Business Feature

Evaluating Buhari’s N56.81trn 6-year budgets

As attention shifts to the N16.39 trillion 2022 appropriation budget proposal presented to the National Assembly on Thursday by President Muhammadu Buhari, indication are that in about six years of President Muhammadu Buhari’s administration, it has implemented a cumulative budget of N56.81 trillion. PAUL OGBUOKIRI and ABDULWAHAB ISA report that the budgets have never reached 100 per cent implementation; even as they have been trailed by deficit financing

 

•Implementation below 100%

•As deficit spending trails budgets

 

Buhari’s full budget from 2016 to 2021

 

Although the outgoing President Goodluck Jonathan approved the N4.5 trillion budget for 2015 which was passed by the National Assembly in late April, President Muhammadu Buhari inherited the budget on assumption of office on May 29, 2015.

Thus, the implementation of the 2015 budget could be said to have started running when President Buhari assumed office on May 29, 2015, as it was approved by former President, Dr. Goodluck Jonathan. On completion of the full cycle of the 2015 fiscal year, President Buhari had approved the 2016, 2017, 2018, 2019, 2020 and 2021 budgets which are cumulatively put at N56.81trillion.

 

The budgeted sums grew exponentially from the Jonathan’s N4.5 trillion for 2015 to N6.08 trillion for 2016, N7.29 trillion in 2017, N9.12 trillion in 2018 and N8.92 trillion in 2019.

It further rose to N10.80 trillion in 2020, and in 2021 the government budgeted the sum of N13.60 trillion for the current fiscal year.

 

President Buhari Thursday presented a humongous N16.39 trillion budget proposal to a joint session of the National Assembly for the 2022 fiscal year. Analysis of previous annual budgets computed by Sunday Telegraph also showed various implementation levels for each of the six sessions of the budget.

 

Breakdown of the six years budgets

 

Even as none of the six budgets recorded 100 per cent implementation, a breakdown of six sessions of budgets under the watch of President Muhammadu Buhari – from 2016 to 2021 is as follows: The 2016 Appropriation Act had a total sum of N6.06 trillion out of which a total of N4.39 trillion was spent .

 

The low implementation level of 2016 budget was, however attributed to the late passage of the budget. The capital expenditure component of the spending in 2016 was only N173 billion of the projected N1.58 trillion.

 

However, some of the capital expenses were carried into the new fiscal year 2017 in line with the clause attached to the Appropriation Act.

 

With revenue falling behind target and expenditures significantly flat, the deficit for the year stood at N2.19 trillion which is very close to the N2.2 trillion projected for the entire fiscal year -meaning deficit numbers may be substantially wider if capital spending of 2017 is considered.

 

For the 2017 budget, Federal Government said it recorded 86 per cent implementation. The Minister in charge of Budget and National Planning at the time, Senator Udoma Udo Udoma, had claimed that although the performances of the ministries and agencies of the Federal Government varied, it was generally an impressive record. Implementation of 2018 budget recorded a far lower performance level.

 

President Muhammadu Buhari during presentation of 2019 budget before the National Assembly said that the implementation of the N9.12 trillion 2018 budget recorded 67 per cent performance across the Ministries, Departments and Agencies (MDAs) of Federal Government.

According to him, out of the total appropriation of N9.12trillion, N4.59 trillion had been spent by September 30, 2018, against the prorated expenditure target of N6.84 trillion. The overall performance of the 2019 budget as at the third quarter of the year was put at 83.95 per cent, according to a publication by the Budget Office of the Federation in the Federal Ministry of Finance.

 

The publication, “Citizen’s Guide to Understanding the Federal Government of Nigeria 2020 Budget of Sustaining Growth and Job Creation”, showed the overall performance of the revenue side of the budget was about 81 per cent, against about 86.9 per cent for the expenditure side over the period.

 

Details of the budget performance showed that out of a total of N6.9 trillion appropriation in the approved 2019 Budget as revenue estimate, the government’s pro-rated revenue figure for the period was N5.2 trillion, against actual aggregate revenue realised which stood at N4.2 trillion ( 81 per cent). The 2020 budget implementation was severely affected by COVID-19 pandemic breakout.

 

However, President Buhari said his administration achieved an ‘impressive’ 97.7 per cent overall performance of the 2020 budget. The President stated this at the State House in Abuja after signing the N13.6 trillion 2021 budget into law.

 

“In spite of the adverse impact of the Coronavirus Pandemic on the nation’s economy and the government’s revenues, we have made appreciable progress in the implementation of the 2020 budget.

