The administration also plans to finance the budget through new borrowings estimated at N1.699 trillion. Fifty per cent of this borrowing will be sourced externally, whilst the balance will be sourced domestically.
The Federal Government is also targeting N306 billion from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE) to finance the budget deficit.
The President made the disclosure yesterday while presenting a N8.612 trillion proposed budget for 2018, which he said will reinforce and build on the recent accomplishments of his administration.
The N8.612 trillion is an increase of 16 per cent on the 2017 budget.
Buhari, who presented the budget, tagged “Budget of Consolidation”, before a joint session of the National Assembly, said the proposed budget will also sustain the reflationary policies of 2016 and 2017 budgets and deliver on Nigeria’s Economic Recovery and Growth Plan (ERGP) 2018 – 2020.
In the budget speech that lasted for one hour two minutes, the President lamented the late passage of the 2017 Budget, which he noted has significantly affected its implementation.
He, therefore, appealed to the lawmakers to ensure to pass the budget by January 1, 2018, to enable the nation return to the January-December calendar.
“As you are aware, the 1999 Constitution authorized necessary Federal Government expenditures prior to the 12th of June, 2017 when the 2017 Appropriation Act was signed into law. This year, we have worked very hard to achieve an earlier submission of the Medium-term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), and the 2018 Appropriation Bill. Our efforts were to avail the National Assembly with sufficient time to perform its important duty of passing the Appropriation Bill into law, hopefully by the 1st of January, 2018.
“It is in this spirit that I solicit the cooperation of the Legislature in our efforts to return to a more predictable budget cycle that runs from January to December.”
Out of the N8.612 trillion, N3.494 trillion is for recurrent costs, N2.428 trillion is for capital expenditure (excluding the capital component of Statutory Transfers); N2.014 trillion is for debt service; N456 billion is for statutory transfers and N220 billion is for sinking fund (to retire maturing bond to local contractors).
The budget is predicated on an oil price benchmark of US$45 per barrel; with oil production estimate of 2.3 million barrels per day, including condensates; while the exchange rate fixed at N305/US$ and real GDP growth estimate of 3.5 per cent; and inflation rate of 12.4 per cent.
The budget is predicated on a deficit of N2.005 trillion, representing 1.77 per cent of GDP. “We expect our fiscal operations to result in a deficit of N2.005 trillion or 1.77 percent of GDP. This reduction is in line with our plans under the ERGP to progressively reduce deficit and borrowings,” he stated.
Total federally-collectible revenue is estimated at N11.983 trillion in 2018. The three tiers of government are to receive about 12 per cent more revenues in 2018 than the 2017 estimate.
Of the amount, the sum of N6.387 trillion is expected to be realised from oil and gas sources. Total receipts from the non-oil sector are projected at N5.597 trillion.
The government’s estimated total revenue is N6.607 trillion in 2018, which is about 30 per cent more than the 2017 target. There is also the projected oil revenues of N2.442 trillion, and non-oil as well as other revenues of N4.165 trillion.
Non-oil and other revenue sources of N4.165 trillion, include several items including: Share of Companies Income Tax (CIT) of N794.7 billion, share of Value Added Tax (VAT) of N207.9 billion, Customs & Excise Receipts of N324.9 billion, FGN Independently Generated Revenues (IGR) of N847.9 billion, FGN’s Share of Tax Amnesty Income of N87.8 billion, and various recoveries of N512.4 billion, N710 billion as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of N678.4 billion.
The president said: “We plan to finance the deficit partly by new borrowings estimated at N1.699 trillion. Fifty per cent of this borrowing will be sourced externally, whilst the balance will be sourced domestically. The balance of the deficit of N306 billion is to be financed from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE).”
He said the government is closely monitoring her debt service to revenue ratio. “We shall address this ratio through our non-oil revenue-generation drive and restructuring of the existing debt portfolio. Presently, domestic debt accounts for about 79 per cent of the total debt. Our medium-term strategy is to reduce the proportion of our domestic debt to 60% by the end of 2019 and increase external debt to 40 per cent,” Buhari told the lawmakers.
He listed the key capital sectoral allocations in the 2018 budget to include, Power, Works and Housing: N555.88 billion; Transportation: N26 3.10 billion; Special Intervention Programmes: N150 billion; Defence: N145 billion; Agriculture and Rural Development N118.98 billion; Water Resources: N95.11 billion; Industry, Trade and Investment: N82.92 billion; Interior: N63.26 billion; Education N61.73 billion and Universal Basic Education Commission: N109.06 billion.
Others include Health: N71.11 billion; Federal Capital Territory: N40.30 billion; Zonal Intervention Projects N100.00 billion; North East Intervention Fund N45 billion; Niger Delta Ministry: N53.89 billion; and Niger Delta Development Commission, N71.20 billion.
A substantial part of the recurrent expenditure for 2018 is for the payment of salaries and overheads in key ministries such as: N510.87 billion for Interior; N435.01 billion for Education; N422.43 billion for Defence; and N269.34 billion for Health.
The President disclosed that the government was working hard on the Ogoni Clean-up project, saying provision has been made in the 2018 budget for oversight of the project. “During the year, we engaged eight international and local companies proposing different technologies for the mandate. To enable us select the best and most suitable technology for the remediation work, we asked each company to conduct Demonstration Clean-up Exercises in the four local government areas of Ogoni land. These demonstrations were recently concluded and the results are being studied by the Governing Council of the Ogoni Clean-up Project.
“Although the project will be funded by the International Oil Companies, we have made provisions in the 2018 Budget for the costs of oversight and governance, to ensure effective implementation,” he disclosed.
He assured oil producing communities of the Niger Delta of the readiness of his administration to honour all agreements, saying the nation cannot afford to return to the ‘dark days of insecurity and vandalism’.
The President equally commended leaders of the Niger Delta for their continued support to the government.
“Our mutually beneficial engagement with oil producing communities in the Niger Delta contributed immensely to the recovery in oil production experienced in recent months. We would like to thank the leadership and communities in the Niger Delta for their continued support and to also reiterate our assurances that this administration will continue to honour our commitments to them. We cannot afford to go back to those dark days of insecurity and vandalism.
“We all want a country that is safe, stable and secure for our families and communities. This means we must all come together to address any grievances through dialogue and peaceful engagement. Threats, intimidation or violence are never the answer.”
The President was also excited about the nation’s economic growth.
On power sector, Buhari said “it still remains a work in progress”, lamenting that despite increased generation capacity, there are challenges of transmission and distribution networks.
He said government was working with the privatized distribution companies to see how to overcome this challenge.
On food security, the president said that a committee headed by Vice President Yemi Osinbajo had been inaugurated to check smuggling of food items across the country’s border towns.