BARRING the unforeseen, President Muhammadu Buhari will today sign the N13.588 trillion 2021 Appropriation Bill into law.
This is to enable the budget implementation to kick off in January next year.
Though the 2020 budget was passed and signed into law on time, the Coronavirus pandemic scuttled its scheduled implementation in line with the January – December Budget Cycle.
The National Assembly passed the bill of N13.588 trillion ($35 billion) at a joint session last week. It was N505 billion higher than the N13.082 trillion estimate presented for consideration by the President in October.
Next year’s budget was prepared to address the damage done to the economy by the Coronavirus pandemic.
Its assumptions are $40 per barrel; oil production at 1.86 million barrels daily oil production; exchange rate of N379/$ and a projected growth rate of three per cent.
With the economy in recession, the government crafted an ambitious 2021 budget. The executive arm made provision for MSME Survival Fund, Nigeria Youth Investment Fund, CBN Support programme for specific sectors to revive the economy; the legislature added N505 billion in anticipation of the purchase of vaccines to tackle COVID-19.
The budget is considered ambitious because the government’s desire to inflate the budget figures is not met with commensurate ability to generate revenue to match or exceed expenditure. What we have is a budget already handicapped by deficit even before it becomes law.
The government was put on its toes following the discovery and exploitation of shale oil. The development made the government realise that the days of over-dependence on crude oil was over.
The Federal Government has been battling to source for alternative revenue especially from taxes but the cost and size of governance have been the albatross on government’s neck.
According to BudgeIT, “while the expenditure component of the budget might have expanded, the federal government’s actual revenue has only increased from N3.24trillion in 2015 to N3.86trillion as of 2019, a 19.3% increase. The only way that the FG has continually met its expenditure has been through the escalation of debts and unfunded deficits provided by the Central Bank of Nigeria”.
In the budget, capital expenditure, including that of 10 Government Owned Enterprises (GOEs) and projects tied to loans, is put at N3.85trillion. N1.82 trillion will be spent by the Federal Government Ministries, Development and Agencies, N370 billion for capital supplementation items and N700 billion for dedicated expenditure tied to specific capital projects.