 

As at December 2020, we had released about N1.748 trillion out of a total of the N1.962 trillion voted for the implementation of critical capital projects, representing a performance of about 89.1 per cent.

 

“The overall performance of the 2020 budget currently stands at an impressive rate of 97.7 per cent.

This commendable outcome underscores the importance of our efforts, together with the Legislature, to return to the discipline of a January-to-December fiscal year”, he said. Implementation for the 2021 budget is ongoing in the current fiscal year.

However, as of August this year, the Federal Government said it had released N1.3 trillion to fund part of the 2021 capital expenditure budget of its Ministries, Departments and Agencies (MDAs). Director General, Budget Office of the Federation, Mr. Ben Akabueze, who disclosed the amount committed into its implementation, said the amount represents 63.5 per cent of capital budget of the year, adding that the government is committed to fully fund the 2021 capital budget.

“MDAs have been told in the recently released budget circular that they should expect to receive full funding for their 2021 capital budget”, he said. The Buhari administration on Thursday presented N16 trillion 2022 budget to the joint session of the National Assembly.

The proposed total expenditure for the coming year is anchored on the benchmark oil price of $57 per barrel and daily oil production estimate of 1.88 million barrels (inclusive of condensates of 300,000 to 400,000 barrels per day). The exchange rate is projected at N410.15 per dollar and projected GDP growth rate of 4.2 per cent with 13 per cent inflation rate.

The president said the total federally distributable revenue is estimated at N12.72 trillion in 2022 while total revenue avail

 

Naable to fund the 2022 budget is estimated at N10.13 trillion. This includes Grants and Aid of N63.38 billion, as well as the revenues of 63 Government-Owned Enterprises (GOEs). The President earlier sought to increase the total expenditure from N13 trillion to 16.45 trillion.

Some reasons he gave for the increase are the allocation of N100 billion to the electoral umpire, INEC, for preparations for the 2023 general election,

N50 billion to health workers for hazard allowance and other allocations to security agencies. But the National Assembly had on Wednesday, approved N16.39 trillion – in the revised Medium Term Expenditure Framework (MTEF).

 

According to the President, total federallycollectible revenue is estimated at N17.70 trillion in 2022. While oil revenue is projected at N3.16 trillion, non-oil taxes estimated at N2.13 trillion while independent revenues are projected to be N1.82 trillion.

 

The budget contains a non-debt recurrent expenditure of N6.83 trillion, personnel cost of N4.11 trillion and debt service of N3.61 trillion. Statutory transfers, the category to which the National Assembly falls, have been put at N768.28 billion while Pension, Gratuities and Retirees Benefits was put at N577 billion and Overhead cost at N792.39 billion.

 

The deficit, Buhari said, will be financed mainly by new borrowings totalling N5.01 trillion. “This represents 3.39 per cent of estimated GDP, slightly above the three per cent threshold set by the Fiscal Responsibility Act 2007. Countries around the world have to necessarily over-shoot their fiscal thresholds for the economies to survive and thrive.

“We need to exceed this threshold considering our collective desire to continue tackling the existential security challenges facing our country.” Buhari said Nigerians are right to worry about the government’s attitude of borrowing but the nation’s borrowing is still within limit.

“We plan to finance the deficit mainly by new borrowings totalling N5.01 trillion, N90.73 billion from privatization proceeds and N1.16 trillion drawdowns on loans secured for specific development projects.”

Speaking to Sunday Telegraph on President’s 2022 budget remarks , Uche Uwaleke, Professor of Capital Market , former Commissioner of Finance, Imo State, commended President Buhari for always sticking to timely presentation of annual budget .

“First, let me commend the President for presenting the 2022 appropriation bill in relatively good time. It is expected that the National Assembly will conclude work on it before the end of the year to enable implementation to commence in January following the President’s assent.

Indeed, the mending of the hitherto broken budget year is a major achievement by this administration”.

 

Asked about the budget benchmark and its reality, he said budget benchmarks are largely realistic with respect to crude oil price of $57, exchange rate of circa N410 and real GDP growth rate of 4.2 per cent.

 

“However, inflation rate of 13 per cent does not appear realistic considering the implementation of the PIA requiring the complete removal of fuel subsidy”

 

“As the President admitted, the concern about increasing deficit financing through borrowing is justified. The consolation however is that all new borrowings are tied to critical projects.

 

It’s equally noteworthy that the government has made provision for use of Green bonds as well as PPP arrangements in financing infrastructure”, Prof. Uwaleke noted.

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