Capital Expenditure Drops As Budget Increases To Record Size
President Muhammadu Buhari on Tuesday presented a budget with reduced plans for spending on infrastructural development to the National Assembly.
According to the spending plan proposed, N2.46trn will be released for capital expenditure.
This is 23.81 per cent of the N10.33trn the government hopes to spend in 2020.
PMB approved a capital expenditure intent of N2.93trn for 2019 in May.
This is a reduction of 9.03 per cent or N470bn from 2019’s spending plan of N2.46trn.
This year, the government hopes to spend N8.92trn in total with the N2.93trn capital expenditure being 32.85 per cent of the entire budget.
In the spending plan made to a joint session of the Nigerian Senate and House of Representatives, PMB said a Value Added Tax of 7.5 per cent will be priced into government’s revenue earnings for the forthcoming financial year as well.
By the expressed intent of the government, Nigerians will be paying more tax to pay salaries and not to provide much needed infrastructural upgrades.
President Buhari said, “The 2020 appropriation being presented today is predicated in the following parameters: Benchmark oil price: $57 production: 2.18m bpd FX: N305/$ proposed increase of VAT from five per cent to 7.5 per cent.”
The spending plan of the government in 2020 will also see N2.45trn spent on servicing government’s debt of over N20trn.
President Buhari indicated in his speech that the government will borrow N2.8trn to breach the deficit between anticipated revenue and intended expenditure.
This means the government believes it would be able to earn N8.53trn in 2020 but going by antecedents, this target might not be met.
Funds released for capital expenditure shows that in 2017, government provided N1.5trn for capital expenditure instead of N2.36trn.
In 2018, government funnelled out N1.74trn to contractors for infrastructural upgrades as against N2.87trn.
This implies a general inability to meet up with estimated revenue earnings.
President Buhari has however, proposed to give N125bn to the National Assembly and N110bn to the judiciary.
The legislature will also receive the customary N100bn for constituency projects.
The North-East Development Commission is expected to receive N37.83bn, while the Basic Healthcare Provision Fund will be credited with N44.5bn.
Other allocations include Works and Housing: N262bn, Power: N127bn, Transportation: N123bn, UBE: 112bn, Defense: N100bn, Zonal Intervention Projects: N100bn, Agriculture and Rural Development: N83bn, Water Resources: N82bn, Niger Delta: 81bn, Education: N48bn, Social Work: 30bn, FCT: 28bn.
The President said he hopes to pass the budget by January 2020 while the National Assembly promised to pass the budget by December.
They revealed that ministries, departments and agencies of government will begin defending their appropriation by October.