Omodele Adigun, Bimbo Oyesola and Ndubuisi Orji, Abuja
Varied reactions greeted the proposed N10.33 trillion budget President Muhammadu Buhari presented to a joint session of the National Assembly, yesterday.
The Presidency has said it was optimistic the National Assembly would pass the 2020 budget expeditiously, the same way it passed the Medium Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP).
Senior Special Assistant to the President on National Assembly Matters, Umar el-Yaqub, stated this shortly after the presentation, yesterday.
Speaking through the Director General, Mr. Timothy Olawale, the Nigeria Employers’ Consultative Association (NECA) lauded the early presentation of the budget proposal, but added there was room to improve further on the timeline.
“It is hoped that the legislators will also do the needful by expediting action on treating the budget with the good of the citizenry as the sole driver.
“Our expectation is that the budget should be back to the president for assent or comments on aspects that require tinkering with by second week in December, so that by the first week of January 2020, it would be ready for implementation.”
The NECA DG urged that beyond the presentation, greater commitment is expected from the National Assembly so that the budget will not suffer the usual padding controversy, leading to unnecessary bickering between the Presidency and the National Assembly.
He stated that no effort should be spared to return the nation to the January-December budgeting year to facilitate proper monitoring and disciplined implementation of projects as enshrined in the Budget for the good of the citizens.
“If we truly want to get the country on the track of economic prosperity as soon as possible, we need to accord extreme importance to the early passage of the budget. There has to be a defined time frame which should be religiously followed as seen in other countries.
“As stated by the President, priority should be given to on-going projects before new ones are started and a sound monitoring and evaluation mechanism clearly defined for the successful implementation of the Budget when passed into Law.”
Meanwhile, the Peoples Democratic Party (PDP) has said that the budget would further impoverish Nigerians and mortgage the future of the nation.
The PDP, in a statement by its national publicity secretary, Kola Ologbondiyan, yesterday, charged the federal legislature to redirect the Appropriation Bill in the interest of Nigerians.
The opposition party claimed that the 2020 budget presented by Buhari was full of false performance indices,stating that the President failed to give account of the handling of the 2019 Appropriations Act.
It alleged that the 2020 budget was skewed to serve the interests of the rich.
The PDP also challenged the Presidency to make public the details of its allocation in the 2020 budget, so that Nigerians would know how much goes into servicing the Presidency.
“The core of the budget remains hazy, showing streaks of padding, duplication, replete with false performance indices, deceptive projections and inexplicable expenditure assertions,” he said.
Ologbondiyan also criticised what he termed allocations for “vague projects,” particularly the Ministries of Works and Housing as well as Transportation, where, according to him, there were allegations of diversion of public funds in the last budget.
“Standing with millions of Nigerian youths and women, our party rejects the paltry budgets of N48 billion for education and N46 billion for health and urges the National Assembly to review the allocations in the interest of Nigerians.”
Appropriations bill empty – CUPP
The Coalition of United Political Parties (CUPP) also dismissed the proposed budget as as lacking in substance.
In a statement by its spokesman, Ugochinyere Ikenga, the CUPP said the budget was unrealistic as the country was already broke and heavily indebted.
Besides, the coalition stated that the inclusion of the proposed increase of Value Added Tax (VAT) as one of the sources of funding for the budget was an indication that the government was out to impose more hardship on the people.
“Opposition parties see this fiscal document as an empty document that is not worth the paper on which it was written. It is full of rhetoric; Buhari’s appropriation bill can best be described as a heavy travel bag that is empty in substance or value.
“The CUPP notes that this document is a final weapon to consolidate Buhari’s next level of economic ruins, poverty, looting and visionlessness. It is a ‘come and chop’ document meant to further impoverish many and prosper the privileged few.
“The opposition rejects the inclusion of the illegal proposed increment in VAT as part of the 2020 budget’s expected source of funding. This has shown that the budget is built in the sky with no serious source of funding except taxing the people to death.
“The opposition coalition has, therefore, resolved to head to court this week to stop the planned insensitive move to tax the suffering citizens of Nigeria to death with the proposed increment in VAT from 5% to over 7%. The President should not force the suffering citizens to bear the consequences of his leadership failures,” it said.
$57 oil benchmark unrealistic – Don
Director, Centre for Petroleum, Energy Economics and Law, University of Ibadan, Prof. Fola Adenikinju, said he was uncomfortable with the oil benchmark of $57 per barrel, as it would not create room for enough savings for the government.
