Nigeria considers additional borrowing to implement N8.92 trillion, 2019 budget

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Nigerian government has signaled a possible raise in its planned borrowing to enable it implement the N8.92 trillion, 2019 budget signed by President Buhari on Monday.

The National Assembly, NASS raised the N8.83 trillion total spending earlier proposed by the executive to N8.92 trillion, a N90.33 billion increase which resulted to an overall increase of N58.83 billion.

Overall budget deficit is N1.918 trillion, as against N1.859 trillion in the Executive Proposal, representing 1.37% of GDP.

Budget deficit is to be financed mainly by borrowing N1.605 trillion split equally between domestic and foreign borrowing. The lawmakers reduced it from the executive planned borrowing of N1.649 trillion, leaving a financing gap of N102.84 billion.

President Buhari, while signing the appropriation bill had expressed reservations that the budget would be difficult to implement and would be engaging the incoming NASS members on how to fund the budget, labelled “budget of continuity”.

Minister of budget and National Planning, Udoma Udo Udoma speaking at the public presentation of the budget on Tuesday signaled the possible raise in borrowing so that government can fund development.

“To fully fund the budget, the level of borrowing may therefore have to increase,” he stressed.

“Executive revenue assumptions were generally approved and adopted by NASS, except for unexplained increases totaling N31.5bn on some non-oil revenue lines,” he said.

Udoma re-emphasised Buhari’s concerns that the law makers, particularly reduced allocations for some executive projects chosen after critical appraisal and linked to the Economic Recovery and Growth Plan ((ERGP). But they introduced a large number of new projects, mainly the constituency projects which they handle themselves.

“Mr President intends to engage the leadership of the ninth National Assembly as soon as it emerges, to effect any amendments necessary to ensure he delivers on the election promises,” said Udoma who exited as the planning minister on Tuesday except if reappointed by the
president.

“Mr President also intends to seek the support of the leadership of the NASS for a smoother, faster budget process going forward and their collaboration to return to a January – December fiscal year,” he added.

The N8.92 trillion spending is based on key assumptions of a 2.3 mbpd oil production; oil price at $60 per barrel; Inflation rate at 9.98percent; exchange rate at N305/$; GDP growth rate at 3.01 percent; nominal GDP at N139.65 trillion, while nominal consumption is
projected at N119.28 trillion.

According to Udoma, “The 2019 budget proposal seeks to continue the reflationary policies of 2016, 2017 and 2018 budgets respectively which helped put the economy back on the path of growth, the budget will further reposition the economy on the path of higher, inclusive,
diversified and sustainable growth, and contribute to lifting significant numbers of our citizens out of poverty”.

Also, the budget is guided by 3 core objectives of the ERGP, which are restoring and sustaining growth, investing in the people and building a globally competitive economy”, he added.

A further breakdown of the budget expenditure estimates shows a statutory transfer at N502 billion; Sinking fund at N110 billion; Debt service N2.144 trillion; Recurrent Expenditure at N4.07 trillion; and MDAs capital expenditure at N2.09trillion.

Out of the Capital Expenditure of N2.93 trillion, MDAs capital and Capital supplementation is N2.09 trillion.

Allocation of funds for projects identified in the budget include; N78.22 billion counterpart funding for railway projects (Lagos-Kano, Calabar-Lagos, Ajaokuta-Itakpe- Aladja, Port Harcourt- Maiduguri, among others), N941.14 million for construction of terminal building
at Enugu airport, N12 billion got construction of second run way at Nnamdi Azikiwe international airport.

Other projects under the power sector, include N869.38 million fund for the Mambilla hydro power project, N250 million for construction of 215MW LPFO/ Gas power station in Kaduna, N208.5 million for Kashimbilla transmission and N203.85 million for fast power program
accelerated gas and solar power generation, as well as N24.97 billion for federal government national housing program.

In the health sector, N51.22 billion fund has been allocated for the implementation of the National Health Act; N21.25 billion for GAVI/Immunization; N1.26 billion for the procurement of non-polio vaccine; N300 million for the establishment of Chemotherapy centres in
UBTH, UITH, ABUTH, UMTH, OAUTH, UNTH, UPTH, FMC Owerri, and FMC Abeokuta.

N38.25 billion was earmarked for ongoing and planned Special Economic Zone Projects across the geopolitical zones to drive manufacturing/exports; N1billion for Industrial Policy Reforms and Enabling Business Environment; N3.03 billion in the form of tax credit to support export through the Export Expansion Grant.

N15 billion was also provisioned to support the recapitalization of the bank of industry and bank of agriculture to support Micro, Small and Medium Scale Enterprises (MSMEs); N7 billion provided as a grant to BOI to subsidize interest rate charged on loans to SMEs.

“This is intended to make it possible for the Bank to give them single digit interest loans,” the minister explained.

Speaking on the government initiative to improve revenue, the minister said that efforts are on to improve public financial management through the comprehensive implementation of the Treasury Single Account, government integrated financial management information system
and the integrated payroll and personnel information system.

“Key reforms will be implemented with increased vigour to improve revenue collection and expenditure management”.

The minister said that provisions have been made for the implementation of the new minimum wage in the budget and that the Presidential Technical Advisory Committee (PTAC) has been set up to ensure that the new minimum wage, and attendant wage adjustments for those already over the Minimum Wage, can be funded without increasing the level of borrowing.

“A Committee headed by the Vice President is currently reviewing the PTAC’s recommendations, to ensure implementation of the wage adjustments in such a manner as to minimize their inflationary impact, and the joint negotiation committee has been constituted for the consequential adjustment”, he said.

Onyinye Nwachukwu & Cynthia Egboboh, Abuja

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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