debt which accounts for about 68 per cent of the total debt. The sum of N296 billion is provided for the Sinking Fund to retire maturing bonds issued to local contractors.”
President Buhari disclosed that there was a draft Finance Bill that proposes an increase of the VAT rate from 5% to 7.5%, just as he said that the 2020 Appropriation Bill was based on this new VAT rate, adding that the additional revenues would be used to fund health, education and infrastructure programmes.
He said that against the backdrop that states and local governments were allocated 85% of all VAT revenues, greater quality and efficiency was expected from them in their spending.
“The VAT Act already exempts pharmaceuticals, educational items, and basic commodities, which exemptions we are expanding under the Finance Bill, 2019.
‘’Specifically, Section 46 of the Finance Bill, 2019 expands the exempt items to include the following: Brown and white bread; cereals, including maize, rice, wheat, millet, barley and sorghum; fish of all kinds; flour and starch meals; fruits, nuts, pulses and vegetables of various kinds; Roots such as yam, cocoyam, sweet and Irish potatoes; Meat and poultry products including eggs; Milk; Salt and herbs of various kinds; and Natural water and table water.
“Additionally, our proposals also raise the threshold for VAT registration to N25 million in turnover per annum, such that the revenue authorities can focus their compliance efforts on larger businesses, thereby bringing relief for our Micro, Small and Medium-sized businesses,’’ the President said.
In the area of sectoral allocation in the 2020 Budget, Works and Housing got N262 billion; Power was allocated N127 billion; Transportation got N123 billion; Universal Basic Education Commission was allocated N112 billion while Defence got N100 billion as against N435.62 billion in 2019.
According to the breakdown, Zonal Intervention Projects was allocated N100 billion; Agriculture and Rural Development got N83 billion; Water Resources, N82 billion; Niger Delta Development Commission got N81 billion. Education was allocated N48 billion as against the N462.24 billion that was allocated to it in 2019. Health was allocated N46 billion as against the N315.62 billion it got in 2019 Budget; Industry, Trade and Investment got N40 billion; North East Development Commission, N38 billion; Interior, N35 billion as against the N569.07 in 2019; Social Investment Programmes, N30 billion; Federal Capital Territory, N28 billion; and Niger Delta Affairs Ministry, N24 billion.
In the budget, the sum of N556.7 billion has been provided for Statutory Transfers and these include: N125 billion for the National Assembly; N110 billion for the Judiciary; N37.83 billion for the North East Development Commission (NEDC); N44.5 billion for the Basic Health Care Provision Fund (BHCPF); N111.79 billion for the Universal Basic Education Commission (UBEC); and N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.
The President has equally disclosed that the government has increased the budgetary allocation to the National Human Rights Commission from N1.5 billion to N2.5 billion, explaining that the 67 per cent increase is to enable the Commission to perform its functions more effectively.
Review of the economy in 2019
Giving an overview of the economy in 2019, President Buhari said: “The economic environment remains very challenging, globally. The International Monetary Fund expects the global economic recovery to slow down from 3.6 per cent in 2018 to 3.5 per cent in 2020. This reflects uncertainties arising from security and trade tensions with attendant implications on commodity price volatility.
“Nearer to home, however, Sub-Saharan Africa is projected to continue to grow from 3.1 per cent in 2018 to 3.6 per cent in 2020. This is driven by investor confidence, oil production recovery in key exporting countries, sustained strong agricultural production as well as public investment in non-dependent economies.
“The Nigerian economy thus far has recorded nine consecutive quarters of GDP growth. Annual growth increased from 0.82 per cent in 2017 to 1.93 per cent in 2018, and 2.02 per cent in the first half of 2019. The continuous recovery reflects our economy’s resilience and gives credence to the effectiveness of our economic policies thus far.
“We also succeeded in significantly reducing inflation from a peak of 18.72 per cent in January 2017 to 11.02 per cent by August 2019. This was achieved through effective fiscal and monetary policy coordination, exchange rate stability and sensible management of our foreign exchange.
“We have sustained accretion to our external reserves, which have risen from US$23 billion in October 2016 to about US$42.5 billion by August 2019. The increase is largely due to favourable prices of crude oil in the international market, minimal disruption of crude oil production given the stable security situation in the Niger Delta region and our import substitution drive, especially in key commodities.
