Five Statutory Transfers Within The 2020 Budget

 

Within the 2020 budget as proposed and presented by President Muhammdu Buhari to the National Assembly, there are statutory transfers.

The statutory transfers of the budgets are appropriations by certain government institutions enabled by law and backed by the constitution to be made by themselves and can not be altered or reviewed by the Presidency or Executive arm of Government.

In the budget presented by the President, the sum of N556.7 billion was provided for statutory transfers.

READ ALSO: Budget 2020: We Dare Buhari To Make Presidency’s Allocation Public – PDP

Below are the statutory transfers as found within the 2020 budget.

a. N125 billion for the National Assembly;

b. N110 billion for the Judiciary;

c. N37.83 billion for the North East Development Commission (NEDC);

d. N44.5 billion for the Basic Health Care Provision Fund (BHCPF);

e. N111.79 billion for the Universal Basic Education Commission (UBEC); and

f. N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.

President Buhari while presenting the budget on Tuesday noted that his government increased the budgetary allocation to the National Human Rights Commission from N1.5 billion to N2.5 billion.

According to him, this 67 percent increase in funding is done to enable the Commission to perform its functions more effectively.

Nigeria’s Economy Has Experienced Nine Consecutive Quarters Of GDP Growth – Buhari

Photo: Channels TV/Sodiq Adelakun

 

President Muhammadu Buhari says the Nigerian economy thus far has recorded nine consecutive quarters of GDP growth.

According to the President, the annual growth increased from 0.82 percent in 2017 to 1.93 percent in 2018, and 2.02 percent in the first half of 2019.

He disclosed this while presenting the 2020 budget at the National Assembly on Tuesday.

President Buhari said the continuous recovery reflects the economy’s resilience and gives credence to the effectiveness of his government’s economic policies thus far.

READ ALSO: Top Four Priorities Of The 2020 Budget

He also stated that his administration succeeded in significantly reducing inflation from a peak of 18.72 percent in January 2017, to 11.02 percent by August 2019. Adding that this was achieved through effective fiscal and monetary policy coordination, exchange rate stability and sensible management of our foreign exchange.

President Buhari further said that his government has sustained accretion to its external reserves, which have risen from US$23 billion in October 2016 to about US$42.5 billion by August 2019.

Mr Buhari noted that the increase is largely due to favourable prices of crude oil in the international market, minimal disruption of crude oil production given the stable security situation in the Niger Delta region and the nation’s import substitution drive, especially in key commodities.

He stressed that the foreign exchange market has also remained stable due to the effective implementation of the Central Bank’s interventions to restore liquidity, improve access and discourage currency speculation.  Adding that special windows were created that enabled small businesses, investors and importers in priority economic sectors to have timely access to foreign exchange.

Speaking further on economic positives, President Buhari said that as a sign of increased investor confidence in the Nigerian economy, there were remarkable inflows of foreign capital in the second quarter of 2019.

“The total value of capital imported into Nigeria increased from US$12 billion in the first half year of 2018 to US$14 billion for the same period in 2019,” he added.

Top Four Priorities Of The 2020 Budget

 

President Muhammadu Buhari on Tuesday presented the 2020 budget to the National Assembly. 

Here are the top four priorities of the appropriation bill according to President Buhari.

A. Fiscal consolidation, to strengthen our macroeconomic environment;

B. Investing in critical infrastructure, human capital development and enabling institutions, especially in key job creating sectors;

C. Incentivising private sector investment essential to complement the Government’s development plans, policies and programmes; and

D. Enhancing our social investment programs to further deepen their impact on those marginalised and most vulnerable Nigerians.

CAPITAL EXPENDITURE

In his speech at the National Assembly, the President stated that investing in critical infrastructure is a key component of his fiscal strategy under the 2020 Budget Proposals.

“Accordingly, an aggregate sum of N2.46 trillion (inclusive of N318.06 billion in statutory transfers) is proposed for capital projects in 2020,” Buhari stated.

He further stated that although the 2020 capital budget is N721.33 billion (or 23 percent) lower than the 2019 budget provision of N3.18 trillion, it is still higher than the actual and projected capital expenditure outturns for both the 2018 and 2019 fiscal years, respectively.

READ ALSO:  We Dare Buhari To Make Presidency’s Allocation Public – PDP

The President however noted that at 24 percent of aggregate projected expenditure, the 2020 provision falls significantly short of the 30 percent target in the Economic Recovery and Growth Plan (ERGP) 2017-2020.

President Buhari further revealed that the main emphasis will be the completion of as many ongoing projects as possible, rather than commencing new ones.

He notes that the MDAs have not been allowed to admit new projects into their capital budget for 2020, unless adequate provision has been made for the completion of ALL ongoing projects.

According to the President, his government has rolled over capital projects that are not likely to be fully funded by the end of 2019 into the 2020 Budget.

“We are aware that the National Assembly shares our view that these projects should be prioritised and given adequate funding in the 2020 Appropriation Act,” the President stated.

OTHER STRATEGIC PRIORITIES IN 2020

The 2020 Budget is expected to accelerate the pace of our economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion. We are optimistic of attaining higher and more inclusive GDP growth in order to achieve our objective of massive job creation and lifting many of our citizens out of poverty.

The efficiency of port operations will also be enhanced by implementing a single customs window, speeding up vessel and cargo handling and issuing more licenses to build modern terminals in existing ports, especially outside Lagos.

Furthermore, completing the reforms to the governance and fiscal terms of the Petroleum Industry will provide certainty and attract further investments into the sector. A consequence of this will be increase in jobs and in government’s take. I therefore seek your support in passing into law two Petroleum Industry Executive Bills I will be forwarding to you shortly.

