FINANCE Minister Mrs. Zainab Ahmed on Monday listed the top 12 Ministries, Departments and Agencies (MDAs) with capital allocations in the N10.33 trillion Budget 2020.
She spoke at the public presentation of the 2020 Appropriation Bill, which was proposed to the joint session of the National Assembly last week by President Muhammadu Buhari.
Mrs. Ahmed also appraised this year’s budget and foreclosed the possibility of the government attaining 80 per cent revenue performance.
The top 12 are: Ministry of Works and Housing (N259.2 billion); Ministry of Power (N127.67 billion); Ministry of Transportation (N123.07 billion); Ministry of Education, including Universal Basic Education Commission (N162.74 billion); Ministry of Defence (N99.87 billion); Ministry of Health (N90.98 billion), Ministry of Agriculture and Rural Development (N79.79 billion) and Ministry of Water Resources (N78.34 billion).
Others are: Ministry of Humanitarian Affairs, Disaster Management and Social Development (N45.45 billion); Ministry of Aviation (N53.85 billion); Ministry of Industry, Trade and Investment (N41.34 billion) and Ministry of Science and Technology (N37.55 billion).
She, however, said there were key expenditures captured in the Medium Term Expenditure Framework (MTEF), but not in the 2020 Budget.
The minister said: “They are N61 billion for the Presidential Power Initiative, N1.22 trillion for federally funded projects in the oil and gas sector to be undertaken by NNPC on behalf of the federation.
“Others are: N272 billion as transfers to Tertiary Education Trust Fund (TETFUND) for infrastructure projects in tertiary institutions and N82.35 billion as transfer to Nigeria Sovereign Wealth Investment (NSIA) for Public Private Partnership/Presidential Infrastructure Development Fund (PIDF).”
She said that under-recovery of Premium Motor Spirit (PMS), referred to as fuel subsidy will gulp N450 billion in the proposed budget.
According to her, it was called ‘under-recovery’ because it was the cost of the Nigeria National Petroleum Corporation (NNPC) operation.
She said: “We have a provision for under-recovery of PMS in the sum of N450 billion. If you look at the Budget office website, it is in the fiscal framework, which is an annexure to the budget.”
The estimated revenue in 2020 of N8.155 trillion comprise oil revenue of N2.64 trillion, non-oil tax revenues of N1.81 trillion and other revenue of N3.7 trillion.
Other estimates are N556.7 billion for statutory transfers, N2.45 trillion for debt servicing and provision of N296 billion as sinking fund.
The 2020 budget is based on an oil production estimate of 2.18 million barrels per day, oil price benchmark of 57 dollars per barrel and an exchange rate of N305 to a dollar.
Mrs. Ahmed said recurrent (non-debt) spending was expected to rise by 11.28 per cent, from N4.39 trillion in 2019 to N4.88 trillion in 2020.
This, she said, would reflect in salaries and pensions, including provisions for implementation of the new minimum wage.
Ahmed said the overall budget deficit of N2.17 trillion represents 1.52 per cent of the Gross Domestic Product (GDP) and N1.64 trillion of it would be funded by both domestic and external borrowing.
According to her, the external sources will provide N850 billion, while domestic sources will provide N744.99 billion.
On the 2019 budget performance, she said: “As at half-year 2019, the Federal Government’s actual aggregate revenue was N2.04 trillion, which is 58 per cent of the prorata target. This includes: Oil Revenue of N900 billion (49 per cent performance); Company Income Tax (CIT) of N349.11 billion (86 per cent performance); Value-Added Tax (VAT) of N81.36 billion (71 per cent performance); and Customs Collections of N184.10 billion (100.47 per cent performance),” the minister said.
The overall revenue performance, she said, “is only 58 per cent of the target in the 2019 Budget largely because some one-off items such as the N710 billion from Oil Joint Venture Asset restructuring and N320 billion from revision of the Oil Production Sharing Contract legislation/terms are yet to be actualised. Fiscal deductions by NNPC for federally funded projects also exceeded target.”
The expected revenue for the year was put at N6.99 trillion but only N2.04 trillion was realised between January and June, thus leaving a revenue gap of 42 per cent when prorated against budgeted figures. In 2018, N7.16 trillion revenue was budgeted but only N3.96 trillion was realised. In order words, the budgeted revenue for 2018 fell short by 45 per cent.
On how revenue was earned this year, she said that oil revenue was N900 billion as against the budgeted amount of N3.68tn; while non revenue had N614.5bn as against budgeted N1.4 trillion.
She also said that the government earned independent revenue of N217.8 billion as against budgeted amount of N631bn while special levies generated N310bn as against budgeted amount of N12.9bn,
She said projected revenue for signature bonus, domestic recoveries, assets and fine, proceeds of oil assets ownership restructuring, grants and donor funding, dividend from Nigerian Liquified National Gas (NLNG), minerals and mining revenue among others, were yet to be actualised.
