President Muhammadu Buhari today presented the 2021 National Budget of N13.08 trillion to the National Assembly, with a warning that the country may experience another bout of recession in view of dwindling revenues amid the Coronavirus pandemic.
Delivering an address to a Joint Session of the National Assembly in Abuja, while presenting the Budget which he titled ‘Budget of Economic Recovery and Resilience’, the President said that the pandemic ended the three-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017.
Buhari declared that “GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences.
“However, we are working assiduously to ensure a rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years.”
He highlighted these programmes to include the Special Public Works programme to provide employment opportunities to 774,000 youths and the N75 billion Nigeria Youth Investment Fund, of which N25 billion has been provided in 2021 Budget.
He also noted the impact of Covid-19 on the N10.81 trillion Budget expenditure; but as at July 2020, the Federal Government’s actual revenue available for the budget was N2.10 trillion.
Nonetheless, Buhari enthused that the 2021 Budget Plan provides a clear road map for our post- Coronavirus economic recovery as a transitional plan to take the country from the Economic Recovery and Growth Plan (2017-2020) to the successor Medium-Term National Development Plan (2021-2025).
He explained that the parameters for the 2021 Budget include: Benchmark oil price of $40 per barrel; Daily oil production estimate of 1.86 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); Exchange rate of N379 per US Dollar; and GDP growth projected at 3.0 percent and inflation closing at 11.95 percent.
Buhari further announced that in based on the foregoing fiscal assumptions and parameters, total federally distributable revenue is estimated at N8.433 trillion in 2021 while total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion.
This includes Grants and Aid of N354.85 billion as well as the revenues of 60 Government-Owned Enterprises while oil revenue is projected at N2.01 trillion. Non-oil revenue is estimated at N1.49 trillion.
According to the President: “An aggregate expenditure of N13.08 trillion is proposed for the Federal Government in 2021. This includes N1.35 trillion spending by Government-Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion.
“For 2021, the proposed N13.08 trillion expenditure comprises: Non-debt Recurrent Costs of N5.65 trillion; Personnel Costs of N3.76 trillion; Pensions, Gratuities and Retirees’ Benefits of N501.19 billion; Overheads of N625.50 billion; Debt Service of N3.124 trillion; Statutory Transfers of N484.49 billion; and Sinking Fund of N220 billion (to retire certain maturing bonds).”
All these indicate that the 2021 Budget deficit (inclusive of Government Owned Enterprises and project-tied loans), is projected at N5.20 trillion, representing 3.64 percent of estimated GDP, slightly above the three percent threshold set by the Fiscal Responsibility Act, 2007.
“It is, however, to be noted that we still face the existential challenge of Coronavirus Pandemic and its aftermath; I believe that this provides a justification to exceed the threshold as provided for by this law.
“The deficit will be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from Privatization Proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes”, he stated.
Besides, “the sum of N484.49 billion provided for Statutory Transfers in the 2021 Budget represents an increase of N56.46 billion (or 13 percent) over the revised 2020 provision.”
The Statutory Transfer provisions are: Niger Delta Development Commission – N63.51 billion; North East Development Commission – N29.70 billion; National Judicial Council – N110.00 billion; Universal Basic Education Commission – N70.05 billion; Independent National Electoral Commission – N40.00 billion; National Assembly – N128.00 billion; Public Complaints Commission – N5.20 billion; Human Rights Commission – N3.00 billion; Basic Health Care Provision Fund – N35.03 billion.
Major Recurrent Expenditures are N227.02 billion for the Ministry of Interior; N441.39 billion for the Ministry of Police Affairs; N545.10 billion for Ministry of Education; N840.56 billion for Ministry of Defence; and N380.21 billion for Ministry of Health.
Buhari said that Personnel cost “accounted for 34 percent of total Federal Government spending and is projected at 33 percent of 2021 expenditure.
Meanwhile, for debt servicing, “we have provisioned N3.12 trillion for this in 2021, representing an increase of N445.57 billion from N2.68 trillion in 2020. A total of N2.183 trillion has been set aside to service domestic debts while N940.89 billion has been provided for foreign debt service.”, he revealed.
Other highlights are: of the 2021 Budget are:*Overhead CostsTotal overhead costs of MDAs and Government Owned Enterprises are projected to rise to N625.50 billion in 2021, mainly due to the inclusion of the overheads of an additional 50 Government Owned Enterprises.
*Capital ExpenditureAn aggregate sum of N3.85 trillion is expected to be available for capital projects in 2021.
Capital expenditure in 2021 remains focused on the completion of as many ongoing projects as possible, rather than the commencement of new ones.
While thanking the National Assembly for its cooperation with the Executive thus far, the President told the lawmakers that “as you review the 2021 Budget estimates, we believe the legislative process will be expedited to ensure its prompt passage to sustain the restoration of a predictable January – December fiscal year.
“In this regard, I have directed all Ministers and Heads of Agencies to be personally available for budget defence.”