Tony Akowe, Abuja
PRESIDENT Muhammadu Buhari presented the N13.08 trillion budget estimate to a joint session of the National Assembly for the 2021 fiscal year.
He requested the National Assembly to consider and pass the estimate for implementation.
Christened budget of “Economic Recovery and Resilience”, President Buhari said the fiscal policy is expected to accelerate the pace of the nation’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.
He said the budget is designed to further deliver on the goals of the nation’s Economic Sustainability Plan, which provides a clear road map for post-Corona virus economic recovery as a transitional plan to take the nation from the Economic Recovery and Growth Plan (2017 – 2020) to the successor Medium Term National Development Plan (2021 – 2025).
The President said in view of the many challenges confronting the nation, “we must accelerate our economic recovery process, promote social inclusion and strengthen the resilience of the economy”, hence, the decision to tag it ‘Budget of Economic Recovery and Resilience’.
He explained that the 2021 – 2023 Medium Term Expenditure Framework and Fiscal Strategy Paper recently passed by both chambers of the National Assembly set out the parameters for the 2021 Budget, which include an oil benchmark of 40 US Dollars per barrel and a daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day), an exchange rate of N379 per US Dollar; and GDP growth projected at 3.0 percent and inflation closing at 11.95 percent.
He said further that the Ministry of Finance will finalise the Finance Bill 2020, which will be forwarded to the National Assembly for consideration and passage into law.
The Finance Bill, he added, will support the realization of the 2021 revenue projections, adopt appropriate counter-cyclical fiscal policies and enhance the efficiency of fiscal incentives. Tax Expenditure Statement.
President Buhari said: “In compliance with the Fiscal Responsibility Act of 2007, we will prepare and publish, a Tax Expenditures Statement for 2019. The 2019 Statement will be the first of these annual Statements, setting out the estimated cost of tax exemptions, incentives and rebates provided under Nigeria’s revenue and other laws. The 2019 Statement is expected to contribute to public discussion on the use of our tax policies and system to achieve socio-economic development. 8 Federal Government Revenue Estimates”
He noted that “based on the foregoing fiscal assumptions and parameters, total federally distributable revenue is estimated at N8.433 trillion in 2021. Total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion. This includes Grants and Aid of N354.85 billion as well as the revenues of 60 Government-Owned Enterprises.
“Oil revenue is projected at N2.01 trillion. Non-oil revenue is estimated at N1.49 trillion. As you will observe, the format of the 2021 Appropriation Bill has been modified to include budgeted revenues, no matter how small, for each MDA, to focus on internal revenue generation. Accordingly, I implore you to pay as much attention to the revenue side as you do to the expenditure side”.
Giving a breakdown of the 2021 appropriation, the President said “an aggregate expenditure of N13.08 trillion is proposed for the Federal Government in 2021. This includes N1.35 trillion spending by Government Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion.
Non-debt Recurrent in 2021 is expected to gulp N5.65 trillion; Personnel Costs will take N3.76 trillion; while Pensions, Gratuities and Retirees’ Benefits will take N501.19 billion of the budget, Overheads of N625.50 billion, Debt Service of N3.124 trillion; Statutory Transfers of N484.49 billion; and N220 billion will be spent as Sinking Fund of N220 billion (to retire certain maturing bonds).
The President put the budget deficit for 2021, (including Government Owned Enterprises and project-tied loans), at N5.20 trillion, representing 3.64 percent of estimated GDP which is slightly above the 3 percent threshold set by the Fiscal Responsibility Act, 2007.
He told the lawmakers that the deficit will be financed mainly by new borrowings totaling N4.28 trillion, N205.15 billion from Privatization Proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.
The President said about N484.49 billion had been provided in the budget for Statutory Transfers, adding that the amount represents an increase of N56.46 billion (or 13 per cent) over the revised 2020 provision.
The transfers include N63.51 billion for the Niger Delta Development Commission, N29.70 billion for the North East Development Commission N110 billion for the National Judicial Council, N70.05 billion for the Universal Basic Education Commission, N40 billion for the Independent National Electoral Commission, N128.00 billion for the National Assembly, N5.20 billion for Public Complaints Commission, N3.00 billion for Human Rights Commission and N35.03 billion for Basic Health Care Provision Fund.
He said however that “In compliance with the Fiscal Responsibility Act 2007, all beneficiaries of Statutory Transfers will 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. Recurrent Expenditure”.
The President stressed that “In our efforts to enhance national security and human capital development, a major part of the 2021 recurrent cost estimate is allocated to paying salaries and overheads in MDAs providing these critical public services.
The allocation include N227.02 billion for the Ministry of Interior; N441.39 billion for the Ministry of Police Affairs; N545.10 billion for Ministry of Education; N840.56 billion for Ministry of Defence; and N380.21 billion for Ministry of Health.
Huge Personnel cost
He said “Personnel cost is still our largest single item of expenditure. In the seven months to 31st July 2020, it accounted for 34 per cent of total Federal Government spending and is projected at 33 per cent of 2021 expenditure.
“To check the incidence of payments to non-existent personnel and unauthorised allowances, only Federal staff that have been captured on the Integrated Personnel Payroll Information System (‘IPPIS’) platform will receive salaries.
“All agencies have been directed to ensure that they obtain all necessary approvals before embarking on any fresh recruitment. Any breach of these directives will be severely sanctioned”
On debt servicing, the President said “we remain committed to meeting our debt service obligations. Hence, we have provisioned N3.12 trillion for this in 2021, representing an increase of N445.57 billion from N2.68 trillion in 2020.
