Buhari Presents N13.08TRN Budget For 2021
President Muhammadu Buhari on Thursday laid the N13.08trn budget for 2021 before a joint session of the National Assembly for legislative approval.
Christened ‘Budget of Economic Recovery and Resilience’, President Buhari noted that though Nigeria had relapsed into recession since July this year, his government would work assiduously towards taking the economy out of recession in 2021.
He said, “The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the Coronavirus Pandemic.
“Real Gross Domestic Product growth declined by 6.1 per cent in the second quarter of 2020. This ended the three-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017.
“I am glad to note that, through our collective efforts, our economy performed relatively better than that of many other developed and emerging economies.
“GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences.
“However, we are working assiduously to ensure a rapid recovery in 2021.”
Giving a further breakdown of the 2021 budget proposal, Buhari put aggregate expenditure at N13.08 trn which includes N1.35trn spending by government-owned firms and grants/aid-funded expenditures of N354.85bn.
He added that the proposed N13.08 trn expenditure also comprises non-debt recurrent costs of N5.65trn; personnel costs of N3.76 trn; and pensions, gratuities and retirees’ benefits of N501.19 bn.
The President said overhead would gulp N625.50 bn; debt servicing (N3.124 trn), Statutory transfers (N484.49bn; and Sinking fund of N220 bn meant to retire certain maturing bonds.
He said, “The 2021 Budget deficit (inclusive of Government-Owned Enterprises and project – tied loans), is projected at N5.20trn, representing 3.64 per cent. ”
He said the proposed budget was expected to accelerate the pace of the nation’s economic recovery, promote economic diversification, enhance competitiveness and ensure social inclusion.
The President added that the fiscal document would be predicated upon the 2021 – 2023 Medium Term Expenditure Framework and Fiscal Strategy Paper already approved by the National Assembly
The assumptions, according to him includes an oil benchmark of $40 per barrel and daily oil production estimate of 1.86 million barrels (inclusive of condensates of 300,000 to 400,000 barrels per day.
Buhari said the exchange rate would be based on N379 per dollar, GDP growth projected at 3.0 per cent, inflation closing at 11.95 per cent and budget deficit of N5.20trn.
He restated that commitment of the government to meet its debt service obligations.
He disclosed that the sum of N3.12trn has been provisioned for servicing of debts in 2021.
This, according to him, represents an increase of N445.57bn from N2.68trn in 2020.
“A total of N2.183 trn has been set aside to service domestic debts while N940.89bn has been provided for foreign debt service.
“N220 billion is provided for transfers to the sinking fund to pay off maturing bonds issued to local contractors and creditors.”
Buhari said the total overhead costs of MDAs and government-owned enterprises are projected to rise to N625.50 bn in 2021, mainly due to the inclusion of the overheads of an additional 50 firms, while provisions have been made for newly created agencies.
Buhari said N3.85 trn would be made available for capital projects in 2021, with MDAs getting N1.80 trn.
He added that N745bn has been earmarked for capital supplementation; N355bn for grants and aid-funded projects; N20bn for the Family Homes Fund, N25bn for the Nigeria Youth Investment Fund; and N336bn for 60 government-owned enterprises.
Buhari said N247 bn has been earmarked for capital component of statutory transfers; and N710 bn for projects funded by multilateral and bi-lateral loans.
He further explained that the 2021 capital budget is N1.15 trn higher than the 2020 provision of N2.69 trn. iture, the provision moves closer to this Administration’s policy target of 30 percent.
He said the capital expenditure would focus on the completion of as many ongoing projects as possible, rather than the commencement of new ones.
He said, ” We have also made efforts to ensure equity in the distribution of projects and programmes in the proposed budget. I will be providing the National Assembly a list of some of the most critical projects which we must work collectively to ensure they receive adequate funding.
“Until projects reach completion, they do not deliver the dividends of democracy that Nigerians rightly deserve.”
The President admitted that his government was passing through difficult challenges to raise revenue to fund the budget but said it would leverage on technology and automation, as well as more effective monitoring of Independently generated revenues.
He said, “Our efforts are aimed at addressing revenue leakages and redirecting scarce resources to the poor and vulnerable. These efforts include, deregulation of the price of petroleum products, ongoing verification exercise with IPPIS and implementation of service-based electricity tariffs.
“As we implement these reforms, social safety nets will be implemented to cushion the effect of the most vulnerable of our citizens as well as business owners.
“In furtherance of our inclusiveness agenda, the sum of N420bn has been provided to sustain the Social Investment Programme, N20bn has also been set aside for the Family Homes Fund, our Social Housing Programme.
“We have expanded our National Social Register, to include an additional one million Nigerians following the outbreak of Coronavirus.
“We recently introduced the N75 billion Survival Fund Programme to support and protect businesses from potential vulnerabilities.
“Furthermore, the Central Bank of Nigeria is reducing the interest rate on its intervention facilities from 9 per cent to 5 per cent with a one-year moratorium till 31st March 2021.
He said it would enable the CBN, to provide concessional lending of N100 bn to households and small businesses; N100 bn to the healthcare and pharmaceutical industry; and N1 trn to large agricultural and manufacturing businesses.
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