By Joshua Elekwachi, Abuja
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed in Abuja on Thursday has assured that several measures are being instituted to improve government revenue and entrench a regime of prudence with emphasis on achieving value for money.
The federal government had proposed a budget of N13.08 trillion for 2021, and it was presented to the National Assembly by President Muhammadu Buhari.
The 2021 budget is N1.15trillion higher than the 2020 provision of N2.69trillionwith an aggregate of N3.85trillion budgeted for capital projects.
The Minister while making presentation on the budget breakdown explained that the 2021 budget is expected to reposition the economy on the path of recovery, growth and resilience.
She revealed that the impact of COVID-19 pandemic affected the economy which necessitated the president to present a reversed budget to the national assembly.
She expressed that is exposed to spikes in risk aversion in the global capital markets, which put further pressure on foreign exchange market as foreign portfolio investors exit the Nigeria market.
Speaking during a public presentation and breakdown of the highlight of the 2021 appropriation bill, she said the aggregate revenue available to fund the 2021 budget is projected at N7.89trillion (35 per cent more than the 2020 revised budget of N5.84trillion), adding that 60 government Enterprises have been integrated in the 2021 budget proposal.
According to her, government planned to source for funding of N13.08trillion 2021 budget, she noted that, an aggregate of 31% of projected revenues is come from oil related sources while 69 per cent is to be earned from non-oil sources to, adding that the budget size is constrained by relatively low revenue.
On the expenditure framework, the federal government aggregate expenditure inclusive of GOEs and project tied loan, is projected to be N13.08trillion, which is 21 per cent higher than revised 2020 budget. The recurrent (none-debt) spending, estimated to amount to N5.93 trillion, is 43.4 per cent of total expenditure, and 14.32% higher than 2020 revised estimate inclusive of increase in salaries and pension.
She said a total of N3.12 trillion has been projected for debt service is 23.88 per cent of total expenditure, 16.63% higher than 2020 revised budget, in addition is provision to retire maturing bonds to local contractors/ suppliers of N220bn is 1.68% of total expenditure. This reflects FGN’s commitment to offset accumulated arrears of contractual obligations during back over 10years.
On budget deficit, she said the overall budget deficit is N5.196trillion for 2021, representing 3.64 per cent of the GDP, she added that the budget deficit will be financed mainly from borrowings through, Domestic sources N2.14trillion, foreign sources N2.14trillion, multi-lateral/bi-lateral loan drawdowns N709.69billion and privatisation proceeds of N205.15billion.
She said, “The goal of fiscal interventions will be to keep the economy active through carefully calibrated regulatory/policy measures designed to boost domestic value-addition, de-risk the enterprise environment, attract external investment and sources of funding, etc.
“Improving the tax administration frame work to optimize government revenue is a major thrust of the Administration’s Strategic Revenue Growth Initiative (SRGI).
“We have included a Tax Expenditure Statement (TES) as part of documents accompanying the 2021 Budget to the National Assembly which seeks to dimension the cost of tax waivers/concessions, and evaluate their policy effectiveness. Tax expenditures (TEs) are currently estimated to (1) CIT N1.18tillion, (2) VAT N3.1trillion, (3) Customs Duties N347bn (4) VAT on Imports 64bn. Going forward, we will set annual ceilings on TEs to better manage their impact on already constrained government revenues.”
Meanwhile the Honorable Minister of State, Budget and National Planning, Prince Clem Agba while responding to questions from the participants explained that Defence Budget is larger than Education and others due to security concerns in the country
The Director General, Budget Office, Ben Akabueze in his remarks noted that the Federal Government is committed to returning the country to January to December budget cycle.