Spending on capital budget, the minister said, “has been prioritised in favour of critical ongoing infrastructural projects in the power, roads, rail and agriculture sectors.”
On the expenditure performance of the 2019 Budget, Mrs. Ahmed stated that “of the total appropriation of N8.92 trillion, N3.39 trillion had been spent by 30th June, 2019 against the prorated expenditure budget of N4.58 trillion. This represents 76 per cent performance.”
Debt service and the implementation of non-debt recurrent expenditure, notably payment of workers’ salaries and pensions, she said, were on track.
For the next fiscal year, the minister announced: “The aggregate revenue available to fund the 2020 budget is projected at N8.155 trillion (7% or N561.2 billion more than the 2019 Budget of N7.59 trillion).
“To promote fiscal transparency, accountability and comprehensiveness, the budget of 10 major GOEs will be integrated into the FGNs budget with effect from next year.
“In aggregate, 43.86 per cent of projected revenues is to come from oil sources while the balance is to be earned from non oil sources. Overall, size of the budget has been constrained by our relatively low revenues.
“Budget deficit is to be financed mainly by borrowing N1.649 trillion. If this amount, Domestic sources will account for N744.99 billion and Foreign sources (which will gradual shift away from commercial to more concessionary financing) will account for N850 billion.
“In 2020, the Federal Government spending (inclusive of GOEs/PT Loans) is projected to be N10.33 trillion. Recurrent (non-debt) spending expected to total N4.88 trillion (reflecting increases in salaries and pensions including provisions for implementation of the new minimum wage).
“Capital Expenditure (Inclusive of Transfers, GOEs Capital & Project-tied loans) as percentage of FGN Expenditure is 24%. At N2.45 trillion, debt service is 23.74% of target expenditure Provision to retire maturing bond to local contractors increased by 169.09% from N110 billion in FY2019 to N296 billion.
“To grow revenue in 2020, government plans to use its strategic revenue growth initiative by: closing legal loopholes; improve collections; collaborate with trading partners; manage performance; and achieve sustainable funding for the energy sector.
“Specifically, the government plans to close legal loopholes to update tax laws in line with best practices and also counter tax evasion. Leverage data and technology to modernise our ports and improve tax administration and closure of outstanding cases by the inaugurated Tax Appeal Tribunal (TAT)
“Improve data sharing and collaboration with data partners; Assess the fiscal implication of impending regional collaboration agenda including the Africa Continental Free Trade Agreement; proactively track the actualisation of budgeted revenues; reconstituted the Presidential Revenue Reconciliation and Monitoring Committee (PRMRC) to proactively monitor oil and non-oil revenues; Enhanced scrutiny of operating surpluses by BOF & OAGF; In the long term, seek to find a lasting solution for self-sufficiency in the energy sector, especially with regards to power and fuel.
In 2020, government will consider new excise on specific beverages, tax on digital economy, revisit VAT on airline tickets, etc. TIN database expansion; TIN unification across states via the JTB; migration to ITAS; incorporate informal and shadow economy into the tax and duties net; deepen the VAT database; extend VAT automation at source, where possible; extend withholding VAT to include Public Interest Entities (PIEs); carry out VAT reforms (input/output VAT) reverse/self charge VAT; deploy a single trade platform aimed at easing trade through trade touchpoints, whilst at the same time boost government revenues.
She also said that the government plans optimize TSA implementation; optimize the payment gateway system for government revenues; Move to a system of quarterly remittances of operating surpluses by Government Owned Enterprise (GOEs) and optimize GIFMIS for real time revenue reporting.”
The minister listed the projects to look out for in the 2020 Budget as: N67.17 billion for counterpart funding for Railway projects, including: Lagos-Kano (ongoing); Calabar-Lagos (ongoing); Ajaokuta-Itakpe-Aladja (Warri ) (ongoing); Port Harcourt- Maiduguri; Kano-Katsina-Jibiya-Maradi in Niger Republic (New); Abuja-Itakpe and Aladja (Warri)-Warri Port And Refinery Including Warri New Harbourm; Bonny Deep Sea Port & Port Harcourt and other rail projects.
“For health, N44.50 billion has been provided for the implementation of the National Health Act; N22.73 billion for GAVI/Immunisation; N4.8 billion Polio eradication initiatives; N815 million for the procurement of non Polio SIA Vaccine; N655 million for the procurement of kits and commodities for community health influencers; N2 billion for expanded midwives service scheme; N5.5 billion for counterpart funding including global fund/health; N4 billion for Procurement of RI vaccines and devices
She said: “Giving update on border closures which some experts said are already taking toll on businesses, the minister said the action was taken to avert collapse of local industry. She said the interest of country comes first, noting that, the boarders will not be closed for ever.
The minister said that the Federal Government has opened discussion with officials of Benin republic and Niger to resolve the issue.
On why adoption of Public Private Partnership (PPP) failed as a means of executing capital projects, she attributed the development to poor preparation of projects. .