Nigeria’s federal government intends to spend some 29 percent (N2.452trillion) of its total N8.42trillion projected revenue to service debt in 2020, amid heightening calls against the country’s ballooning debt status.
According to detailed breakdown of the annual budget presented on Thursday by the Minister of Finance, Budget and National Planning, Zainab Ahmed, debt service will also take some 23.2% of total expenditure, about 14.5% higher than 2019.
Aggregate Capital Expenditure of N2.78 tn is 26.2% of total expenditure; and 12.6% less than 2019 (Inclusive of Capital component of Statutory Transfers, GOEs Capital & Project-tied loans expenditures) as % of FGN Expenditure is 26%.
Ahmed also mention some provision to retire maturing bonds to local contractors of N272.9 bn which is 2.6% of total expenditure, and 148% higher than 2019.
According to her, this reflects FGN’s effort to resolve accumulated arrears of contractual obligations dating back over 10 years.
Meanwhile, the overall budget deficit of N2.175 trillion jerked up from the N859 billion in 2019, representing a 1.52percent of the gross domestic product.
Ahmed said that the projected deficit is still within the threshold stipulated in the fiscal responsibility act 2007.
She explained that the N2.175 trillion deficit will be funded by N850 billion new foreign borrowing, N744.99billion new domestic borrowing, N328 billion multilateral/bilateral loan agreement, N252 billion privatisation proceeds.
The key assumptions of the budget framework include; Exchange rate at N305/$, Oil production at 2.18 mbpd, Oil price at $57/pb, Inflation rate at 10.81percent, Norminal GDP at 142.96 trillion, GDP growth at 2.93 percent and Norminal consumption at N122.75 trillion.
The oil production volume is projected to average 2.18 mbpd which is lower than the projected volume of 2.3 mbpd in 2019.
The minister explained that the actual crude oil production and exports have been below budget projections since 2013 despite installed capacity of up to 2.5 mbpd, hence the 2020 projection of 2.3 mbpd, adding that it is more realistic to achieve.
A breakdown of the budget shows a total revenue of N8.42 trillion, to be generated through N1.81 trillion non oil revenue, N2.64 trillion oil revenue, N3.97 trillion other revenue sources while the total expenditure which is valued at N10.594 trillion, broken down into Capital expenditure at N2.465 trillion, Recurrent expenditure at N4.493 trillion, Debt service at N2.453 trillion, Statutory transfer at N560 billion, Debt sinking fund at N274 billion.
“The top 12 MDAs recurrent expenditure include, ministry of interior at N219.46 billion, ministry of police affairs at N394.57 billion, Federal ministry of defence at N784.59 billion, Federal ministry of education at N501.48 billion, federal ministry of youth and sport at N168.33 billion”.
“Others include; ministry of foreign affairs at N67.81 billion, ministry of Petroleum resources at N 75.96 billion, Office of the national security adviser at N116.91 billion, ministry of agriculture and rural development atN58.69 billion, office of the secretary to the government of the federation at N 59.60 billion and Presidency at N46.56 billion”.
She further explained that the initiatives to drive strategic revenue growth includes; to identify new and enhance existing revenue streams, build a sustainable revenue generation ecosystem by ensuring resilient and optimal performing revenue stream.
“We will implement the revenue generation operating model that enhances collaboration, synergy, capacity building and eliminate leakages”.
Clem Agba, minister of state, budget and national planning, in his remark said that capital expenditure will be targeted at completion of ongoing projects rather than commencing new ones adding that therebis a projection for an increased share of non oil revenues which underscore confidence in the various revenue diversification strategies.
” In our efforts to enhance transparency and accountability, we shall extend strict implementation of treasury single account to capture the domiciliary accounts in our foreign missions as well as some accounts of government owned Enterprises”.
” The 2020 budget expects enhanced real GDP growth of 2.93 percent to be driven largely by no n oil output as economic diversification accelerates and the enabling business environment improves”, he added.
Ben Akabueze, Director General, Budget office of the federation in his remark said that the 2020 budget aims to consolidate the achievements of the Economic recovery and growth plan of the government, with key focus on ramping up the nation’s infrastructure stock, sustain economic growth and maintaining macro economic stability.
” Although the 2020 capital expenditure falls short of 30 percent ERGP target, the main emphasis will be the completion of as many ongoing projects as possible”.
“It is expected that given the early passage of the budget, actual disbursement may exceed the outcomes under larger budgets in past years”.
Cynthia Egboboh, Abuja
