*Defence gets a lion share of N840.56 billion
*Education-N545.10 billion
*Police Affairs-N545.10 billion
By Ignatius Okorocha and Gift Chapi Odekina
President Muhammadu Buhari on Thursday presented a budget estimate of N13.8billion to a joint session of the Senate and House of Representatives for 2021 fiscal year.
The budget which reflects an increase of N3trillion from the 2020 budget estimate of N10.8trillion.
According to the President, the 2021 budget estimate which is tagged “Budget of Economic Recovery and Resilience,” is expected to accelerate the pace of e nation’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.
The Parameters & Fiscal Assumptions Underpinning the 2021 Appropriation as contained in the 2021 – 2023 MediumTerm Expenditure Framework and Fiscal Strategy Paper set out the parameters for the 2021 Budget, which include:
a. Benchmark oil price of 40 US Dollars per barrel;
b. Daily oil production estimate of 1.86 million barrels (inclusive of
Condensates of 300,000 to 400,000 barrels per day);
c. Exchange rate of N379 per US Dollar; and
d. GDP growth projected at 3.0 percent and inflation closing at 11.95
percent.
Breakdown of the N13.08 trillion expenditure proposed by the president comprises:
a. Non-debt Recurrent Costs of N5.65 trillion;
b. Personnel Costs of N3.76 trillion;
c. Pensions, Gratuities and Retirees’ Benefits of N501.19 billion;
d. Overheads of N625.50 billion;
e. Debt Service of N3.124 trillion;
f. Statutory Transfers of N484.49 billion; and
g. Sinking Fund of N220 billion (to retire certain maturing bonds).
Fiscal Balance
The 2021 Budget deficit (inclusive of Government Owned Enterprises and project-tied loans), is projected at N5.20 trillion. This represents 3.64 percent of estimated GDP, slightly above the 3 percent threshold set by the Fiscal.
This includes N1.35 trillion spending by Government-Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion.
The President further explained 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.
48. Oil revenue is projected at N2.01 trillion. Non-oil revenue is estimated at N1.49trillion,” he noted
Further breakdown of the budget Statutory Transfers:
The sum of N484.49 billion provided for Statutory Transfers in the 2021 Budget represents an increase of N56.46 billion (or 13 percent) over the revised 2020 provision.
The Statutory Transfer provisions are:
a. Niger Delta Development Commission – N63.51 billion;
b. North East Development Commission – N29.70 billion;
c. National Judicial Council – N110.00 billion;
d. Universal Basic Education Commission – N70.05 billion;
e. Independent National Electoral Commission – N40.00 billion;
f. National Assembly – N128.00 billion;
g. Public Complaints Commission – N5.20 billion;
h. Human Rights Commission – N3.00 billion; and
i. Basic Health Care Provision Fund – N35.03 billion.
53. 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:
He explained thus,”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.
These include:
a. N227.02 billion for the Ministry of Interior;
b. N441.39 billion for the Ministry of Police Affairs;
c. N545.10 billion for Ministry of Education;
d. N840.56 billion for Ministry of Defence; and
e. N380.21 billion for Ministry of Health.
Statutory Transfers:
The sum of N484.49 billion provided for Statutory Transfers in the 2021 Budget
represents an increase of N56.46 billion (or 13 percent) over the revised 2020
provision. The Statutory Transfer provisions are:
a. Niger Delta Development Commission – N63.51 billion;
b. North East Development Commission – N29.70 billion;
c. National Judicial Council – N110.00 billion;
d. Universal Basic Education Commission – N70.05 billion;
e. Independent National Electoral Commission – N40.00 billion;
f. National Assembly – N128.00 billion;
g. Public Complaints Commission – N5.20 billion;
h. Human Rights Commission – N3.00 billion; and
i. Basic Health Care Provision Fund – N35.03 billion.
53. 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:
He explained 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 service.”These include:
a. N227.02 billion for the Ministry of Interior;
b. N441.39 billion for the Ministry of Police Affairs;
c. N545.10 billion for Ministry of Education;
d. N840.56 billion for Ministry of Defence; and
e. N380.21 billion for Ministry of Health.
Personnel Costs:
On Personnel, Buhari lamented that personnel cost is still the nation’s largest single item of expenditure.
He noted that he noted the seven months to 31st July 2020, personnel costed accounted for 34 percent of total Federal
Government spending and is projected at 33 percent of 2021 expenditure.
He cautioned ,”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 Service, 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 provisions have also been made for newly created agencies. To keep a tab on running costs, MDAs must adhere to extant expenditure controls.”
Capital Expenditure:
According to the President ,”An aggregate sum of N3.85 trillion is expected to be available for capital projects in 2021, as summarised below:
a. N1.80 trillion for MDAs’ capital expenditure;
b. N745 billion for Capital Supplementation;
c. N355 billion for Grants and Aid-funded projects;
d. N20 billion for the Family Homes Fund;
e. N25 billion for the Nigeria Youth Investment Fund;
f. N336 billion for 60 Government Owned Enterprises;
g. N247 billion for capital component of Statutory Transfers; and
h. N710 billion for projects funded by Multi-lateral and Bi-lateral loans.
The 2021 capital budget is N1.15 trillion higher than the 2020 provision of N2.69 trillion. At 29 percent of aggregate expenditure, the provision moves closer to this Administration’s policy target of 30 percent.
He assured that 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 noted that Key capital spending allocations in the 2021 Budget include:
a. Power: N198 billion (inclusive of N150 billion for the Power Sector
Recovery Plan);
b. Works and Housing: N404 billion;
c. Transportation: N256 billion;
d. Defence: N121 billion;
e. Agriculture and Rural Development: N110 billion;
f. Water Resources: N153 billion;
g. Industry, Trade and Investment: N51 billion;
h. Education: N127 billion;
i. Universal Basic Education Commission: N70 billion;
j. Health: N132 billion;
k. Zonal Intervention Projects: N100 billion; and
l. Niger Delta Development Commission: N64 billion.
The president noted 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.
He explained that the sum of N63.51 billion 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,” Buhari said.
To plugged revenue leakages the president said”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:
a. Deregulation of the price of petroleum products;
b. Ongoing verification exercise with IPPIS; and
c. Implementation of service-based electricity tariffs.
76. 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.
On the passage of Petroleum Industry Bill into law, Buhari said his administration will leave no stone unturned to ensure e speedy assent of the a Bill once it is passed by the lawmakers.
“Distinguished Senators and Honourable Members, 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.
He noted that in furtherance of his administration’s inclusiveness agenda, aimed at cushioning that plight of the vulnerable in the society, the sum of N420 billion has been provided to sustain the Social Investment Programme. N20 billion has also been
set aside for the Family Homes Fund, our Social Housing Programme.
“We have expanded our National Social Register, to include an additional one million Nigerians following the onset of Coronavirus.
“We recently introduced the N75billion Survival Fund Programme to support and protect businesses from
potential vulnerabilities. Furthermore, the Central Bank of Nigeria is reducing the interest rate on its intervention facilities from 9% to 5% with a 1-year moratorium till 31st March 2021, to provide concessional lending of:
a. N100 billion to households and small businesses;
b. N100 billion to the healthcare and pharmaceutical industry; and
c. N1 trillion to large agricultural and manufacturing businesses.
81. We urge Nigerian businesses and individuals to make the most of these concessional credit facilities and other such opportunities.
