Not satisfied, some economic experts and the political class have since expressed concern over the N10.33 trillion budget recently presented by President Muhammadu Buhari to the joint session of the National Assembly for the 2020 fiscal year, describing the oil benchmark at $57 per barrel and crude oil production of 2.18 million bpd as unrealistic.
President Buhari had presented a budget indicating recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure in the figures based on $57/barrel oil price and 7.5 percent VAT.
Allocations to some MDAs are as follows: Works and Housing – N262 billion, Transportation – N123 billion, UBE – N112 billion, Defence – N100 billion, Agriculture – N83 billion, Water – N82 billion, Niger Delta – N81 billion, Education – N48 billion, Health – N46 billion, NEDC – N38 billion, SIP – N30 billion, FCT – N28 billion, Power – N127 billion, NDDC -N80.88 billion and Zonal Intervention Projects – N100 billion.
Buhari also put the Federal Government’s estimated revenue in 2020 at N8.155 trillion, comprising oil revenue of N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenue of N3.7 trillion.Other estimates are N556.7 billion for statutory transfers; N2.45 trillion for debt servicing and provision of N296 billion as sinking fund.
The 2020 budget is based on an oil production estimate of 2.18 million barrels per day, oil price benchmark of 57 dollars per barrel and an exchange rate of N305 to a dollar. Other benchmarks are real Gross Domestic Product (GDP), growth rate of 2.93 percent while inflation rate “is expected to remain slightly above single digits in 2020.”
While condemning the Federal Government’s decision to base the estimated revenue from Value Added Tax (VAT) in 2020 on 7.5 percent instead of five percent, economic analysts also decried the abysmal allocations to agriculture, health, education and the Social Investment Programme.
The Tide aligns itself with the fears expressed by pundits that the paltry sums allocated to vital sectors portray continued downward trends in the allocations to these key sectors that have direct bearing on the living standard of the citizenry and should be reviewed.
It is pertinent to make provisions for the adequate funding of Agriculture, Health and Education sectors given their strategic importance. Agriculture employs up to 80 percent of the population, especially in the informal sector, where the majority of the small-scale food producers are women farmers.
Similarly, the health sector requires improved funding, as our health centres, maternities and hospitals lack basic essential facilities and drugs and evidence has shown that increased investment in these pro-poor sectors has a strong impact on poverty and inequality reduction, while simultaneously creating employment opportunities.
Furthermore, the set parameters for the 2020 proposal remain unrealistic given the volatility in the global oil market and the increasing insecurity across the country. Oil benchmark at $57 and the crude oil production of 2.18 million bpd are unrealistic.
While we welcome the estimated revenue of N8.155 trillion for 2020, and expect that it will be vigorously pursued, we hope that with the new Finance Bill to be submitted by the President, the review of the domestic tax policy will likely lead to improved revenue over the period.
However, The Tide is worried that the 2020 budget proposal continues to deepen the huge gap between the capital and recurrent expenditures. Given the teeming population, we opine that the capital expenditure proposal for 2020 of N2.46 trillion, about 24 percent of aggregate projected expenditure compared to the recurrent proposal of N4.88 trillion is not good enough for a country with a high demand for infrastructural development.
We are equally worried about the paltry allocations to the Niger Delta Development Commission (NDDC) and the Niger Delta Ministry responsible for the welfare of the Niger Delta people. We expect more attention to be paid to the completion of road infrastructures such as the East-West Road, Bonny-Bodo Road and adequate funding of the Amnesty Progromme.
While we commend the tireless effort of the government in the early presentation of the 2020 budget proposal to the joint sitting of the National Assembly, we are worried about the slow implementation of the 2019 budget owing to low-level revenue generation, aggregating N2.04 trillion as at June 2019 and amounting to only 58 percent of the 2019 budget target.
Even more worrisome is that N3.39 trillion has been spent out of the N4.46 trillion budgeted for recurrent expenditure as at June 30, 2019, while only N294.63 billion was released for capital expenditure as at September 30, 2019. This has a major implication to the infrastructural development of the country, meaning that we continue to consume far more than we invest.
We, therefore call on the National Assembly to take a bold step in correcting the inherent inequality in the pattern of allocations in the 2020 budget proposal, with specific reference to the allocations for the agencies for the development of the Niger Delta, agriculture, health, education and the National Social Investment Programme (NSIP). These allocations need to be improved upon.
Also, as much as it is important for the government to increase its tax revenue, increasing VAT is not the right way to go. VAT is a multi-level tax on consumption and the burden rests on the final consumer and not the business; so the people are the ones who will bear the brunt of the increase. It is on this premise that we demand a review of proposal of any form of increase on VAT.