Recall 2021 Budget Over FRA Contravention – Atiku Tells Buhari
Former Vice President, Atiku Abubakar, has asked President Muhammadu Buhari to withdraw the 2021 Budget over contravention of the Fiscal Responsibility Act, 2007.
President Buhari had on Thursday presented a budget of N13.08 trillion to National Assembly with Defence, Education, Police Affairs, Health, Interior, and Works & Housing Ministries receiving the lion’s share.
While laying the budget at a joint sitting of the National Assembly, the president had projected a budget deficit of N5.20 trillion in 2021, inclusive of government-owned enterprise and project-tied loans.
“This represents 3.64 per cent of estimated GDP, slightly above the 3 per cent threshold set by the Fiscal Responsibility Act, 2007.
“It is, however, to be noted that we still face the existential challenge of Coronavirus pandemic and its aftermaths; I believe that this provides a justification to exceed the threshold as provided by this law.
“The deficit will be financed mainly by new borrowings totalling N4.28 trillion, N205.15 billion from Privatisation Proceeds and N709.69 billion in drawdown on multilateral and bilateral loans secured for specific projects and programmes,” Buhari had stated.
In his reaction to next year budget, Atiku stated that there were very grave and disturbing issues in the 2021 appropriation bill.
The former vice president, in a statement on Friday, said he would only address one very important issue because of its direness and consequence to Nigeria’s economy.
He said the budget deficit in the proposal was ₦5.21 trillion which, according to him, was just over 3.5% of Nigeria’s 2019 Gross Domestic Product.
Atiku said, “This is contrary to the Fiscal Responsibility Act of 2007, which provides in Part II, Section 12, subsection 1 that: “Aggregate Expenditure and the Aggregate amount appropriated by the National Assembly for each financial year shall not be more than the estimated aggregate revenue plus a deficit, not exceeding three per cent of the estimated Gross Domestic Product or any sustainable percentage as may be determined by the National Assembly for each financial year.
“Nigeria had a GDP of approximately $447 billion in 2019. Three percent (3%) of this amount is $13. 3 billion, which at the current official exchange rate of ₦379 to $1, gives you a figure of ₦5.07 trillion.
“So clearly, the budget deficit of ₦5.21 trillion, as announced by President Muhammadu, is above 3% of our GDP and is therefore in contravention of the Fiscal Responsibility Act of 2007.”
The former president further noted that more disturbing was the sharp fall in the nation’s GDP projected by the World Bank and other multilateral institutions at between $350 billion and $4000 billion.
He opined that this means that in actual sense, the ₦5.21 trillion budget deficit is actually far above the 3% threshold stipulated by the FRA.
Atiku said, “That this escaped the notice of the Buhari administration shows a glaring lack of rigour in the formulation of the Budget. A very disturbing development.
“Furthermore, this deficit shows the precarious state of our national finances, which have since been overburdened by excessive borrowing on the part of the Buhari administration.
“It has not escaped my attention that the Fiscal Responsibility Act of 2007 makes provision for the National Assembly to raise the threshold of the budget deficit from 3% to a higher figure.”
He added, “However, if this is done, they will be serving this administration’s interests, not Nigeria’s, because the Act says that such a threshold must be sustainable. Is it sustainable when our budget makes almost as much provision for debt servicing, as it does for capital expenditure?
“As such, I call on the President, to recall this budget, and recalibrate it to reflect the provisions of the Fiscal Responsibility Act of 2007, and the current economic realities of the nation.
“To do otherwise will not only be unpatriotic, it will also be catastrophic for our nation’s economy.”
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