The realities of the struggling state of the Nigerian economy has finally dawn on the Federal Government, as the nation is targeting a tighter fiscal plan for the economy by projecting a budget of N8.6 trillion in the next fiscal year -2019. The Minister of Budget and National Planning, Senator Udoma Udo Udoma, revealed this at a public consultation on the 2019-2021 Medium Term Fiscal Framework (MTEF) and Fiscal Strategy Paper (FSP) in Abuja.
Breakdown of Proposed Budget
According to the Minister, the 2019 budget will be anchored on a projected total revenue of N7.9 trillion, out of which N3.6 trillion is projected to be realised from crude oil, as against the N2.9 trillion in the 2018 budget.
Meanwhile, the proposed 2019 budget is also projected on oil production volume of 2.3 million barrels per day with a crude oil price of $60 per barrel. Exchange rate in 2019 is projected to be N305 to a dollar while inflation rate is projected to be 9.98%. A Real Gross Domestic Product (GDP) of 3.0% is also being targeted in the next fiscal year.
A non-oil revenue of N1.385 trillion is projected to be realised in the 2019 fiscal year as against N1.348 trillion in the 2018 budget. In his bid to realise the targeted non-oil revenue in 2019, the Federal Government is projecting an Income Tax of N799.5 billion as against the N794.6 billion in the current fiscal year.
However, government also to hope to raise a Value Added Tax (VAT) of N229.3 billion in the fiscal year, compared to the N207.5 billion in the 2018 budget. The sum of N54.1 billion is projected as the Federation Account Levy as against the 2018 budget figure of N57.8 billion.
Also, nine government agencies (aside NNPC) are expected to generate the sum of N955.3 billion while revenue from independent sources is projected to be N624.5 billion in the 2019 fiscal year, as against N847.9 billion in 2018.
On the expenditure side, the projected 2019 budget will be premiered on a project statutory transfer of N506.8 billion compared to N530.4 billion in 2018 while a sum of N2.144 trillion will be set aside to service Nigeria’s total debt as against N2.013 trillion this year. A sum of N220 billion is also projected for Sinking Fund in contrast to N190 billion in the current fiscal year.
What FG hope to achieve via the 2019 budget
According to the Minister, despite the small size of the proposed 2019 budget, the Federal Government hope to achieve the following:
- Getting more revenue, oil and non-oil, by squeezing the maximum from oil, and build up non-oil revenue by an average of 30% up from the previous figure.
- Relying less on borrowing and debt, but do more on revenue build up, so that debt service to revenue is brought down.
- Increasing the tax to GDP rate which is still very low
- Committing more funds to paying pension, gratuities and retirement benefits of retired employees by proposing N527 billion in contrast to N241.9 billion in the 2018 budget.
- Giving more priority to human capital development, health and education.
Can the January to December Budget Cycle be met in 2019?
The last time the Nigerian economy really witnessed the January to December budget cycle was during the military era, as the budget has hardly gone through the normal fiscal year cycle, since the fourth republic began in 1999.
Gone are the days when the Nigerian fiscal year budgets were broadcast to the nation by the Head of State on the January 1st, as the budgets in the current dispensation do not get the constitutional National Assembly passage, until several months into the fiscal year which the budget is proposed to be implemented.
The delay in budget implementation reached a crescendo in the current 2018 fiscal year, when the budget was not passed by both Chambers of the National Assembly until six months, after it was presented by the president. As if that was not enough, it took President Buhari another 35 days before finally accenting the 2018 budget. All these delays practically left the economy at a standstill.
Nevertheless, according to Udoma Udo Udoma, the METF document would be passed to the National Assembly by the end of October while the full budget would be sent in November. However, with 2019 being an election year, it is very unlikely that the 2019 budget proposal will be passed on time.