Nigeria Business & Finance Updates

Buhari targets 7.5%VAT hike, borrowings to fund N10.33trn budget

President Muhammadu Buhari, yesterday, submitted the 2020 Appropriation Bill   of N10.33 trillion to the joint session of the National Assembly. The presentation which has become an annual event was held at the Green Chamber of the Parliament.

The National Assembly, had last week, proposed a N10.729 trillion for the 2020-2022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The presentation of the budget came barely six months after the eight National Assembly passed the N8.8 trillion 2019 national budget.

The proposal tagged: “Budget of Sustaining Growth and Job Creation”, according to President Buhari, will target critical sectors of the economy.

He listed the key areas to include “Fiscal consolidation, strengthening the nation’s macroeconomic environment; Investing in critical infrastructure, human capital development and enabling institutions, especially in key job creating sectors. Other objectves include incentivising private sector investment essential to complement the government’s development plans, policies and programmes; and enhancing social investment programme to further deepen their impact on those marginalised and most vulnerable Nigerians.”

The sum of N8.155 trillion is estimated as the total Federal Government revenue in 2020 and comprises oil revenue at N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenues of N3.7 trillion, an indcation that  the budget is about 7 per cent higher than the 2019 comparative estimate of N7.594 trillion inclusive of the Government Owned Enterprises.

The 2020 budget deficit is projected to be N2.18 trillion in 2020. This includes drawdowns on project-tied loans and the related capital expenditure.

This represents 1.52 per cent of estimated GDP, well below the 3 per cent threshold set by the Fiscal Responsibility Act of 2007, and in line with the ERGP target of 1.96 per cent.

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According to the president, 2020 budget deficit will be financed by new foreign and domestic borrowings, privatisation proceeds, signature bonuses and drawdowns on the loans secured for specific development projects.

According to a breakdown of the estimates, the expenditure estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers).

Debt service is estimated at N2.45 trillion, and provision for Sinking Fund to retire maturing bonds issued to local contractors is N296 billion. The sum of N556.7 billion is provided for Statutory Transfers. Works and Housing got the lion’s share of N262 billion. It is followed by Power put at N127 billion and National Assembly at N125 billion. Transportation got N123 billion

The sum of  N110 billion is earmarked for the Judiciary, N37.83 billion for the North East Development Commission (NEDC) and N44.5 billion for the Basic Health Care Provision Fund (BHCPF). Others include N111.79 billion for the Universal Basic Education Commission (UBEC) and N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.

“We have increased the budgetary allocation to the National Human Rights Commission from N1.5 billion to N2.5 billion. This 67 percent increase in funding is done to enable the Commission to perform its functions more effectively,” Buhari informed lawmakers.

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