BY COBHAM NSA – Despite what many critics claim as its near paralysing N31 trillion debt burden, the Federal Government insists there are no incentives for Nigeria to eye any of the relief packages being dangled at countries on the international stage at present.
Amid global economic downturn due to the COVID-19 pandemic, the International Monetary Fund (IMF) has continued to push debt relief for low income countries but Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, says Nigeria is not interested in the risky freebies for now.
Speaking during the public presentation and breakdown of the 2021 budget in Abuja on Tuesday, Mrs Ahmed said government is not keen on the debt relief option at this time due to obvious limitations and inherent risk factors.
She explained to her physical and virtual audiences that having signed several loan agreements with various lending institutions, seeking debt relief could portray Nigeria in the eyes of creditors as a non serious country that cannot honour and service its debt obligations according to agreed terms.
The Minister, who also defended the 2021 budget deficit which has exceeded the Fiscal Responsibility Act (FRA) threshold of three percent, said government has not breeched any law by its current proposals.
On October 8, 2020, President Muhammadu Buhari had presented to the National Assembly (NASS) a budget proposal of ₦13.08 trillion, representing about 22.9 per cent increase from the ₦10.8 trillion 2020 budget, with revenue projected at about ₦7.5 trillion.
By the budget document, the projection indicates the deficit will grow by ₦5.21trillion, comprising Government Owned Enterprises (GOEs) and project-tied loans, which is about 3.64 percent of the total budget size.
However, addressing concerns that the amount exceeds the three per cent threshold prescribed by law for Nigeria’s annual budget, Mrs Ahmed explained that a provision in the FRA 2007 gives government the leeway to overshoot the set limit during “unusual times”, such the this COVID-19 pandemic period.
According to her; “The 2021 budget deficit (inclusive of Government Owned Enterprises and project-tied loans), is projected at N5.20 trillion. This represents 3.64 per cent of estimated GDP, slightly above the three (3) per cent threshold set by Fiscal Responsibility Act (FRA), 2007.”
“It is, however, to be noted that we still face the existential challenge of Coronavirus pandemic and its aftermath; Mr President believes that this provides a justification to exceed the threshold as provided for by this law”, Mrs Ahmed said in her presentation.
The Minister further said the 2021 budget estimates put capital projects at N3.85 trillion and these proposed capital allocations include N745 billion for capital supplementation; N710 billion for projects funded by Multi-lateral and Bi-lateral loans; 110.80 billion for Ministries Department and Agencies (MDAs) expenditure as well as N247 billion for capital component for statutory transfers.
Others include: N355 billion for grants and Aid-funded projects; N366 billion for sixty (60) Government Owned Enterprises (GOEs); N25 billion for Nigeria Youth Investment Fund; and N20 billion as allocation to Family Homes Fund.
On what is due to the Federal Ministry of Finance, Budget and National Planning in the 2021 budget if approved by the lawmakers, the Minister said the allocation includes a total of N615.3 billion for personnel expenses; about N3.66 trillion for overheads, and about N1.13 trillion for capital expenditure.
Further breakdown revealed that the Federal Ministry of Finance, Budget, and National Planning headquarters has N230.4 billion; Office of the Accountant-General of the Federation (OAGF) – N4.85 billion; the Budget Office of the Federation – N2.144 billion; Investment and Securities Tribunal – N618.3 million; and Service Wide Vote – N1.66 trillion.
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Others are: National Bureau of Statistics – N6.69 billion; Pension Transitional Arrangement Department (PTAD) Headquarters – N2.82 billion; Centre for Management Development – N 2.24 billion; and Nigeria Institute of Social and Economic Research – N1.552 billion.
Aside providing N2.16 million to each of the 37 Federal Pay Offices (FPO) along with seven other zonal offices across the country, the budget estimates has about N3.24 million as allocation to the Federal Treasury Academy, Orozo in Nasarawa State for the 2021 fiscal year.
On statutory transfers, the Minister said the sum of N484.49 billion allocated in the 2021 budget represents an increase of N56.46 billion or 13 per cent over the revised 2020 provision.
She however said; “In compliance with the Fiscal Responsibility Act, 2007, all beneficiaries of Statutory Transfers will be required to provide the Budget Office of the Federation with periodic reports on the allocation and expenditure of funds for inclusion in the quarterly Budget Implementation Report.”
Generally, the Minister assured that capital expenditure in 2021 is focused on the completion of as many projects as possible, rather than the commencement of new ones, adding; “We have also made efforts to ensure equity in the distribution of projects and programmes in the proposed budget.”
In his comments, the Minister of State for Budget and National Planning, Mr Clement Agba, noted that with the COVID-19 being both health and economic pandemic, the Federal Government will not relent in promoting necessary safety nets meant to cushion the impact of any policy measure and programme on the vulnerable segment of the Nigerian society.
He also said with its Economic Sustainability Plan (ESP), government would continue to look after the welfare of all Nigerians and pleaded for wider public participation in the budget preparation processes to drive efficiency in its implementation.
On his part, the Director General, Budget Office of the Federation, Dr Ben Akabueze said having put behind it the spectre of delays and controversies around annual budget preparation, the present administration is committed to bequeath to the nation a budget implementation process that works well and delivers the desired results to Nigerians.
He called for support from all stakeholders to ensure the budget processes are more open, transparent, timely and efficient in the overall interest of sustainable economic growth and development in the country.
