2021 budget: Defence, Education, Police, Works take lion shares of N13.08 budget

President Muhammadu Buhari, on Thursday raised the alarm that Nigeria economy may slide into recession again as Gross Domestic Product, GDP growth rate, has remained in the negative since the first quarter of the year.

This is as the Ministries of Defence, Education, Police, Works etc, got the lion shares of the N13.08 trillion 2021 budget presented to joint session of the National Assembly by the President.

President Buhari in the budget christened “Budget of Economic Recovery and Resilience”, lamented that since GDP growth rate has been in the negative since the first quarter of the year up to the just ended third quarter, Nigeria may slide into another recession again four years after the first occurrence.

“The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the Coronavirus Pandemic. Real Gross Domestic Product (GDP) growth declined by 6.1 percent in the second quarter of 2020.

“This ended the three-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017.

“GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences,” he stressed.

He, however, assured Nigerians that strategic efforts are being made to insulate the Nigerian economy from consequences of such recession.

“We are working assiduously to ensure a rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years,” the President assured.

President Buhari, in the presentation also sealed the fate of Academic Staff Union of Universities, ASUU members, who have not been captured on the Integrated Personnel Payroll Information System, IPPIS platform, saying only federal staff members already captured would receive salaries from 2021

“To check the incidence of payments to non-existent personnel and unauthorized allowances, only federal staff members that have been captured on the Integrated Personnel Payroll Information System (IPPIS) platform will receive salaries,” he vowed.

President Buhari further explained that the parameters upon which the budget is based are $40 per barrel oil price benchmark, 1.86million barrel oil per day, N379 to a US dollar exchange rate, GDP growth rate of 3% and Inflation growth rate of 11.59%.

According to him, an aggregate expenditure of N13.08 trillion is proposed for the federal government in 2021.

This, he explained, includes N1.35 trillion spending by government- owned enterprises and grants and aid funded expenditures of N354.85 billion.

For 2021, the proposed N13.08 trillion expenditure comprises:
Non-debt recurrent costs of N5.65 trillion; personnel costs of N3.76 trillion; pensions, gratuities and retirees’ benefits of N501.19 billion; overheads of N625.50 billion; debt service of N3.124 trillion; statutory transfers of N484.49billion; and sinking fund of N220 billion (to retire certain maturing bonds) fiscal balance.

The N5.2trillion budget deficit, according to the President , is inclusive of government owned enterprises and project-tied loans which represents 3.64 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal Responsibility Act, 2007.

He explained further that the deficit will be financed mainly by new borrowings totalling 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 sum of N484.49 billion the President added, is provided for statutory transfers in the 2021 budget representing an increase of N56.46 billion (or 13 percent) over the revised 2020 provision while an aggregate sum of N3.85trillion is estimated for capital expenditure.

The statutory transfer provisions as broken down by the President from the N13.08 aggregate expenditure are: Niger Delta Development Commission, NDDC, N56.4billion; North East Development Commission, NEDC, N29.7billion;
National Judicial Council, NJC, N110billion; Universal Basic Education Commission, UBEC, N70.05billion; Independent National Electoral Commission, INEC, N40billion; National Assembly, NASS, N128billion; Public Complaints Commission, PCC, N5.2billion etc.

Under sectoral allocations within the recurrent expenditure component, the Ministry of Defence has the highest votes of N840.5billion followed by the Ministry of Education which has N545billion, the Ministry of Police Affairs with N441.3billion, Ministry of Health, N382.21billion and Ministry of Interior with N220billion etc.

But under capital expenditure projections, the Ministry of Works has the highest votes of N440billion, followed by Ministry of Transportation with N256billion votes, Ministry of Power with N198billion and the Ministry of Defence with N121billion, among others.

Other traditional projections like N100billion for Zonal Intervention projects, N65billion for Amnesty programme, N64billion for Niger Delta Development Commission, NDDC and N124billion for the Ministry of Niger Delta Affairs, were captured in the budgetary proposals.

The President in the speech, appreciated the difficulties Nigerians are going through in the implementation of reforms agenda of the federal government like the deregulation of the oil sector.

He, however, assured Nigerians that provisions have been made in the 2021 budget for required cushioning effects.

According to him, series of Social Safety Nets have been put in place in the budgetary proposals and will be implemented judiciously.

“We thank all Nigerians, for your perseverance and continued support during these difficult times. We remain unwavering in our commitment to actualize our vision of a bright future for everyone,” he said.

The President also lamented that revenue generation has been the major challenge facing the country on yearly basis as far as implementation of budgetary provisions are concerned but assured that the challenge will be surmounted in 2021 fiscal year.

“Let me emphasise that revenue generation remains our major challenge. Nevertheless, Government is determined to tackle the persisting problems with domestic resource mobilization, as there is a limit to deficit financing through borrowing.

“The time has come for us to maintain a healthy balance between meeting our growing expenditure commitments and our long-term public financial health,” he said.

President Buhari specifically mentioned the 2nd Niger Delta Bridge as one of the projects to be funded by capital component of the budget.

The project according to him, has attained 46 per cent implementation level and will be completed before expiration of his tenure in May 2023.

His words: “The Second Niger Bridge is at about 46 percent completion. We hope to commission the project before the end of our tenure in 2023. We have awarded several contracts to rehabilitate, reconstruct and construct major arterial roads, in order to reduce the hardship to commuters and increase economic activity.

“Under the Road Infrastructure Tax Credit Scheme, we are undertaking the construction and rehabilitation of over 780km of roads and bridges, nationwide, to be financed by the grant of tax credits to investing business. Ongoing projects under this scheme include: Construction and Rehabilitation of Lokoja-Obajana-Kabba-Ilorin Road Section II (Obajana-Kabba) in Kogi and Kwara States.

“Others are the construction of Apapa-Oworonshoki-Ojota Expressway in Lagos State; and
Construction of Bodo-Bonny road with a bridge across the Opobo Channel in Rivers State.”

Earlier before the budget presentation, the Senate President, Ahmad Lawan in his remarks, assured the President that the budget will be given expeditious consideration as done in 2019.

Also, the Speaker of the House of Representatives, Femi Gbajabiamila, called on heads of MDAs to cooperate fully with relevant committees of both chambers during budget defence sessions.