Nigeria Employers’ Consultative Association (NECA) says Federal Government’s 2019 budget of N8.83 trillion is rested on faulty estimates and the $60 per barrel of crude which the budget is benchmarked is unrealistic and dicey.
Timothy Olawale, the Director General of NECA, stated this after a careful review of the budget by the employers’ body. The budget was tabled before the National Assembly by President Muhammadu Buhari on December 19, 2018.
Olawale said there was little to cheer, as the budget seemed incapable of taking the economy out of the woods. According to the DG, who shared the employers’ view, the foundation on which the budget is built ‘is worrisome.’
“The budget was benchmarked against $60 per barrel of oil at 2.3m litres daily, an exchange rate of N305 to $1, an inflation rate of 9.98 percent and a GDP growth rate of 3.01 percent. These assumptions negate the reality of oil price volatility. Oil industry experts had rightly warned that the political dynamics of the Middle East might drive down the price of Crude. True to prediction, a barrel of crude today sells for $54, $6 less than the benchmarked price and it is yet unknown how government will increase our present 2.09mbpd crude production to 2.3mbpd in 2019 and with OPEC’s resolution on cut in oil production, Nigeria’s daily production should now be 1.7mbpd.
NECA also faulted sectoral allocation in the budget especially to critical sectors, describing them as grossly inadequate.
“A cursory a look at budgetary allocation to some critical sectors raises some germane questions about our readiness as a nation to address certain fundamental questions. Human capital development has been noted as critical to a nation’s development.
“It is therefore worrisome that education was allocated N462.24 billion, which is less than six per cent of the entire budget. This is a far cry from the UNESCO’s benchmark of 26 per cent of the national budget.”
NEC also picked hole in the allocation to the health sector. The sum of N315.62 billion, representing 4.1 percent of the budget was allocated to health. NECA said this allocation contrasted the pledge made by member countries of the African Union (AU) to commit a minimum of 15 percent of their annual budget to their health sector.
While proffering a way out of the seeming quagmire, Olawale called for “the elimination of wastages perpetrated through the never-ending turnaround maintenance on the old refineries, encouragement of private investor in modular refineries and a total deregulation of the downstream sector.
“As a matter of urgency, we must remove fuel subsidy which has become a conduit pipe for misappropriation of funds. It is not sustainable and we cannot continue to fund inefficiency”.
The DG said that “a holistic review of the budget assumptions has to be done especially now that the budget is about receiving the attention of the National Assembly”.
JOSHUA BASSEY
