After President Muhammadu Buhari laid the 2023 budget estimate of N20.5 trillion before the National Assembly, there have been criticisms and commendations. In this piece, BENJAMIN UMUTEME looks at some of the talking points.
President Muhammadu Buhari Friday last week presented the 2023 budget proposal to the National Assembly saying the record N20.5 trillion proposed expenditure “reflects the serious challenges” faced by Nigeria and contained key reforms necessary to address them.
Tagged the budget of fiscal sustainability and transition, the budget is focused on maintaining fiscal viability and ensuring smooth transition to the incoming administration.
The N20.51 trillion budget, which is the last one by the present administration, is 15.37 per cent higher than the amount budgeted in 2022.
A peep into the appropriation bill indicates a proposed deficit of N10.78 trillion or 52.5 per cent of the budget. This represents 4.78 per cent of GDP as opposed to the 3.99 per cent for the 2022 amended budget, both above the 3 per cent threshold set by the Fiscal Responsibility Act.
According to the President, to finance the deficit, “We plan to finance the deficit mainly by new borrowings totalling N8.80 trillion, N206.18 billion from privatisation proceeds and N1.77 trillion draw-downs on bilateral/multilateral loans secured for specific development projects/programmes.”
On the other hand, the 2023 expenditure of N20.51 trillion includes N2.42 trillion spending by Government-Owned Enterprises; statutory transfers of N744.11 billion; Non-debt Recurrent Costs of N8.27 trillion; Personnel Costs of N4.99 trillion; Pensions, Gratuities and Retirees’ Benefits of N854.8 billion; Overheads of N1.11 trillion
The Capital component of the budget is put at N5.35 trillion, including the capital component of Statutory Transfers, with debt service and sinking fund for retiring certain maturing bonds at N6.31 trillion and N247.73 billion, respectively.
Key parameters for the budget includes a oil price benchmark of $70 per barrel, daily oil production estimate of 1.69 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); exchange rate of N435.57 to the US Dollar; a projected GDP growth rate of 3.75 percent and 17.16 percent inflation rate.
Defence, education, health lead
With issues bordering on security, education infrastructure and health taking the centre stage of national discourse in recent times, it was, therefore, not a surprise that these sectors got the highest allocations.
Subject to the approval of the National Assembly, the federal government would spend N8.074 trillion on five priority sectors for the government. The sectors are defence & security, education, health, infrastructure and social development & poverty reduction programmes.
A breakdown showed defence had the highest vote of N2.74 trillion (13 per cent of the total budget).
From the N2.05 trillion (10 per cent of the budget) for education sector, paltry N470 billion is earmarked for tertiary education revitalisation and salary enhancement, indicating that the government maybe heading for another showdown with university lecturers. N1.23 trillion is the amount provisioned for the Federal Ministry of Education and its agencies (recurrent & capital expenditure) with the other amount voted for UBEC and TETFund.
The health sector gulped N1.58 trillion or eight per cent of the proposed budget, while the government plans to spend N756 billion (four per cent) on social development and poverty reduction programmes of the present administration.
Curiously, only five per cent or less than N1 trillion of the entire budget is voted for building of infrastructure. In simple terms, the federal government is planning to spend a little fragment of the budget (N998.93 billion) through ministries of Works & Housing, Power, Transport, Water Resources, and Aviation for provision of infrastructure that is largely in deficit across Nigeria.
Speaking at the public presentation of the 2023 budget proposal Wednesday in Abuja, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, said the “goal of fiscal interventions will be to further stimulate the economy through carefully calibrated regulatory/policy measures designed to boost domestic value addition, de-risk the enterprise environment, attract external investment and sources of funding, etc.”
Personnel costs, telephone charges, newspapers, others take N14.8bn
The Presidency, the 2023 budget proposal indicated, would spend the sum of N14.8 billion for Internet connection, stationery, and telephone charges, among others, in the Presidential Villa.
A breakdown showed that the Villa’s Internet connectivity is expected to cost N67.1 million, with stationery and computer consumables costing N79 million.
While N35.9 million was allocated for electricity expenditures, N306.2 million was earmarked for telephone charges, and N40.6 million for water rates. Out of the total budget for the Villa, N1.6 billion would be spent on personnel costs. Meanwhile, the sum of N35 million was budgeted for books and newspapers, even as newspapers alone take N26.4 million and books gulp N8.5 million.
NASS’ N169bn
The allocation in the budget to the National Assembly has got tongues wagging as the federal government plans to spend the sum of N169 billion on the legislative arm of the government. This is against the sum of N134 billion that was allocated to the National Assembly before it was increased by over N500 million when it was passed by NASS.
The amount is the highest amount allocated to the legislature since the return of democracy in 1999. The allocation, disregard for the dwindling economy, comes amid calls to reduce the cost of governance. It also comes amid plans by the federal government to borrow to fund the 2023 budget.
Questions
Several questions are being asked about the workability of the budget as it is.
Experts are of the opinion that with dwindling revenue, oil market volatility, high imports occasioned by a weakened naira, and high food prices, implementing the budget would be an herculean task.
For Prof. Uche Uwaleke, President of the Capital Market Academics, the budget can only be realistic if the current effort by the NNPC to curb oil theft and vandalism is effective.
“I think the oil price benchmark of $70 is conservative in line with budget principles. I also think the oil production benchmark of 1.69mbpd is realistic given the assurance by the President that the NNPC Limited is doing something to curb oil theft and pipeline vandalism.
“It is, however, worrisome that capital expenditure as a proportion of total spending has gone down well below the government target of 30 per cent, while debt-servicing at over N6 trillion is in excess of the amount budgeted for capital expenditure.
“As the President rightly noted, the greatest threat to budget performance is the revenue side. This is why every effort must be made to improve revenue collection efficiency as well as monitor closely the MDAs and the government independent revenues.
“I also think the fiscal deficit of over N10 trillion can be trimmed, especially by pruning down the over N1 trillion overhead costs,” he said.