“The foreign exchange market has also remained stable due to the effective implementation of the Central Bank’s interventions to restore liquidity, improve access and discourage currency speculation. Special windows were created that enabled small businesses, investors and importers in priority economic sectors to have timely access to foreign exchange.
“Furthermore, as a sign of increased investor confidence in our economy, there were remarkable inflows of foreign capital in the second quarter of 2019. The total value of capital imported into Nigeria increased from US$12 billion in the first half-year of 2018 to US$14 billion for the same period in 2019”
On the performance of 2019 Budget, the President said, “you will recall that the 2019 ‘Budget of Continuity’ was based on a benchmark oil price of US$60 per barrel, oil production of 2.3 mbpd, and an exchange rate of N305 to the United States Dollar. Based on these parameters, we projected a deficit of N1.918 trillion or 1.37 per cent of Gross Domestic Product.
“ As at June 2019, Federal Government’s actual aggregate revenue (excluding Government-Owned Enterprises) was N2.04 trillion. This revenue performance is only 58 per cent of the 2019 Budget’s target due to the underperformance of both oil and non-oil revenue sources. Specifically, oil revenues were below target by 49 per cent as of June 2019. This reflects the lower-than-projected oil production, deductions for cost under-recovery on the supply of premium motor spirit (PMS), as well as higher expenditures on pipeline security/maintenance and Frontier exploration.
“Daily oil production averaged 1.86 mbpd as at June 2019, as against the estimated 2.3 mbpd that was assumed. This shortfall was partly offset as the market price of Bonny Light crude oil averaged US$67.20 per barrel which was higher than the benchmark price of US$60.
“Additionally, revenue projections from the restructuring of Joint Venture Oil and Gas assets and enactment of new fiscal terms for Production Sharing Contracts did not materialize, as the enabling legislation for these reforms is yet to be passed into law.
“The performance of non-oil taxes and independent revenues such as internally generated revenues were N614.57 billion and N217.84 billion, respectively.
“Receipts from Value Added Tax were below expectations due to lower levels of activities in certain economic sectors, in the aftermath of national elections. Corporate taxes were affected by the seasonality of collections, which tend to peak in the second half of the calendar year.
“On the expenditure side, 2019 Budget implementation was also hindered by the combination of delay in its approval and the under-performance of revenue collections. As such, only recurrent expenditure items have been implemented substantially. Of the prorated expenditure of N4.46 trillion budgeted, N3.39 trillion had been spent by June 30, 2019.
“In compliance with the provisions of the 2018 Appropriation Act, we implemented the 2018 capital budget until June 2019. Capital releases under the 2019 Budget commenced in the third quarter. As at 30th September 2019, a total of about N294.63 billion had been released for capital projects. I have directed the Ministry of Finance, Budget and National Planning to release an additional N600 billion of the 2019 capital budget by the end of the year.
“Despite the delay in capital releases, a deficit of N1.35 trillion was recorded at the end of June 2019. This represents 70 percent of the budgeted deficit for the full year.
“Despite these anomalies, I am happy to report that we met our debt service obligations, we are currently on staff salaries and overhead costs have also been largely covered.”
MDAs to appear for 2020 budget defence in October – Lawan
Meanwhile, Ministries, Departments and Agencies, MDAs, are to appear before committees of the Senate in October to defend their 2020 budget, President of the Senate, Ahmad Lawan, has said.
Lawan spoke yesterday as the House of Representatives said the debate on the 2020 Appropriations Bill would commence today.
Lawan, who stated this at the presentation of the budget by President Buhari, said for the timely passage of the budget, all MDAs were expected to appear before the committees for the defence within the month of October.
He said the National Assembly committees were ready to receive ministers and other heads of agencies for the budget defence of various MDAs within the month.
“We have earmarked the month of October to be the sole window for all budget defence activities in this year by all MDAs. Our committees will be expected to conclude their work on budget defence within October 2019.
“The subsequent necessary legislative work will be carried out in November and December leading to eventual passage before December 31,” he said.
Lawan said the presentation of the budget marked another day of exercising the constitutional obligations and mandates by both the Legislature and the Executive as provided for in Section 81 of the 1999 Constitution.
