The 2015 general elections are around the corner and continue to dominate public discourse. At the same time, the federal government budget for the fiscal year 2015 is before the National Assembly for deliberations and passage. Although different views have been expressed since the appropriation bill was submitted to the National Assembly, this article provides an extra perspective on the bill and also serves as a reminder to the politicians that irrespective of the outcome of the elections, the 2015 appropriation bill, when eventually passed and signed into law, becomes the key driver of the economy for the year.
The highlights of the 2015 appropriation bill as submitted to the National Assembly indicate that the government plans to spend N4.36 trillion, 7.6 percent lower than N4.72trn in 2014. When the SURE-P component is taken into consideration, the proposed spending is N4.46trn, lower than N4.99trn last year. The budget is also a contraction because it is 4.6 percent of GDP compared with 5.9 percent of GDP in 2014. The breakdown shows that non-debt recurrent expenditure of N2.62 trillion is 6 percent higher than the 2014 level while the amount set aside for debt service is N943 billion or approximately 22 percent of the total budget and 32.4 percent increase over last year.
Statutory transfers of N411.84 billion suggest a 0.8-percent increase over last year’s N408.69 billion. The proposed amount for capital spending is N387.11 billion or 8.9 percent of the budget and is a sharp decline from N1.14 trillion in 2014. When the capital outlay in the statutory transfers and SURE-P are included, the proposed capital spending increases to N627.12 billion, still significantly lower than the N1.55 trillion in 2014.
Read also: Does always thinking about money really make me happy?
Overall, the share of capital expenditure in the 2015 appropriation bill is 14.06 percent as against the 31.1 percent last year, implying total recurrent spending ratio of 85.94 percent compared with 68.9 percent in 2014. The projected revenue for 2015 indicates that the government hopes to get N3.60 trillion in revenue, 3.4 percent lower than N3.73 trillion in 2014. Of this amount, oil revenue is projected to contribute N1.92 trillion, a decline of 9.3 percent from N2.11 trillion last year, while N1.12 trillion is expected from non-oil revenue compared with N1 trillion in 2014. Minerals and mining is estimated to add N6.61 billion to the projected income. Given the planned expenditure of N4.36 trillion and the forecast revenue of N3.6 trillion, the expected fiscal deficit for 2015 is N775 billion or 0.79 percent of GDP, lower than N994 billion or 1.24 percent of GDP in 2014.
In terms of sector allocations, the inclusion of Service Wide Votes (SWVs) and debt service in the allocation of the Ministry of Finance means that it will get the highest share of N1.72 trillion or 39.5 percent of the total budget. While the debt service element is self-explanatory, the SWV allocations comprise those expenditure items that cannot be placed directly under any ministry, department or agency (MDA) and are therefore implemented by the Ministry of Finance. The second highest allocation of N492 billion or 11.3 percent of the total budget will go to the education sector including the Universal Basic Education Commission. While N20 billion of this amount is for capital spending, the sum of N450.6 billion and N21.5 billion are for personnel and overhead costs, respectively. The allocation to defence is N358.5 billion or 8.2 percent of the budget and N323.5 billion of this amount is for recurrent expenses and N35 billion for capital spending. When the N84.2 billion allocated to the Office of the National Security Adviser is included, the total amount allocated to defence increases to N442.6 billion. The other sectors that made the top 10 allocations in the 2015 appropriation bill are Police Formations (N329.66bn), Health (N257.54bn), Interior (N156.56bn), National Assembly (N150bn), National Judicial Council (N73bn) and Youth Development (N71.85bn).
Of the top 10 allocations in the 2015 appropriation bill, the N150 billion or 3.4 percent of the total budget earmarked for the National Assembly is unchanged from the previous three budgets. This amount is also equivalent to allocations of 12 sectors (Works N39.6 billion; Agric N39.2 billion; Water Resources N13.9 billion; FCDA N12 billion; Aviation N10.9 billion; Mines & Steel N10.4 billion; Power N8.8bn; Sports Commission N6.8 billion; Lands & Housing N6.2 billion; Police Service Commission N0.78 billion; Code of Conduct Tribunal N0.69 billion; Wages & Service Commission N0.69 billion).
Besides, the N150 billion to the National Assembly accounts for 5.7 percent of the total recurrent expenditure of N2.62 trillion in the 2015 appropriation bill. It is also important to note that the allocation to the National Assembly has remained at N150 billion since 2012 irrespective of the overall expenditure size. This implies that relative to other sectors, allocations to the National Assembly continue to be significant. For example, while the share of capital spending in the total budget dropped from 43.09 percent in 2001 to less than 15 percent in 2015, allocation to the National Assembly increased from 1.52 percent in 2001 to 3.44 percent in 2015. Put differently, from a share of N15.49bn in 2001, the allocation to National Assembly increased by 868 percent to N150 billion in 2012 and has been maintained since then. This implies that the allocation to the National Assembly has been higher than 3 percent of total budget compared with 0.2 percent for South Africa and 0.1 percent for India.
Maxwell Ekor
