President Muhammad Buhari has presented a budget proposal of N8.612 trillion for the 2018 fiscal year to a joint session of the National Assembly in Abuja.
The key parameters and assumptions for the 2018 Budget as laid out by President Buhari and as set out in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) are: oil price benchmark of $45 per barrel; Oil production estimate of 2.3 million barrels per day, including condensates; Exchange rate of N305/US$ for 2018; Real GDP growth of 3.5 percent; and inflation Rate of 12.4 percent.
The budget christened Budget of Consolidation, which is expected to consolidate on the gains of the 2017 budget, the Buhari noted will help “to actualize the economic growth recovery plan of this administration. 2018 is expected to be a year of positive and better outcomes”
The total expenditure of the N8.612 trillion proposed for 2018, Buhari disclosed is a nominal increase of 16 percent above the 2017 Budget estimate adding that “In keeping with our policy, 30.8 percent (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget”.
“We expect our fiscal operations to result in a deficit of N2.005 trillion or 1.77 percent of GDP. This reduction is in line with our plans under the ERGP to progressively reduce deficit and borrowings,” he told the lawmakers during the presentation session.
Buhari revealed that the government plans “to finance the deficit partly by new borrowings estimated at N1.699 trillion. Fifty percent of this borrowing will be sourced externally, whilst the balance will be sourced domestically. The balance of the deficit of 306 billion Naira is to be financed from proceeds of privatization of some non-oil assets by the Bureau of Public Enterprises (BPE)”.
Breakdown of the proposed N8.612 trillion of 2018 Aggregate Expenditure comprises a Recurrent Costs of N3.494 trillion; Debt Service of N2.014 trillion; Statutory Transfers of about N456 billion; Sinking Fund of N220 billion (to retire maturing bond to Local Contractors) and Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).
To consolidate on the momentum of the 2017 Budget’s implementation, President Buhari said that many ongoing capital projects have been provided for in the 2018 Budget.
“This is in line with our commitment to appropriately fund ongoing capital projects to completion. By allocating 30.8 percent of the 2018 Budget to capital expenditure, the Federal Government is also demonstrating its strong commitment to investing in critical infrastructure capable of spurring growth and creating jobs in the Nigerian economy
The president listed the key capital spending allocations in the 2018 Budget to include: Power, Works and Housing with a hefty allocation of N555.88 billion; Transportation with an allocation of N263.10 billion; while Special Intervention Programmes will gulp N150.00 billion in the budget proposal.
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Others are Defence with N145.00 billion; Agriculture and Rural Development with N118.98 billion allocation; Water Resources has N95.11 billion; Industry, Trade and Investment was allocated N82.92 billion; Interior has N63.26 billion allocation while; Education N61.73 billion.
Universal Basic Education Commission is allocated N109.06 billion; Health, N71.11 billion; Federal Capital Territory has N40.30 billion allocation; Zonal Intervention Projects was allocated N100.00 billion; North East Intervention Fund has N45.00 billion; Niger Delta Ministry was allocated N53.89 billion; and Niger Delta Development Commission: N71.20 billion.
He said a substantial part of the recurrent cost proposal for 2018 is for the payment of salaries and overheads in key Ministries providing critical public services such as N510.87 billion for Interior; N435.01 billion for Education; N422.43 billion for Defence; and N269.34 billion for Health.
The President added that “the allocation to these Ministries represent significant increases over votes in previous budgets”.
He estimates increase in personnel costs to rise by 12 percent in 2018 stressing that although government has made substantial savings by registering MDAs on the Integrated Personnel Payroll Information System (IPPIS) platform, “the increase is mainly due to provision for staff promotion arrears, and recruitments by the Military, Police Force and para-military agencies. Furthermore, I have directed agencies are not to embark on any fresh recruitment unless they have obtained all the requisite approvals. Any breach of this directive will be severely sanctioned”.
Overhead costs President Buhari said “is projected to rise by 26 billion Naira in 2018, a modest increase of about 12 percent reflecting inflationary adjustments. MDAs are required to adhere to government regulations regarding cost control”.
The 2017 Budget was N7.298 trillion and the National Assembly claimed it has only achieved 10 per cent performance as at the end of September 2017. The budget was 20.4% higher than 2016 estimates.
The assumptions and projections for the outgoing budget were: Benchmark crude oil price – $42.5 peper barrel; Oil production estimate – 2.2 million barrels per day; Average exchange rate – N305 to US dollars.
The aggregate revenue available in the 2016 budget was N 4. 94tn while Deficit was put at N2. 36 trillion which was about 2.18% of GDP.
The deficit in the budget was to be financed mainly through borrowing and projected to be about N2.32 trillion out of which N1.067 trillion of the borrowing would be from external sources and the balance of N1.254 trillion to be borrowed from the domestic market.
On Expenditure Estimates, N7.298 trillion was proposed with statutory transfers fixed at N419.02bn while Debt service was N1.66tn
On Recurrent Expenditure, the payment of salaries and overheads in institutions that provide critical public services took the largest chunk of the appropriation.
For the sectoral allocations in the 2017 budget, the Ministry of Interior budgeted was allocated N37 billion; Ministry of Education, N1billion; Ministry of Defence, N87 billion; Ministry of Health, N87 billion; and Ministry of Power, Works and Housing, N529 billion
Others were, Transportation, N262 billion; Ministry of Water Resources, N85 billion; Federal Capital Territory (FCT), N37 billion while Universal Basic Education Commission had N92 billion
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