After a six-month wait for the budget’s passage, the Minister of Finance, Mrs. Kemi Adeosun, has expressed the readiness of her ministry to immediately release N350 billion as part of the capital votes included in the 2017 Appropriation Act, which was signed into law last week.
Also providing the highlights of the budget christened “Budget of Recovery and Economic Growth”, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the budget reflected government’s plan to restore the economy on the path of sustainable and inclusive growth as set out in the 2017-2020 Economic Recovery and Growth Plan (ERGP).
Udoma restated that the 2017 budget has an expenditure outlay of N7.44 trillion, representing an increase of 22.8 per cent over the 2016 budget provision of N6.06 trillion.
The details, he added, include statutory transfers of N434.41 billion; debt service of N1.66 trillion; sinking fund of N177.46 billion to retire certain maturing bonds; non-debt recurrent expenditure of N2.99 trillion; and capital expenditure N2.36 trillion (inclusive of statutory transfers).
He explained that some of the major capital allocation sectors were to the Power, Works and Housing Ministry, which got N553.7 billion; Transportation – N150 billion, Defence – N104.24 billion, and Interior – N151. 91 billion.
Udoma also disclosed that N40 billion was allocated to defray the electricity debts of the ministries, department and agencies (MDAs).
The overall projected fiscal deficit in the budget was put at N2.36 trillion, about 2.18 per cent of gross domestic product (GDP).
This, he said, was within the 3 per cent threshold stipulated in the Fiscal Responsibility Act (FRA).
The deficit will be financed mainly by borrowings projected at N2.32 trillion.
Of this amount, N1.07 trillion will be sourced externally, while N1.25 trillion will be sourced domestically.
The debt service-to-revenue ratio was projected at 32.7 per cent in 2017, while the recurrent non-debt expenditure of N2.99 trillion was made up of personnel costs – N1.88 trillion (63 per cent) and overheads – N219.84 billion (7 per cent).
He stated that the total projected revenue for the year was N5.08 trillion, exceeding that of last year by 30.26 per cent.
He also pointed out that oil revenue projections were put at 41.7 per cent, compared to 19 per cent in 2016, driven mainly by joint venture cash call cost reductions, higher oil prices, exchange rate and additional oil-related revenue.
Udoma further explained that 11 per cent of projected revenue to fund the budget would come from recoveries of looted/misappropriated funds and fines.
In response to a question on whether the recovered funds were already in government’s kitty, the minister responded in the affirmative.
The minister assured his audience that the federal government has no intention of sacking public sector workers during the year and would continue its recurrent obligations, including meeting personnel cost.
He, however, observed that there would be prudent management of overhead costs in order to provide adequate funds to execute capital projects.
Udoma stated that over 65 roads and bridges undergoing construction and rehabilitation across the six geopolitical zones of the country were captured in the budget.
He listed some of them as N10 billion for the rehabilitation/reconstruction and expansion of Lagos-Shagamu-Ibadan dual carriageway Sections I & II in Lagos and Oyo States.
• N13.19bn for the dualisation of Kano-Maiduguri Road, Sections I-V;
• N10.63bn for rehabilitation of Enugu-Port Harcourt dual carriageway,
• N7bn for the construction of Second Niger Bridge including access roads phases 2A & 2B;
• N7.12bn for the dualisation of Abuja-Abaji-Lokoja road;
• N9.25bn for the dualisation of Obajana junction to Benin road Phase
2 Sections I-IV;
• N7.5bn for the rehabilitation of Onitsha-Enugu dual carriageway
• N7bn for the construction of Bodo-Bonny road with a bridge across the
• N3.3bn for the rehabilitation of Ilorin-Jebba-Mokwa-Bokani road;
• N3.5bn for the dualisation of Odukpani-Itu-(SPUR IDIDEP – ITAM) – Ikot Ekpene federal highway Lot 1: Odukpani-Itu bridgehead;
• N1.5bn for the dualisation of Kano-Katsina road Phase 1;
• N2.24bn for the dualisation of Suleja-Minna Road, Sections I & II;
• N2.3bn for Gombe-Numan-Yola Phase II (Gombe – Kaltungo);
• N2.7bn for the construction of Kano Western bypass; and
• N2.03bn for the construction of the terminal building at Enugu airport.
He noted that in designing the 2017 budget, the government considered certain critical international factors that would affect the country, including the protracted period of lower oil prices; major macroeconomic realignments in China to a new growth model; increasing divergence in monetary policy in major economies; and uncertain economic, political and institutional implications of BREXIT.
Others are weak demand in advanced economies and its spill-over effects; and geopolitical tensions in several countries.
On the domestic side, he said there were considerations such as contraction in growth (-2.06 per cent in Q1 2016, now -0.52% in Q1 2017); insurgency and insecurity in parts of the North-east; crude oil theft and pipeline vandalism; as well as foreign exchange (FX) scarcity and exchange rate tensions, among others.
On the implementation of this year’s budget, he said strenuous efforts were being made to find the resources required.
“We are challenging our revenue generating agencies, particularly the FIRS and Customs, to improve efficiency and broaden their reach so as to achieve the targets set for them in the 2017 budget.
“Most importantly, we will strive to maximize the revenues we can generate from the oil and gas sector, as it is clear that the foreign exchange generated from the sector is critical for our plans to diversify to the non-oil sectors.
“While we are introducing creative measures to improve on the efficiencies in that sector to increase government’s take, we are also engaging more extensively with the communities and people of the Niger Delta to minimize disruptions to oil production,” Udoma said.
On the virement controversy in the 2017 budget, the minister said there was no ambiguity on what was agreed with the National Assembly before acting President Yemi Osinbajo assented to the budget.
According to him, the lawmakers and the executive agreed that when the projects for which virement are to be made are ready, the executive would send the details to the National Assembly for approval.
He noted that until then, what was signed was exactly what the parliament passed.
On the implementation of last year’s budget, he stated that as at year ending 2016, actual revenue was N2.95 trillion, representing 76.4 per cent of the N3.85 trillion budgeted, of which oil revenue was N697.8 billion or 97.2 per cent of the budget, while Company Income Tax (CIT) and Value Added Tax (VAT) collections were N457.91 billion and 108.72 billion, respectively, representing 52.8 per cent and 54.8 per cent of amounts budgeted.
The minister stated that while Customs collections of N247.42 billion implied a 63.6 per cent performance, independent revenue was significantly much lower than projections at only 15.8 per cent.
“Despite the shortfall in revenue, we met our debt service obligations and personnel costs. Similarly, overhead costs were largely covered.
“It is important to note that although capital expenditure suffered because key recurrent spending like debt service and payment of salaries had to be met first, the N1.22 trillion released for capital projects under the 2016 budget was the highest aggregate capital releases for a single fiscal year in Nigeria.
“This was achieved despite the lower oil prices and revenue shortfalls, which underscores the government’s commitment to investing in critical infrastructure,” Udoma said.