After many failed attempts to return the nation’s budget cycle to the January to December calendar, the jinx was apparently broken on December 5, when the National Assembly passed the 2020 budget of N10.59 trillion. President Muhammadu Buhari had on October 8, presented N10.33 trillion budget entitled, “Budget of Sustaining Growth and Job Creation.” The budget was passed unanimously after the Senate and House of Representatives considered and adopted the report submitted by their committees on appropriations.
A breakdown of the N10.594trn approved for the 2020 fiscal year shows that N560billion is for statutory transfers, N4.84trilion recurrent expenditure, a capital expenditure of provision of N2.46trillion and N2.72trilion for debt servicing. The fiscal deficit of the budget is N2.28trn while the deficit to Gross Domestic Product (GDP) ratio is 1.52 per cent. The budget is predicated on crude oil production of 2.18mbpd and oil benchmark of US$57 per barrel as, exchange rate of N305/US$ and inflation rate of 10.81 per cent. In the approved estimate, Defence got the highest vote for recurrent expenditure with N784.5billion. It also received the highest vote of N116billion for capital expenditure. Education sector got the second highest recurrent expenditure of N490.3billion and N84.7billion for capital expenditure, followed by Works and Housing with a capital expenditure vote of N315billion. This is in addition to N27.9billion recurrent expenditure.
We commend the National Assembly for the timely passage of the budget. The passage of the budget is historic. Now that President Buhari has signed the Appropriation Bill into law, we advise that the implementation should start in earnest. In terms of capital release, it is equally important that funds should be timely released for execution of projects. In the past, projects were delayed largely because of late passage of the budget and dearth of revenue to finance the budget. With the broadening of the revenue base through the hike in the Value Added Tax (VAT) and other revenue sources, we believe that timely release of funds will no longer be a challenge. Good enough, oil prices in the international market have remained stable and above the projected benchmark of $57 per barrel.
With the early passage of the budget, the government should ensure that it is significantly implemented. Doing so will help boost the economy that is still vulnerable to both internal and external shocks. It is on record that the nation has not achieved more than 50 per cent of budget implementation. To achieve the objective of the 2020 budget, government must strive to ensure at least 70 per cent implementation.
We recommend that government should strengthen the linkage between plans and budget preparations so that effective implementation will be achieved. Moving forward, it has become necessary for the private sector to synchronise with government’s spending pattern. This will enhance our developmental efforts and service delivery. No doubt, budget remains the most potent fiscal tool to address the challenges of the country. Government should use the 2020 budget to address the rising poverty and unemployment. This calls for diligent execution of the budget.
With the unflinching cooperation this administration received from the 9th National Assembly, it has no reason to fail in the implementation of the 2020 budget. The relevant Committees of the National Assembly should ensure that revenues expected to implement the budget are released on time. The implementation of the 2020 budget will determine the desirability or otherwise of the January-December budget calendar. To avoid delay in implementation of budget, the budget proposal should be presented early enough to the lawmakers.
On no account should the 2020 budget suffer the fate of previous budgets. Interestingly, the outlook of the macroeconomic fundamentals is not bad as inflation is on the decline. However, government must thoroughly examine the continued closure of the nation’s borders considering that the policy is pushing up the cost of food items and inflation rate. It has also become imperative to reduce the cost of governance, especially the emoluments of political officials. All government agencies must promptly remit all generated funds to the consolidated revenue fund as required by law. The recent revelation by the Auditor-General’s report that over 265 Federal Government’s agencies did not remit over N300billion is worrisome. Therefore, all hands must be on deck to meet the aspirations of the 2020 budget. Let the government use the budget to achieve inclusive growth.