In addition, we need to quickly review the fiscal terms for deep offshore oil fields to reflect the current realities and for more revenue to accrue to the government. The Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2018, was submitted to the 8th National Assembly in June 2018 but was unfortunately not passed into law.

I will be re-forwarding the Bill to this Assembly very shortly and therefore urge you to pass it. We estimate that this effort can generate at least 500 million US dollars additional revenue for the Federal Government in 2020, and over one billion dollars from 2021.

Whilst the Budget is our principal fiscal tool to achieve these socio-economic development targets, we remain committed to prudently planning for our future economic prosperity. In this regard, I have directed the reconstituted Ministry of Finance, Budget and National Planning to commence preparations towards the development of successor medium – and long-term economic development plans, particularly as the Nigeria Vision 20-2020 and the ERGP expire next year.

The Quick Figures From 2020 Budget Proposal

 

Proposed 2020 Budget
An overview of President Buhari’s Proposed 2020 budget

 

 

President Muhammadu Buhari on Tuesday presented the budget for the 2020 fiscal year to the joint session of the National Assembly.

The budget is based on an oil price benchmark of US$57 per barrel, a daily oil production estimate of 2.18 mbpd. and an exchange rate of N305 per US Dollar.

Along with the budget proposal, a Finance Bill was presented to the National Assembly for consideration and passage into law.  The draft Finance Bill proposes an increase of the VAT rate from 5% to 7.5%. The 2020 budget revenues estimates is based, in part, on the new proposed VAT rate.

The sum of N8.155 trillion is estimated as the total Federal Government revenue in 2020 and comprises oil revenues of N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenues of N3.7 trillion. 

An aggregate expenditure of N10.33 trillion is proposed for the Federal Government in 2020. The expenditure estimate includes statutory transfers of N556.7 billion, non-debt recurrent expenditure of N4.88 trillion and N2.14 trillion of capital expenditure (excluding the capital component of statutory transfers). Debt service is estimated at N2.45 trillion, and provision for Sinking Fund to retire maturing bonds issued to local contractors is N296 billion.

 

Statutory Transfers

The sum of N556.7 billion is provided for Statutory Transfers in the 2020 Budget and includes:

  1. N125 billion for the National Assembly;
  2. N110 billion for the Judiciary;
  3. N37.83 billion for the North East Development Commission (NEDC);
  4. N44.5 billion for the Basic Health Care Provision Fund (BHCPF);
  5. N111.79 billion for the Universal Basic Education Commission (UBEC);
  6. N80.88 billion for the Niger Delta Development Commission (NDDC), which is now supervised by the Ministry of Niger Delta Affairs.

 

Recurrent Expenditure

The non-debt recurrent expenditure includes N3.6 trillion for personnel and pension costs, an increase of N620.28 billion over 2019. This increase reflects the new minimum wage as well as our proposals to improve remuneration and welfare of our Police and Armed Forces. You will all agree that Good Governance, Inclusive Growth and Collective Prosperity can only be sustained in an environment of peace and security.

Overhead costs are projected at N426.6 billion in 2020.

An overview of President Buhari's Proposed 2020 budget
An overview of President Buhari’s Proposed 2020 budget

Capital Expenditure

An aggregate sum of N2.46 trillion (inclusive of N318.06 billion in statutory transfers) is proposed for capital projects in 2020.

At 24 percent of aggregate projected expenditure, the 2020 provision falls significantly short of the 30 percent target in the Economic Recovery and Growth Plan (ERGP) 2017-2020.

Some of the key capital spending allocations in the 2020 Budget include:

  1. Works and Housing: N262 billion;
  2. Power: N127 billion;
  3. Transportation: N123 billion;
  4. Universal Basic Education Commission: N112 billion;
  5. Defence: N100 billion;
  6. Zonal Intervention Projects: N100 billion;
  7. Agriculture and Rural Development: N83 billion;
  8. Water Resources: N82 billion;
  9. Niger Delta Development Commission: N81 billion;
  10. Education: N48 billion;
  11. Health: N46 billion;
  12. Industry, Trade and Investment: N40 billion;
  13. North East Development Commission: N38 billion;
  14. Interior: N35 billion;
  15. Social Investment Programmes: N30 billion;
  16. Federal Capital Territory: N28 billion; and
  17. Niger Delta Affairs Ministry: N24 billion.

 

Budget Deficit

The Budget deficit is projected to be N2.18 trillion in 2020. This includes drawdowns on project-tied loans and the related capital expenditure.

This represents 1.52 percent of estimated GDP, well below the 3 percent threshold set by the Fiscal Responsibility Act of 2007, and in line with the ERGP target of 1.96 percent.

 

2020 Budget: Defend Your Budget Estimates This October – Lawan Tells MDAs

 

The Senate President, Mr Ahmad Lawan has urged all Ministries, Departments and Agencies to appear before the committees for the defence of their budget estimate within October 2019.

Mr Lawan made the call at first joint session of the National Assembly which sat for the presentation of the 2020 budget proposal.

He stated that the National Assembly will work swiftly to see that the budget as processed in time.

READ ALSO: FG To Service Debt With N2.45trn, Says Buhari

“The National Assembly, after the receipt of the budget estimate today will swing into swift action to start work, both chambers have constituted their committees we are therefore ready to start processing the budget estimate.

“In order for timely passage, all MDAs are expected to appear before the committees for the defence of their budget estimate within the month of October. We have earmarked the month of October to be the sole window for all budget defence activities in this year by all MDAs.

“Clearly, this effort is to enable the FG provides those laudable objectives of physical infrastructure and socio-economic services to our citizens,” he said.

The Senate President stressed the need for Nigeria to return to a January-December budget cycle, saying that the National Assembly would accelerate work on the 2020 Appropriation Bill being presented by President Muhammadu Buhari.