…It is unrealistic and not achievable, Senators
…This budget is nothing but old News; We have a budget based on unrealistic expectations, Abaribe
By Henry Umoru
Senators Tuesday began debate on the general principles of the 2021 Appropriation Bill of N13.082 trillion presented before the National Assembly by President Muhammadu Buhari.
The Senators who were Tuesday sharply divided across party lines, did not hide their reservations as some lampooned the entire budget proposal.
Senate Leader, Senator Abdullahi Yahaya, All Progressives Congress, APC, Kebbi North Kick started the debate
While most Senators from the opposition Peoples Democratic Party (PDP) were critical about the budget parameters; those from the ruling All Progressives Congress (APC) made it a duty to defend the document.
President Muhammadu Buhari had last week submitted a budget of N13.08 trillion; christening it a budget of recovery and resilience, just as the budget is predicated on a benchmark oil price of $40/barrel; Oil production of 1.86 mb/day, with an exchange rate of N379/$.
The budget is also predicated on the assumption of 11.95% inflation rate and a Gross Domestic Product(GDP) growth of 3% and while the Federal Government retained a revenue projection of N7.89 trillion, the budget remained high on fiscal deficit of N5.19 trillion; slightly above the 3% threshold set by the Fiscal Responsibility Act, 2007.
In his presentation, Senator Abdullahi Yahaya who left the subject matter of budget, went into the issue of restructuring by describing those clamouring for restructuring of the country as people seeking for dismemberment of the country before addressing the budgetary proposals and projections.
Yahaya said, ” Mr. President distinguished colleagues, we are all witnesses to the cacophony of voices and opinions of some leading members of our society, our compatriots who out of genuine concerns, frustration, sense of entitlement or sheer political bravado, call for the dismemberment of this nation or for public disobedience through which they hope to bring down the government of the day, thereby truncating our hard won democratic journey.
“The constitutional reform process is there in the National Assembly to satisfy the earnings and aspirations of Nigerians for restructuring and reshaping our federation to make it an inclusive and all-embracing polity.
“We as Senators of the Federal Republic, should not contemplate the dangerous and destabilizing temptations of dismembering our federation. We must stand by the honour of our status, our convictions and our oath of office which is to preserve and protect the interest of Nigeria and Nigerians, as a whole.
“We are obliged to place the social and economic challenges we face today in their proper historical perspectives with a View to determining the best course of action for our people and our nation at this point in history”
On the budget proposals, the Senate Leader said, “It is important to note at the outset, that this proposal is not strange to the leadership of the National Assembly and the Committees of Finance and National Planning. All the parameters were discussed and agreed upon, at least in principle. What remains for us is to closely examine the contents and the details in order to sort things out and smoothen the rough edges.
“A budget deficit of #5.19 trillion represents 3.64% of GDP and is therefore above the threshold set by the Fiscal Responsibility Act, 2007. Even though the deficit is covered by N4.28 trillion of new borrowing and funds obtainable from privatization proceeds and multilateral and bilateral sources, it is important for our committees on Finance to raise the matter for the National Assembly to permit this increase, as specified in the extant law, particularly given the special circumstances which made this necessary.
“It is also important to note that a budget deficit of this size requiring more indebtedness is not healthy for the long-term development of the country, but this must be tolerated now because of the challenges of the times.”
“This budget is nothing but Old News, We have a budget based on unrealistic expectations”, Abaribe
Senator Enyinnaya Abaribe, PDP, Abia South, who fired the first salvo after the Senate leader, described the projections in the budget as nothing but old News and the budget is based on unrealistic expectations.
Abaribe said, “This budget is nothing, but the same. We have a budget based on unrealistic expectations. We are not also so sure what the oil situation is going to be.
“If the budget is based on assumption, I agree but why are not assuming properly. I want to go ahead and say it does not reflect the understanding of the fundamental challenges of today. This budget is nothing but old news. Every time the same old news, nothing new.
“The 2021 Appropriation Bill proposes to spend N13.082 trillion, with expected revenue of N7.886 trillion and a deficit of N5.196 trillion. As with the other budgets over the last few years, it looks impractical and un-implementable.
“The major challenge, as with previous budgets, is with revenue and an overly optimistic revenue target. The 2021 budget hopes that the federal government will be able to generate almost eight trillion naira. If history is anything to go by, this projection looks impossible.
