Breaking: FG to prune 2019 budget to N8.6trillion

The federal government is proposing a smaller budget size of N8.6 trillion for 2019 fiscal year compared to 2018 budget figure of N9.1 trillion.

New Telegraph reports that the federal government also envisaged a total revenue projection of N7.9 trillion, reductions in both borrowing and deficit financing going by provisions contained in 2019- 2021 medium term expenditure framework/fiscal strategy paper unveiled on Thursday, October 18, in Abuja by the minister of budget and national planning, Senator Udoma Udo Udoma.

It was gathered that while addressing members of the public comprising the media and members of civil society organizations, Udoma said the government was oblivious of revenue challenges assailing it.

Going forward into 2019 budget, he said the government will trim down drastically on borrowing by “cutting coat according to size of pocket and increase revenue substantially.”

Giving an insight into 2019 budget projections captured in MTEF, the minister listed key assumptions which include: oil production volume of 2.3 million barrels per day at an oil price of $60, an exchange rate of N305 to dollar; inflation rate of 9.98% and GDP growth rate of 3%.

The federal government, he said projected an oil revenue of N3.6 trillion in 2019 against N2.9 trillion figure of 2018, and non- oil revenue projection of N1.385 trillion as against N1.348 trillion in 2018 budget.

According to the breakdown of non-oil revenues, for 2019 government projected Company Income Tax( CIT ) of N799.5 billion as against 2018 figure of N794.6 billion, VAT projection of N229.3 billion against 2018 figure of N207.5 billion; share of federation account levy at N54.1 billion against 2018 figure of N57.8 billion.

In the coming year, federal government spotted top nine Government’s Owned Enterprises (excluding NNPC) to generate the sum of N955.3 billion, sum of N624.5 billion to be generated from Independent revenue sources compared to 2018 figure of N847.9 billion.

For expenditure, government protected statutory transfer of N506.8 billion against 2018 figure of N530 .4 billion, debt service of N2,144,014,113.092 trillion against 2018 figure of N2,013,833.365 trillion; sinking fund of N220 billion against 2018 figure of N190 billion.

For 2019, the government intends to commit more funding in paying pension, gratuities and retirement benefits of retired employees as it proposed N527 billion against 2018 figure of 241.9 billion.

The minister explained that notwithstanding small size budget being proposed, certain critical items, he said would be given priority.

He listed such important areas as human capital development, health, education; pension payment and few others.

“In 2019, we will concentrate on getting more revenue- oil and non-oil, by squeezing the maximum from oil, builds up the non-oil by an average of 30 percent up from previous figure.

Here we all know that the rate of tax to the GDP is still very low.

“We could do much better than we are doing. So going forward, we will rely less on borrowing, debt but do more on revenue build up so that debt service to revenue is brought down. This is the approach. To government, its revenue, revenue and revenue. That is our priority. If you have revenue, it’s possible to deliver on infrastructure”, said Udoma.

“If we don’t grow the economy we can’t get the resources to do the development and transformation. The human beings who are at the core of development we have to invest in them.”

Responding to question on government penchant for borrowing, he said:”Borrowing was critical when we were short of funds to bring the country out of recession. And that borrowing was directed at capital projects and it worked. And that is why you see activities in Lagos- Ibadan railways. That is why you see Lagos, Kano terminals are being finished. That is where the money went into. The borrowing was necessary and essential, and it was borrowed for infrastructure. However, that level of borrowing we are taking it down because as revenue picks up, we rely less on borrowing”.

Though the minister assured that the MTEF document will be passed to the National Assembly by end of October and the budget in November, he regretted January to December calendar had yet to be met.

According to him, “January to December budget cycle is what this administration believes in, but as an election year we do not envisage National Assembly to pass the budget on time. This might not be the ideal time for synergy but both National Assembly and Executive desire it.”