The 2019 budget estimates proposal presented to the National Assembly by President Muhammadu Buhari is heavily tilted towards recurrent expenditures, doubling what the executive proposed for capital expenditures.
According to the President Buhari, who presented the Budget estimates to a joint session of the National Assembly, Recurrent expenditure will take N4.04 trillion, Debt Service, N2.14 trillion, Statutory Transfers of about N492.36 billion, Sinking Fund of N120 billion which will be used to retire maturing bond to local contractors while Capital Expenditure takes N2.031 trillion including capital supplementation but excluding the capital component of Statutory Transfers.
The President further said that the N8.83 trillion budget proposal is intended to further place the economy on the path of inclusive, diversified and sustainable growth in order to continue to lift significant numbers of Nigerians out of poverty.
He further disclosed that allocations to Ministries, Departments and Agencies of Government were guided by the 3 objectives of the ERGP, “which are, (i) Restoring and Sustaining Growth; (ii) Investing in our People and (iii) Building a Globally Competitive Economy.”
Speaking on the revenue assumptions for the 2019 Budget proposal, the President listed Oil price benchmark of $60 per barrel, Oil production estimate of 2.3 million barrels per day, including condensates, Exchange rate of N305/$, Real GDP growth of 3.01 percent; and Inflation Rate of 9.98 percent.
Taking note of the unstable prices of crude oil in the international market as it relates to the Budget estimates, the President said: “Notwithstanding the recent softening in international oil prices, the considered view of most reputable analysts is that the downward trend in oil prices in recent months is not necessarily reflective of the outlook for 2019. However, as a responsible Administration, we will continue to monitor the situation and will respond to any changes in the international oil price outlook for 2019.
“With regard to oil production, I have directed the NPPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day.”
On the revenue target for 2019, President Buhari said: “Total revenue is projected at N6.97 trillion (which is 3 percent lower than the 2018 estimate of N7.17 trillion), consisting of Oil revenue projected at N3.73 trillion while non-oil revenue is estimated at N1.39 trillion.
“We have allowed for N305 billion ($1 billion) for under-recovery by NNPC on PMS in 2019. We will continue working to bring it downwards so that such resources are freed up to meet the developmental needs of our people.
“The estimate for non-oil revenue consists of N799.52 billion from Companies Income Tax (CIT), N229.34 billion from Value Added Tax (VAT) and Customs Duties of N302.55 billion. We have reduced our expectation from Independent Revenues to N624.58 billion. Other revenues expected in 2019 include various recoveries of N203.38 billion, N710 billion as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of N104.11 billion.”
The President further disclosed that the total expenditure of N8.83 trillion is estimated for 2019, including grants and donor funds of N209.92 billion.
The President added that the expenditure estimate is however higher than the N8.6 trillion originally proposed by the executive but lower than the N9.12 estimated for 2018.
On deficit projections for the Budget, the President said the budget deficit is projected to decrease to N1.86 trillion (or 1.3 percent of GDP) in 2019 from N1.95 trillion projected for 2018. This reduction, he said, is in line with Federal Government’s plans to progressively reduce deficit and borrowings.
On statutory transfers, President Buhari said N492.36 billion has been provided for, a seven percent decrease from 2018. He however said transfers to Niger Delta Development Commission (NDDC) and Universal Basic Education Commission (UBEC) are projected to be higher as they are directly related to the quantum of oil revenue.
On recurrent expenditure, President Buhari said: ” A substantial part of the recurrent cost proposal for 2019 is for the payment of salaries and overheads in Ministries providing critical public services such as: N569.07 billion for the Ministry of Interior, N435.62 billion for the Ministry of Defence, N462.24 billion for the Ministry of Education; and N315.62 billion for the Ministry of Health.
“The allocation to these Ministries represent significant increases over votes in previous budgets, underscoring our commitment to increase investment in national security and human capital development.”
The President said further: “Personnel costs, estimated at N2.29 trillion, currently amount to nearly 40 percent of projected revenues. Substantial savings have been made from wider use of the Integrated Personnel Payroll Information System platform. I have directed that all MDAs must implement the IPPIS by March, 2019. We have made provisions for staff promotion arrears and recruitments by the armed forces, police and para-military agencies.
“We have also provided for the settlement of inherited outstanding pension liabilities. Again we have included provisions for the implementation of a new national minimum wage.
“Furthermore, 1 percent of the Consolidated Revenue Fund amounting to N51.22 billion has been earmarked for the Basic Health Care Provision Fund, and other related commitments.”
Addressing the nagging issue of minimum wage, President Buhari said he is committed to addressing the issue and will be sending a bill to the National Assembly on this.
“However, in order to avoid a fiscal crisis for the Federal Government, as well as the States, it is important to devise ways to ensure that its implementation does not lead to an increase in the level of borrowing.
“I am accordingly setting up a High Powered Technical Committee to advise on ways of funding an increase in the minimum wage, and the attendant wage adjustments, without having to resort to additional borrowings.
“The work of this Technical Committee will be the basis of a Finance Bill which will be submitted to the National Assembly, alongside the Minimum Wage Bill. In addition, the Technical Committee will recommend modalities for the implementation of the new minimum wage in such a manner as to minimize its inflationary impact, as well as ensure that its introduction does not lead to job losses”, the President said.
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