“This overly optimistic position is not new in Nigeria but is part of a continuing pattern of false optimism that has put the federal government’s accounts in the deep red and the country in dire straits.
“To demonstrate this point, the observers needs to look at the performance of previous approved budget revenues and what were achieved as actual revenue.
” In 2016, Nigeria had an approved budget with a revenue of N3.855 trillion. By the end of the year, the total retained revenue was only N2.621 trillion.
” This performance was a 32 percent shortfall according to the budget implementation reports. In 2017, instead of trying to readjust to the reality of a difficult revenue situation, Government of Nigeria repeated the same overly optimistic exercise. The approved budget had a revenue of N5 trillion while actual revenue that year was only N2.37 trillion.
“This performance was a whopping 53 percent shortfall. In 2018, Federal Government of Nigeria repeated the same thing by submitted a budget that expected revenue to jump from N2.37 trillion to N7.165 trillion. By the end of the year, actual revenue was only N3.48 trillion; a 51 percent shortfall. The story was the same in 2019 and 2020. In 2019 the revenue shortfall was 41 percent and so far in 2020 the shortfall is 38 percent.
“Here we are in 2021 and the submitted budget expects revenue to be N7.886 trillion. Based on the half year numbers, Nigeria would be lucky to realise N3.3 trillion in revenue in 2020 by the end of the year. Yet the Executive expects revenue to increase by over 200 percent in 2021.
“When the Executive announces a N13 trillion budget, the ministries and agencies take it as a signal that the largess can continue. A casual look at the Appropriation Bill contains items like SUVs for chief executives and fancy office buildings for agencies who really do not need them.
“All of these things will count as “capital expenditure” without adding much to the productive ability of the economy. At a time when the Executive is on the verge of a serious fiscal crisis some of these proposed spending items are unnecessary.
“The budget betrays a lack of understanding of how modern economies function.”
But in a swift reaction, Deputy Chief Whip, Senator Aliyu Sabi Abdullahi, APC, Niger North who came to the rescue; saving the budget from being shred further by Abaribe, however accused the Minority Leader of playing to the gallery.
According to Sabi Abdullahi, the APC-led government was doing its best to recover the economy from the state of comatose previous PDP governments had left it; stressing that there was nothing wrong with borrowing.
The disagreements continued when PDP Senators such as Ike Ekweremadu, PDP, Enugu West; George Sekibo, PDP, Rivers East, Gabriel Suswam, PDP, Benue North East Onor Sandy, PDP, Cross River Central, among others made their presentations against workability of the budget .
Ekweremadu who tackled the Senate Leader over his comment that proponents of restructuring are seeking for dismemberment of Nigeria, said that the leader got it wrong and withdrew the statement on his behalf.
He said, “For the first time, we debt to GDP Ratio is over 3%. I want the committee on Finance and appropriation should find a solution to this.
‘I have been very worried about the way we are going in terms of borrowing. I am concerned on the loan being given by China. They will not let you go off any of the debt because all the monies are for specific projects and if they are not done they take over.
“The other issue is the issue of social intervention. We have spent a lot of money on it but we still have young men who are looking for jobs. We need to deal with the real issues by investing in ICT, modern Agriculture. We must create life style centre around Agriculture and in modern farms. Until we do that, it will remain unattractive to our young people.
“The last issue is on value to cost. The government is making certain Expenditures on health centres but what has happened is that those health centres are not put to use because there are no doctors or nurses.”
Senator Gabriel Suswam was not particularly comfortable with the fiscal deficit, debt service and huge domestic borrowing, just as he said that it will crowd out the private sector.
On his part, Senator George Sekibo strongly cautioned that Nigeria should reduce borrowings, lower the exchange rate of Naira to the US dollar.
But other APC Senators who spoke along the same line with Aliyu Sabi Abdullahi, like Orji Uzor Kalu, Uba Sani, Adamu Aliero, Ibikunle Amosun etc, expressed hope in the workability of the budgetary proposals.
Senator orji Uzor Kalu who defended the budget budget; pointed out that the Senate needed to support President Muhammadu Buhari achieve all the projections and put the Nigerian economy on the path of growth again.
The debate continues today and tomorrow this week.