He said: “This function, being the first in the 9th the National Assembly, makes it even more significant as both the Legislature and the Executive have demonstrated readiness and commitment to work together in order to pass the 2020 budget in a good and desirable time.
“Clearly, this effort is to enable the federal government to provide those laudable objectives of physical infrastructure and socio-economic services to our citizens.’’
He said further that the public and private sectors needed a reliable budget cycle that was predictable and reliable for planning and execution of fiscal and financial policies and programmes.
“It is, therefore, necessary that the present cycle is changed to January-December. In this regard, the National Assembly and the executive must work together to ensure the realisation of the important objective,” he said.
Lawan said the National Assembly, after the receipt of the budget, would swing into action to start work immediately.
“Both chambers of the National Assembly have constituted their committees, we are, therefore, ready to start processing the budget,” he said.
The president of the senate said the 9th National Assembly had shown capacity, commitment and willingness to treat legislative matters that would impact on the lives of citizens with dispatch and every sense of urgency.
He said this was clearly demonstrated last week when the National Assembly received, processed and passed the request of the president on the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP).
“The National Assembly will treat the 2020 budget with the same commitment or even more.
“In our effort to pass the budget, we will also be guided by the legislative requirement of thorough scrutiny,” Mr Lawan said.
Reps commence debate on 2020 budget today
On its part, the House of Representatives said the debate on the 2020 Appropriations Bill would commence today.
Spokesman of the House, Benjamin Kalu (APC-Abia), said the general principles of the 2020 Appropriations Bill would commence today, after the second reading of the bill.
Benjamin Kalu, who disclosed this at a briefing in Abuja yesterday, said the aim of the House was to conclude work on the 2020 budget on November 28.
He said: “We are suspending plenary to enable us to go into our various committees to interact with MDAs. To achieve that, we have set up a road map which goes as follows: Today (yesterday) October 8, the presentation of the draft budget was done by the President.
‘’On Wednesday 9 to October 10, we will have a debate on the general principles of the Appropriations Bill, as well as the second reading and referral.
“This is to show you how committed the House of Representatives is in achieving this change in our budget calendar. On Thursday, October 10, we are going to meet with the chairmen of all the committees to guide them on what is expected as regards the 2020 budget.
“From same Thursday, October 10 to 29, we will have budget hearing and engagements with MDAs by the Appropriations subcommittees.
“From Monday, October 21 to Tuesday, October 22, we will have a public hearing on the 2020 Appropriations Bill .
‘’From Wednesday, October 30 to Tuesday, November 5, we are going to have submission and defence of budget reports to the Appropriations Committees. After November 5, we will not accept any defence from any MDA.
“This is our expectation. With this road map we have set, we will have a presentation of the report of the Appropriations Committee on November 28. Our expectation is that we want to be done with this exercise on November 28, 2019. Our idea is that from the beginning of December 2019, the budget is ready. “
APC confident of early passage of budget
Meanwhile, the All Progressives Congress, APC, has hailed President Buhari for efforts to return Nigeria to the January-December budget cycle, noting that the National Assembly had nearly three months to consider and pass the budget.
It said following the presentation of the 2020 Appropriation Bill to a joint session of the National Assembly yesterday by the President, the party welcomed the commitment of both the executive and legislative arms to ensure budget passage was returned to January-December cycle.
“To put this into effect, our party notes the early presentation by the President, leaving the lawmakers near three months to consider and pass the budget,” APC said in the statement issued by its National Publicity Secretary, Mallam Lanre Issa-Onilu.
The party “congratulated the President and all APC members on the early presentation of the proposed 2020 Budget of a record N10.33 trillion which surpasses the N8.916 trillion budgeted for 2019.”
According to the APC, “the proposed 2020 budget is targeted at consolidating on the gains the current administration has made in revamping our power, rail and road infrastructure; diversification and retooling the economy; social intervention programmes targeted at the poor; fight against emerging crimes, insurgency and rehabilitation, rebuilding of the North East, particularly through the newly-established North East Development Commission, among other critical interventions.
“According to the President in his budget speech, tagged ‘Budget of sustaining growth and job creation’, there is a renewed government’s commitment to plugging revenue leakage with the continued strict implementation of the Treasury Single Account, TSA.
