Nigeria’s 2018 Fiscal Budget At Periscope

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– Nasir Ja’afar

A budget is an estimation of revenue and expenses over a specified period of time. It is compiled and re-evaluated on a periodic basis. Nigeria has made its 2018 budget earlier in November 2017, its earlier submission by the Nigerian President Muhammadu Buhari compared to previous years was highly commended by many observers.

There are many areas the government did wonderfully well and especially its spread of projects to all geopolitical zones across Nigeria which if to be managed well will trigger the all inclusive national development in the coming fiscal year. Out of the N8.612 trillion proposed for 2018, 30.8 per cent (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget. This indicates that the government was optimistic of stronger revenue inflow against borrowings to fund the budget, much in line with the government’s plans under the Economic Recovery and Growth Plan, (ERGP), aimed at progressively reducing deficit and borrowings.

The 2018 Budget was tagged as that of ‘Consolidation’, which means it is expected to consolidate on the gains of the 2017 budgets, which will however help to actualise the economic growth recovery plan of this administration. I am therefore optimistic that a 2018 will be a year of positive and better outcomes to both the government and general welfare of the Nigerians.

Going by the revelation from President Muhammadu Buhari that his government plans to finance the deficit partly by new borrowings estimated at N1.699 trillion while 50 per cent of the borrowing would be sourced externally, and that the balance would be sourced from domestic financial market. This is certainly a welcome development compared with the 2017 fiscal policy presented.

It is also important to note that the balance of the 2017 deficit of N306 billion is to be financed from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE). Another fact was that, the 2018 budget was based on a crude oil benchmark price of US $45 per barrel, with an output of Oil production estimate of 2.3 million barrels per day, including condensates, as against that of 2017 which was of $42.50 per barrel, and output was put at 2.2 million barrels per day. It was also established that the Exchange rate of N305/US$ was set for 2018, while Real Gross Domestic Product (GDP) growth of 3.5 per cent was projected and inflation Rate of 12.4 per cent.

A glance at the Budget breakdown of the proposed N8.612 trillion of 2018 Aggregate Expenditure comprises a Recurrent Cost of N3.494 trillion; Debt Service of N2.014 trillion; Statutory Transfers of about N456 billion; Sinking Fund of N220 billion (to retire maturing bond to Local Contractors) and Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).

It is also a bright decision that the government has provided for, in the 2018 budget, many on going projects as part of moves to consolidate on the momentum of the 2017 Budget’s implementation. This has shown the government commitment to appropriately fund ongoing capital projects to completion. By allocating 30.8 per cent of the 2018 Budget to capital expenditure, the Federal Government is also demonstrating its strong commitment to investing in critical infrastructure capable of spurring growth and creating jobs in the Nigerian economy.

President Muhammadu Buhari has listed the key capital spending allocations in the 2018 Budget to include: Power, Works and Housing with a hefty allocation of N555.88 billion; Transportation with an allocation of N263.10 billion; while Special Intervention Programmes will gulp N150.00 billion in the budget proposal. Others are Defence with N145.00 billion; Agriculture and Rural Development with N118.98 billion allocation; Water Resources has N95.11 billion; Industry, Trade and Investment was allocated N82.92 billion; Interior has N63.26 billion allocation while; Education N61.73 billion. Universal Basic Education Commission is allocated N109.06 billion; Health, N71.11 billion; Federal Capital Territory has N40.30 billion allocation; Zonal Intervention Projects was allocated N100..00 billion; North East Intervention Fund has N45.00 billion; Niger Delta Ministry was allocated N53.89 billion; and Niger Delta Development Commission: N71.20 billion. According to him, a substantial part of the recurrent cost proposal for 2018 has been set aside for the payment of salaries and overheads in key Ministries providing critical public services such as N510.87 billion for Interior; N435.01 billion for Education; N422.43 billion for Defence; and N269.34 billion for Health, adding that “the allocation to these Ministries represent significant increases over votes in previous budgets.

Critical observations made it imperative to point out some flaws especially on the allocations to education and health sector which demand a serious government intervention at this juncture. Allocation to education is far less than 10% which is below the minimum 26% of the budget recommended by UNESCO, it is therefore obvious that the federal government has not met the standard yet. However, the federal budget allocated allocates less than 1% to health, which has contradicted what it preaches, especially as the Minister of Health was encouraging commissioners of health in the 36 states of the federation to give minimum 15%of their states budgets to health….

(To be continued)

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