“While the benchmark price appears realistic, it does not give room for any buffer of any sort to take care of price volatility in the price of oil or the economy in general, he opined, expressing worries that the volume of oil production target was also a source of concern, saying Nigeria has not been able to produce up to its 2020 benchmark of 2.18 million barrels per day.
He insisted that if the security challenges were not addressed, the country would not only experience price volatility but also expect volatility in the quantity of oil production.
He said it was important for government to ensure that the Petroleum Industry Bill (PIB) was passed to spur fresh investments that would lead to increased oil production.
APC lawmaker faults allocations of N2.8trn to debt servicing
An All Progressives Congress (APC) member of the House of Representatives, Mohammed Gudaji Kazaure, expressed dismay over the allocation of N2.8 trillion for debt servicing in the 2020 budget.
He said: “How can we earmark N2.8 trillion for servicing of external debt alone when our youths are wallowing in poverty? This debt service management thing is another conduit pipe for corruption. Peoples Democratic Party started all this mess. How can we pay debt when the money was stolen by PDP. For me, instead of servicing debt, let’s get all these thieves to bring our money that they have stolen. This money is in the pocket of Nigerians and if they see fire-for-fire they would return it. We are very very disappointed, this money would do a lot for us when we channel it well. PDP has cheated us in this country.”
Activist hails allocation to education
Executive director, Conscience Nigeria, Tosin Adeyanju, hailed the substantive allocation to the education sector.
“Works and Housing has the highest allocation with N262 billion, while Education has N48 billion and Universal Basic Education Commission has N112 billion. When you combine the two, it is a good one for the education sector.
“If this is eventually passed and the fund is released and properly monitored by NASS through oversight, it will go along way to improve the education sector,” he said.
7.5% VAT worries experts
Some experts have expressed concerns over the Federal Government’s decision to base the estimated revenue from VAT in 2020 by 7.5 per cent, instead of 5 per cent.
Ayodele Adigun, former president, Chartered Institute of Taxation of Nigeria (CITN), said: “We should just be prepared for another tough year ahead. I can tell you, if the two instrumentalities of regulating budget, fiscal and monetary policies, are not properly harnessed, definitely, it is going to be summersault again. I am sure the budget is not going to produce any good result because when the micro-economic issues are not addressed, honestly, it is going to be a total failure.
“For instance, the VAT increase is a wrong step in the right direction. It is poorly timed. VAT is different from other income tax. VAT increase has the effect of increasing the cost of goods. And when the cost of goods is increased, there would be poor sales because, already, the the economy is pauperised. The people’s purchasing power is already very weak. And there would be a lot of stocks in the warehouses of the manufacturers. The effect is that they would lay off workers. Already, the unemployment rate is terribly high, very alarming. So, whoever advised them in that direction has not done it very well.”
Dr. Patricia Auta, an economic analyst, said government acted prematurely in using 7.5 per cent, instead of 5 per cent, VAT.
Auta said that the proposed hike in VAT would have to be approved by the National Assembly before it comes into effect.
In addition, government should not have used it in calculating its revenue estimates.
“Its my opinion that the government cannot just assume that the National Assembly will approve the VAT increment from 5 per cent to 7.5 per cent.
“As much as its important for the government to increase its tax revenue, increasing VAT is not the right way to go.
“VAT is a multilevel tax on consumption and the burden rests on the final consumer and not the business so the people are the ones who will bear the brunt of the increase.
“Government needs to pay attention to expanding the tax net and ensure that businesses pay tax, especially those multinational companies. That’s where the money is,” she said.
Another expert, Mr. Jibrin Ibrahim, also expressed concern over the sum allocated to education and health, compared to other sectors.
He said with the infrastructure gap in the education and health sectors, it was surprising that only N48 billion was budgeted for Education and N46 billion for Health, out of the N2.46 trillion earmarked for capital expenditure.
In his reaction, Lukman Otunuga, FXTM senior research analyst, said: “Should crude oil production remain around 2.18 million barrels a day target and oil prices stabilise or trade above $57, the outlook for Nigeria is set to brighten in 2020. However, the budget must still be approved by parliament before being signed into law by Buhari. Lessons of the past have illustrated how long this process may take, with the repeated delay of passing the 2018 budget acting as a prime example.”