By Orkula Shaagee, Abuja
Largest Spenders: Works &Housing – N262 billion
Transportaion- N123 billion;UBEC -N112bn;Defence-N100bn;Agric-N83bn;Water-N82bn
NASS Will Pass Budget Before December 31-Lawan
The Federal Government Tuesday, announced plans to borrow a whopping N2.8trillion to partly finance the 2020 budget of N10.33 trillion.
President Muhammadu Buhari who presented the 2020 Appropriation Bill to the joint session of the National Assembly said the deficit includes drawdowns on project-tied loans and the related capital expenditure.
The deficit, Buhari said represents 1.52 percent of estimated GDP, which according to him was well below the 3 percent threshold set by the Fiscal Responsibility Act of 2007, and in line with the Economy Recovery and Growth Plan(ERGP) target of 1.96 percent.
“The deficit will be financed by new foreign and domestic borrowings, Privatization Proceeds, signature bonuses and drawdowns on the loans secured for specific development projects,” the President told his hosts.
He said “Nigeria remained committed to meeting its debt service
obligations”, hence the provision of the sum of N2.
“ Of this amount, 71 percent is to service domestic debt which accounts for about 68 percent of the total debt. The sum of N296 billion is provided for the Sinking Fund to retire maturing bonds issued to local contractors,” he explained.
“ I am confident that our aggressive and re-energised revenue drive will maintain debt-revenue ratio at acceptable and manageable levels. We will also continue to be innovative in our borrowings by using instruments such as Sukuk, Green Bonds and Diaspora Bonds,” he stated.
Largest Sectoral Spenders:
Out of the N10.33 trillion total expenditure for the
fiscal year 2020, Buhari announced the largest allocation of N262billion to the
Federal Ministry of Works and Housing to underscore his administration’s
commitment to improvements in infrastructure.
The ministry of Works and Housing, which got the highest allocation of N262 billion, was followed by the Transportation ministry with N123 billion, while UBEC placed third with N112 billion. The Defence ministry was allocated N100 billion, while Agriculture got N83 billion.
Other sectoral allocations include:Water Resources-N82 billion; Education – N48 billion; Health-N46 billion; North East Development Commission – N38 billion; Social Investment Programmes(SIPs) – N30 billion; FCT – N28 billion and the Niger Delta Ministry- N24 billion.
The President a conservative oil price benchmark of US$57 per barrel, was adopted as oil price benchmark on the basis of daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per US Dollar for 2020 fiscal year.
VAT Increases to 7.5%
The president also formally disclosed government’s proposal to increase the nation’s Value Added Tax (VAT) to7.5 % from 5%. The proposal was first made public over a Month ago by the Minister of Finance, Mrs Zainab Ahmed.
Buhari, said additional revenues will be used to fund health, education and infrastructure. He promised the Federal Government’s continued strict implementation of Treasury Single Account(TSA) and listed the items exempted from VAT to include pharmaceuticals, some food such as fish, white and brown bread among others.
He reeled out the economic performance of his administration to include significant reduction in inflation from 18.7 in January 2017 to 11.02 by August 2019.
“We also succeeded in significantly reducing inflation from18.72 per cent in January 2017 to 11.02 per cent by August 2019.
“The receipts from VAT in the last budget year were below expectation,” Buhari said giving reasons such as the last general elections.
Buhari disclosed that expenditure in the 2019 budget was hindered by delay in the budget defence, adding that capital releases commenced in the third quarter.
He, therefore, urged the National Assembly to stop the unnecessary practice of budget delay to enable the 2020 budget come into effect by 1st January 2020.
In his remarks, Senate President, Ahmed Lawan said all MDAs must defend their budget estimates before relevant NASS committees in October, adding that the parliament was committed to passing the budget “before the end of the year.”