Buhari’s 2020 deficit budget of N10.33 trillion

Admin l Wednesday, October 09,2019

ABUJA, Nigeria – President Muhammadu Buhari on Tuesday presented a total capital expenditure of N10.33 trillion for the year 2020 to a joint session of the National Assembly, with total expected revenue put at N8.155 trillion, a deficit of about N2.175 trillion.

The budget estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers). Debt service is estimated to cost N2.45 trillion, and provision for Sinking Fund to retire maturing bonds issued to local contractors put at N296 billion.

Oil revenue is expected to hit N2.64 trillion, non-oil tax revenues projected to be N1.81 trillion and other revenues of N3.7 trillion. “This is 7 percent higher than the 2019 comparative estimate of N7.594 trillion inclusive of the Government Owned Enterprises”, President Muhammadu Buhari said.

Statutory transfers was N556.7 billion, N125 billion for the National Assembly;N110 billion for the Judiciary; N37.83 billion for the North East Development Commission (NEDC); N44.5 billion for the Basic Health Care Provision Fund (BHCPF); N111.79 billion for the Universal Basic Education Commission (UBEC); and N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.

The president said government increased the budgetary allocation to the National Human Rights Commission from N1.5 billion to N2.5 billion, which is 67 percent increase over previous allocation.

Overhead costs are projected at N426.6 billion in 2020. In preparing the budget, government adopted a conservative oil price benchmark of US$57 per barrel, daily oil production estimate of 2.18 mbpd and an exchange rate of N305 per US Dollar for 2020.

“We expect enhanced real GDP growth of 2.93% in 2020, driven largely by non-oil output, as economic diversification accelerates, and the enabling business environment improves”, he said.

Sectoral allocations as laid out in the budget are works and Housing: N262 billion; Power: N127 billion; Transportation: N123 billion;
Universal Basic Education Commission: N112 billion; Defence: N100 billion; Zonal Intervention Projects: N100 billion; Agriculture and Rural Development: N83 billion; Water Resources: N82 billion; Niger Delta Development Commission: N81 billion;Education: N48 billion; Health: N46 billion; Industry, Trade and Investment: N40 billion; North East Development Commission: N38 billion; Interior: N35 billion; Social Investment Programmes: N30 billion; Federal Capital Territory: N28 billion; while Niger Delta Affairs Ministry is N24 billion.

Speaking on the 2019 budget, the president reported that the Nigerian economy has recorded nine consecutive quarters of GDP growth and that annual growth increased from 0.82 percent in 2017 to 1.93 percent in 2018, and 2.02 percent in the first half of 2019, adding that the continuous recovery reflects the economy’s resilience and gives credence to the effectiveness of economic policies thus far.

“We also succeeded in significantly reducing inflation from a peak of 18.72 percent in January 2017, to 11.02 percent by August 2019. This was achieved through effective fiscal and monetary policy coordination, exchange rate stability and sensible management of our foreign exchange.

“We have sustained accretion to our external reserves, which have risen from US$23 billion in October 2016 to about US$42.5 billion by August 2019. The increase is largely due to favourable prices of crude oil in the international market, minimal disruption of crude oil production given the stable security situation in the Niger Delta region and our import substitution drive, especially in key commodities.

“As at June 2019, Federal Government’s actual aggregate revenue (excluding Government-Owned Enterprises) was N2.04 trillion. This revenue performance is only 58 percent of the 2019 Budget’s target due to the underperformance of both oil and non-oil revenue sources. Specifically, oil revenues were below target by 49 percent as at June 2019. This reflects the lower-than-projected oil production, deductions for cost under-recovery on supply of premium motor spirit (PMS), as well as higher expenditures on pipeline security/maintenance and Frontier exploration.

“Daily oil production averaged 1.86 mbpd as at June 2019, as against the estimated 2.3 mbpd that was assumed. This shortfall was partly offset as the market price of Bonny Light crude oil averaged US$67.20 per barrel which was higher than the benchmark price of US$60”, he said.