The 2020 budget proposal of N10.33 trillion presented to the joint sitting of National Assembly by President Muhammadu Buhari on Tuesday generated varied reactions on the floor of the Senate on Wednesday as the majority of the lawmakers faulted the budget proposals and projections.
Leading the debate was the Senate Majority Leader, Yahaya Abdullahi ( APC Kebbi North) who declared that the budget was defective and incapable of leading the economy out of its present doldrums.
Senator Abdullahi premised his position on several assumptions in the budget proposal which he noted were misplaced.
He declared that the capital budget of N2.14 trillion to GDP ratio of 2% was rather too small.
He equally faulted the crude oil production quota of 2.18 million barrels per day which he said did not take cognisance of the volatility of international spot market and unpredictability of disruptions of productions at the terminals in the Niger Delta region.
He said: ” The injection of this amount is a mere drop in the ocean and is incapable of stimulating the economy to higher growth, wealth creation and employment generation.
“An economic Growth Rate of 2.93% for a population of nearly 200 million, is only marginally above population growth rate at 2.6%, annually. The country’s depending on crude oil exports does not present a bright scenario for Nigeria’s healthy growth.
“The projections of increased Oil Production averaging 2.18 million barrels/day, in the medium term, are subject to very high risks that have had devastating consequences in recent times. Volatility, both at the international spot market and in the Niger Delta are factors that could make these expectations only tentative.”
The Senate Majority Leader further argued that the provision for debt servicing was too high and called on the federal government to avert its mind to a cheap source of borrowing, particularly offshore. He said high debt profile was a disincentive to growth in the real sector of the economy.
“The borrowing programme, projected at N1.7 trillion, on 60:40 ratio,(domestic:external), could be a good starting point but there are lots of foreign loan sources with reasonable concessionary terms that government should explore to further whittle down the ratio, say to 30:70, in favour of external sources.
“Relating directly to the above is the case of Debt Servicing burden. The logic is self-evident that seeking cheap funds abroad will reduce the burden of borrowing to repay huge domestic debts. This could undermine growth by denying the real sector access to cheap domestic loans. As it stands, the cost of domestic borrowing is becoming too high.
“The continued pursuit of CBN’s restrictive Monetary Policy in the face of a clear economic necessity to reflate the economy, particularly by ensuring cheap money to power the real sector of the economy, is still baffling.
” I have on the floor of this chamber, repeatedly called for the realignment of the country’s monetary and fiscal policies to ensure the right structural momentum in the economy.
” When viewed in terms of per capita, the 2020 Capital Expenditure of N2.46 trillion, is paltry. The pace of funds releases to the MDAs in the 2019 budget is contrary to efforts to strengthen the country’s full recovery from the recent recession.
“The projected high deficit of N2.18 trillion for 2020 is a direct function of the economy-wide revenue shortfalls, as well as the choice and cost of borrowing. Government, particularly the collecting agencies, must improve on their collection capacity. But to do this, there must be robust investments in the real sector so that it could grow to earn taxable revenues.
” The capital budget to GDP ratio is too small. It is just 2 per cent of the GDP. This is a very low figure indeed. And when we look at as an issue of investment it is a mere drop in the ocean. Therefore, incapable of stimulating the economy to a higher growth trajectory. That has been the problem of the national economy for more than 30 years.
“We have been tethering on the edge, any small disturbance either in the domestic or international scene will bring economic crash.
When we realize the need to diversify the economy away from oil we also refused to accept the fact that we have to change our approach to revenue generation and even approach to budgeting.
“Debt service as a Percentage of Capital Expenditure is still high, while debt service as a Percentage of Revenue should be diminishing, only if we dedicate ourselves to raising more revenues by investing in the real sector to grow the economy and boost employment and productivity; broadening the tax base in order to capture more revenue sources.”
In his contribution, Senate Minority Leader, Enyinnaya Abaribe ( PDP Abia South ), equally faulted the budget projections.
He dismissed the document as a budget of taxation. He said the debt servicing component was higher than capital expenditure with no window for job creation.
He said: “Let me thank the leader for making my job very easy. I counted the number of times he mentioned low in his speech 15 times, saying that everything is low. Our leader, I want to draw your attention to the president’s speech because we are debating the general principles of the budget. In every budget speech what we normally see is that they will give it a name. Last year it was budget of consolidation. So this year I was waiting to see what was going to be the nitty-gritty of the budget and I saw that there were many things that were put and jumbled together, a budget of fiscal consolidation, investing in critical infrastructure, incentivising the private sector enhancing and so forth. In other words, putting everything together like that reminds us of what Shakespeare said, full of sound and fury signifying nothing.
“I want to suggest the name to those who wrote this; that this is nothing but a budget of taxation.
” This is a budget that is based on taxation, it is based on 7.5% increase on VAT and several other increases.
“Following the lead of Senate leader who mentioned 15 lows. The biggest low that we have is the fact that how would you talk about job creation when you do not invest in what would create jobs? Debt servicing as a component is higher than capital expenditure, N2trillion for capital expenditure, N2.4 trillion for debt servicing. The projected growth as read by the President is 1.9% less than the population growth of 2.6%. So if you look at it globally we are still struggling that is why I was very happy when the senate leader said we may have to take over and redirect the economic policy of this government having seen that they have not done anything that they have failed. ”
Senator Jibrin Barau ( APC Kano North), in his contribution, said ” the budget is realistic and will facilitate rapid development across the various sectors.
” This budget in terms of revenue projections and proposals on expenditure , are very realistic and achievable.
” On the template of revenue generation , as lawmakers , we need to join the executive in realising the projected N8.155trillion through thorough oversight functions on all the relevant revenue-generating agencies.”
Former Benue state governor and senator representing Benue Northeast, Gabriel Suswam raised concern over the crude oil production ceiling and price benchmark. On the latter, he accused the Nigerian National Petroleum Corporation(NNPC) of lack of transparency
He said:” Two assumptions tare critical to this budget. The first is the assumption on oil prices. I know that our people were very l happy when there seem to be a little problem in the middle east with Iraq which will lead to a hike in oil price. Which means our projections for the oil price may also be off the mark, second one is our projections for the production levels daily. Last year the average production level was 1.8m barrels per day why don’t we keep it there why must we go to 2.1m only to be disappointed at the end of the day?
“Mr President, I know that you have promised to work with the executive, that you are going to work very well with the executive to pass the budget but I plead with my colleagues look at the facts because you cannot run away from facts and the fact say this is not a sustainable budget. The fact also tells us that where we are going if we need a change we must be able to look at the critical fundamentals of this budget speech and make adjustments.”
Other contributors like Senators George Sekibo ( PDP Rivers East), Olubunmi Adetunbi ( APC Ekiti North ) toed the line of the Senate Leader in picking holes in the budget proposals, while others commended the executive for proposals and projections made .
The President of the Senate, Ahmad Lawan acknowledged the brilliant presentations of his colleagues but claimed that some of their submissions were ” also laced with so many inaccurate statistical information but again you are entitled to your opinions.”
The budget debate is expected to continue tomorrow, Thursday, 10th of October, 2019.
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