“We congratulate the leaders of the two chambers of the 9th National Assembly, Senate President, Ahmad Lawan, and speaker of the House of Representatives, Femi Gbajabiamila, for creating a convivial environment for the budget presentation exercise, a welcomed departure from the usual tensed and adversarial atmosphere of the previous four years.
“The party is confident that the patriotic disposition of the leaders and members of the 9th National Assembly would ensure a cordial relationship with the executive arm, which would surely translate to good governance and proper implementation of the administration’s Next Level plans for Nigerians.’’
2020 budget heavy travel bag but empty in substance – CUPP
However, the Coalition of United Political Parties, CUPP, described the 2020 Budget as lacking substance and vowed to challenge the planned increment in the Value Added Tax, VAT, by the Federal Government in court.
CUPP particularly said the budget was similar to a heavy travelling bag that has no substance in it.
In a statement issued by its Spokesman, Ikenga Ugochinye, yesterday, the CUPP said: “The Coalition of United Political Parties, CUPP, having listened critically to President Buhari’s 2020 Appropriation Bill as presented to the joint session of the National Assembly on Tuesday, regrets to inform Nigerians that the days of the nation’s suffering are not any way close to an end.
‘’The President has by today’s budget presentation shown that he has no formula to save the nation’s economy from the impending final ruins that his mismanagement has caused.
“Opposition parties see this fiscal document as an empty document that is not worth the paper on which it was written. It is full of rhetoric; Buhari’s appropriation bill can best be described as a heavy travel bag that is empty in substance or value.
“The CUPP notes that this document is a final weapon to consolidate Buhari’s next level of economic ruins, poverty, looting and visionlessness. It is a come and chop document meant to further impoverish many and prosper the privileged few.
“The Opposition rejects the inclusion of the illegal proposed increment in VAT as part of the 2020 budget expected source of funding. This has shown that the budget is built in the sky with no serious source of funding except taxing the people to death.
“The opposition coalition has therefore resolved to head to court this week to stop the planned insensitive move to tax the suffering citizens of Nigeria to death with the proposed increment in VAT from 5% to over 7%. The president should not force the suffering citizens to bear the consequences of his leadership failures.”
Reacting to the budget presentation, Peoples Democratic Party, PDP, said the N10.7 trillion 2020 budget presented by President Muhammadu Buhari to the National Assembly would further impoverish Nigerians and mortgage the future of the nation and its citizens.
The party also urged the legislature to redirect the fiscal proposal to serve the interest of the vast majority of Nigerians.
A statement issued by the party’s spokesman, Kola Ologbondiyan, described the Appropriation Bill as hazy, showing streaks of padding, fraudulent duplication, replete with false performance indices, deceptive projections and inexplicable expenditure assertions.
It read: “The PDP insists that it is inexcusable that despite the huge natural resources at President Buhari’s reach, he articulated an N10.7 trillion budget that is completely lacking in concrete wealth creation strategy but relies on further squeezing of Nigerians through excruciating taxes, levies and agonizing tolls.
“The party described as unacceptable that the budget is skewed to serve the interest of the opulent, as projects that have a direct bearing on the well being of the masses were not substantially accommodated in the overall expenditure profile.
The party also criticized the Buhari-led administration for “not being transparent in the mammoth allocations for alleged vague projects, particularly the Ministries of Works and Housing as well as transportation, where allegations of diversion of public funds were endemic in the last budget.
“Standing with millions of Nigerian youths and women, our party rejects the paltry budgets of N48 billion for Education and N46 billion for Health and urges the National Assembly to review the allocations in the interest of Nigerians.
“Furthermore, the PDP notes, as unacceptable that President Buhari, in his budget speech, could not give an account of his handling of the 2019 budget and had to resort to lame excuses and unsupported figures, particularly on the various unimplemented subheads in critical sectors of the economy.
“Moreover, President Buhari failed to explain why his administration has remained hugely corrupt and how his Presidency depleted our foreign reserves to an all time low of $41,852 billion accumulated huge foreign and domestic debts and kept the naira at its knees at about N360 to $1USD under his watch.”
The party also challenged the Presidency to make public the details of the Presidency allocation for Nigerians.