“A total of N2.183 trillion has been set aside to service domestic debts while N940.89 billion has been provided for foreign debt service. N220 billion is provided for transfers to the Sinking Fund to pay off maturing bonds issued to local contractors and creditors. Overhead Costs
“Total overhead costs of MDAs and Government Owned Enterprises are projected to rise to N625.50 billion in 2021, mainly due to the inclusion of the overheads of an additional 50 Government Owned Enterprises. Overhead 11 provisions have also been made for newly created agencies. To keep a tab on running costs, MDAs must adhere to extant expenditure controls”
On capital Expenditure, the President said that an aggregate sum of N3.85 trillion is expected to be available for capital projects in 2021, with N1.80 trillion for MDAs’ capital expenditure; N745 billion for Capital Supplementation; N355 billion for Grants and Aid-funded projects; N20 billion for the Family Homes Fund; N25 billion for the Nigeria Youth Investment Fund; N336 billion for 60 Government Owned Enterprises; N247 billion for capital component of Statutory Transfers; and N710 billion for projects funded by Multi-lateral and Bi-lateral loans.
Higher Capital budget
He disclosed that the 2021 capital budget is N1.15 trillion higher than the 2020 provision of N2.69 trillion, adding that “at 29 per cent of aggregate expenditure, the provision moves closer to his Administration’s policy target of 30 per cent.
“Capital expenditure in 2021 remains focused on the completion of as many ongoing projects as possible, rather than the commencement of new ones. We have also made efforts to ensure equity in the distribution of projects and programmes in the proposed budget.
“I will be providing the National Assembly a list of some of the most critical projects which we must work collectively to ensure they receive adequate funding. Until projects reach completion, they do not deliver the dividends of democracy that Nigerians rightly deserve. Highlights of the 2021 Capital Projects”
He said the Ministry of Agriculture and Rural Development is expected to facilitate the integrated development of its sector by promoting crops’ value chains; as well as providing rural roads, water and sanitation, veterinary and pest controls, grazing, food and strategic reserves, and access to inputs and extension services.
He said that “the 157 per cent increase in the capital allocation to the health sector is to enhance the capacity to deliver healthcare services through the procurement of equipment, vaccines and other facilities. Two centres of excellence, as well as one Accident and Emergency Centre, will be equipped in Federal Teaching Hospitals in each geopolitical zone.
“In addition, numerous Primary Health Care Centres will be equipped and upgraded across the six geopolitical zones. Furthermore, funds have been allocated for the expansion of Midwives Service Scheme in the six geopolitical zones. To enhance occupational safety, funds have been provided for the provision of Personal Protective Equipment for health workers”.
On education, the President said “the Ministry of Education’s capital allocation has been increased by 65 per cent to improve the education of our children. Funds have been provided for the provision of scholarship awards to Nigerian students at home and abroad.
“We have provided funds for the upgrade of security and other infrastructural facilities in our Unity Colleges nationwide. To improve access to education, we have made provision for the establishment of five new Federal Science and Technical Colleges. We have also provided for the payment of allowances to 5,000 teachers under the Federal Teachers Scheme.
“In line with our commitment to invest in Transportation Infrastructure, capital allocation to the Works and Housing sector is to facilitate the completion of several critical projects in 2021. Key projects for implementation in the Power sector include several Rural Electrification Projects in the 36 States and Abuja, Rural Electrification Access Programme in Federal Universities, the Kaduna LPFO Gas Fired power Plant, the Mambilla Hydro Power Project and the Zungeru Hydropower Project.
“Provisions have been made for legacy debts owed to local contractors compensation and resettlement of project-affected communities, the Renewable Energy Micro Utility (Solar) project, and the construction of transmission lines and substations nationwide. These project’s implementation is expected to have positive impact on electricity supply nationwide, as well as boost productivity and employment.
“Projects to be implemented by the Ministry of Water Resources in 2021 include provision of potable water in the North East, construction of irrigation and dams across the country, and the provision of Water, Sanitation and Hygiene facilities.
“To maintain the peace in the Niger Delta region for economic and social activities to thrive, the provision of N65 billion for the Presidential Amnesty Programme has been retained in the 2021 Budget.
“In addition, the sum of N63.51 billion has been appropriated for the Niger Delta Development Commission and N24.27 billion has been provided for the capital projects of the Ministry of Niger Delta Affairs. These allocations should further support the development of the region by facilitating the completion of important ongoing projects, such as the East-West Road. Government Fiscal Strategy in 2021
“The government is already implementing several measures to overcome our fiscal constraints. In addition to the Strategic Revenue Growth Initiatives, we are leveraging technology and automation, as well as more effective monitoring of Independently Generated Revenues.
“Our efforts are aimed at addressing revenue leakages and redirecting scarce resources to the poor and vulnerable. These efforts include Deregulation of the price of petroleum products; Ongoing verification exercise with IPPIS; and Implementation of service-based electricity tariffs.
“The new petrol pricing regime has freed up resources that was allocated to subsidise petroleum products. Similarly, the ongoing IPPIS verification exercise has closed gaps that encourage ghost workers or pensioners. The service reflective electricity tariffs will help resolve liquidity crisis in the power sector and make the sector attractive to foreign investment. These reforms have released trillions of Naira for allocation to other priority areas.”
He maintained that the main thrust of capital spending programme in 2021 is the completion of as many ongoing projects as possible across the country. Accordingly, we have prioritized projects that can be rapidly completed to benefit our people.
Petrol Industry Bill
The President said further: “I note, with satisfaction, your determination to promptly consider and pass the Petroleum Industry Bill into law. The enactment of this Bill will boost confidence and attract further investments into our oil and gas sector, as well as increase revenues.
“I fully understand the difficulties many of our people are going through with the implementation of our reform agenda. However, the measures we are implementing are necessary for sustainable public finance, better allocation of our scarce resources and improved public service delivery. As we implement these reforms, social safety nets will be implemented to cushion the effect of the most vulnerable of our citizens as well as business owners.”