New Telegraph

FG releases N1.9trn for capital projects, COVID-19

…targets N850bn from unclaimed dividends

 

Minister: No more fuel subsidy

 

 

 

The Federal Government has so far released N1.80 trillion for capital projects ex  ecution in the 2020 budget, representing 89 per cent of the provisions in the fiscal document  Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, who confirmed this, also disclosed that the sum of N118.37 billion was released for COVID-19 expenditure.

 

The minister gave the figures at public presentation of the 2021 budget. She stated that while the Federal Government had projected the sum of N9.97 trillion expenditure for 2020, it actually spent about N10.08 trillion, representing 101 per cent performance.

 

She put the amount spent on debt servicing at N3.27    trillion, while the sum of N3.19 trillion was released for payment of salaries and pensions. President Muhammadu Buhari, on December 31, 2020, signed the 2021 N13.5 trillion budget into law.

 

The signed budget is 25.7 per cent higher than the 2020 budget. Giving insight into the aggregate revenue to fund 2021 budget projected at N7.99 trillion, which is 36 per cent higher than 2020 projection of N5.84 trillion, Ahmed said 30 per cent of the projected revenue would come from oil related sources and 70 per cent from nonoil sources.

 

“Overall, the size of the budget has been constrained by our relatively low revenue,” she said. For expenditure component of 2021 budget, government projected recurrent (non-debt) sum of N5.99 trillion, indicating 44.1 per cent of total expenditure and 13.39 higher than 2020 revised budget.

 

The 2021 budget comes with aggregate capital expenditure of N4.37 trillion, representing 32.29 per cent of total expenditure and 62.9 per cent higher than 2020. The debt service provision is N3.32 trillion, representing 24.5 per cent and 12.6 per cent higher than 2020 revised budget.

 

To retire maturing bonds to local contractors, she said the sum of N200 billion had been provided for in the new budget, representing 1.68 per cent of the total budget, adding that “overall, N5.60 trillion has been provided for borrowing to finance the budget deficit.”

 

The borrowing, the minister said, would come in two forms – domestic and foreign sources – with an equal fixed amount of N2.34 trillion respectively, while another borrowing in the sum of N709.69 billion is to be procured from multilateral and bilateral sources.

 

Privatisation proceeds target of N205.15 billion would form part of the proceeds to finance 2021 budget, said the minister.

 

In the budget, government ministries with large chunk of capital allocations are Ministry of Education, N1,146.8 billion; Health, N600.52 billion; Defence and security sector N1,114.16 billion; N11.61 billion for rehabilitation and railway tracking.

 

On measures being adopted to curtail waivers, she said government was in the process of working out waiver cost as guide to final decision. Responding to inquiry on fate of oil subsidy provision, the minister said it was a settled topic, which had been dealt with.

 

She ruled out the possibility of retaining oil subsidy. “We are not bringing back fuel subsidy. We didn’t make provision for fuel subsidy in the budget. The impact of what was done is reducing some of the cost components that are within the fuel subsidy template. No provisions have been made for subsidy of fuel, no provisions have been made for subsidy of electricity,” she responded.

 

Asked how much government was targeting in assuming control of unclaimed dividends, an action provided for in Finance Act of 2020, which is drawing flasks from certain quarters, she gave a conservative estimate of N850 billion.

 

“There would be as much as N850 billion. We have to get the exact report from CBN and then company registrar to ascertain that so it could be realised into this special trust fund for unclaimed dividends and dormant account.

 

“Again , this is a special trust fund, it means government is keeping the money in trust for the beneficiaries at any time a registrar or a bank confirms that this is a true and bonafide beneficiary of this fund, then government will release from that trust fund to the investors entitlement,” she added.

 

Government, the minister restated, was not keen about locking down the economy. However, she said government would have no choice but to toe the path if health challenges posed by breach of COVID-19 protocols remain unabated.

 

“We hope we never have  to lockdown the economy like we did before, because the impact is very high on the economy, but then, if the health challenge becomes so large, and government has no option, then that step might be taken. But, right now, what we are doing as government is to reinforce the measures that needed to be taken by government, companies and individuals to mitigate the impact of COVID-19.

 

“Currently, the vaccines are now out and they are available and Nigeria is in the process of deciding and beginning to acquire its own vaccine, so, we do hope that the lockdown we experienced in 2020 will not happen,” she assured.

 

The minister gave insight into the financial implication of procuring COVID-19 vaccines by government.

 

“First, we are aware that we are expecting donations. As you know, there is a global alliance to support economically weak nations with vaccines. Our understanding of the current plan is that we will be getting vaccine donations to cover up to 20 per cent of our population.

 

But then, the global standards say that to achieve immunity, you have to vaccine at least 70 per cent of the population and so, there is 50 per cent of the population that may be required to pay for their own vaccination,” Ahmed said.

 

 

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