The National Assembly on Wednesday commenced the debate on the general principles of the 2019 budget with majority of the lawmakers expressing reservations in the ability of the fiscal document to tackle the nation’s socio-economic problems.
While some senators condemned the borrowing plans of the Federal Government and the huge sums proposed to service the existing foreign loans, some members of the House of Representatives called for job creation, especially through the Social Investment Programme of the Federal Government.
Some finance experts and economic groups such as the Lagos Chamber of Commerce and Industry, Professor of Economics at the Olabisi Onabanjo University Ago-Iwoye, Ogun, Sheriffdeen Tella; the Lead Director, Centre for Social Justice, Eze Onyekpere, and the Head of Tax and Regulatory Services at PricewaterhouseCoopers, Taiwo Oyedele, also faulted the revenue framework upon which the 2020 budget was predicated.
President Muhammadu Buhari on Tuesday proposed the highest allocation of N262bn to the Ministry of Works and Housing, just as Power, Transportation and Defence followed with N123bn, N112bn and N100bn, respectively in the 2020 budget estimates presented to the National Assembly.
The analysts who spoke to our correspondents during separate telephone interviews said with the revenue challenges facing the country, it might be difficult to fully implement the budget.
Senate, Reps begin debate on budget
The Senate on Wednesday commenced debate on the 2020 Appropriation Bill with some senators drawing the attention of the executive arm of government to certain areas that needed some tweaking to enhance the economy.
One of such lawmakers, the Senate Leader, Senator Yahaya Abdullahi, bemoaned the amount allocated for the implementation of capital projects.
According to him, the N2.14tn proposed as capital expenditure was insufficient to stimulate the economy along a trajectory that could guarantee growth.
Abdullahi, who kick-started the debate, said a critical analysis of the budget clearly showed that the revenue to Gross Domestic Product was too low and could affect the implementation of the budget if passed as presented.
He said, “The major problem that we have is that the economy is very short of revenue. We have an economy with a GDP of about N140tn out of which we can only get about 10 per cent or less. Now, when you look at the budget and the GDP ratio, it is very low. The total Federal Government revenue is N8.155tn. If you add the deficit, the budget comes to about 10.7tn.”
The Senate Leader, however, noted that the country had done well with inflation by bringing it down from 18.72 per cent to around 11.22 per cent.
Abdullahi said the issue of economic policy should not be left to members of the executive arm of government alone to handle, adding, “We have to think out of the box from this chamber to make the relevant laws in order for this economy to generate revenue.”
The Minority Leader, Senator Enyinnaya Abaribe, quoting the late poet, Williams Shakespeare, described the budget proposal as “a pen full of sound and fury signifying nothing.”
“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 jumbled together.
“They call it 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, ‘a pen 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. It is based on 7.5 per cent increase on VAT and several other increases,” he added.
The President of the Senate, Ahmad Lawan, however, cautioned his colleagues that the budget was not as bad as being projected.
“That is a brilliant presentation but also laced with so many inaccurate statistical information but again, you are entitled to your opinion,” Lawan told Abaribe.
Other senators, in their various contributions admitted that the nation’s economy was not doing well at the moment and called for legislation to involve them in the management of the economy.
Senator Gabriel Suswan said policies that would further contracted the economy were contained in the budget and condemned the introduction of 2.5 per cent increase in VAT. He said “it would slow down the economy.”
The Chairman of the Appropriation Committee, Jibrin Barau, said the budget proposal was a deliberate plan to move from the non-oil revenue.
Senator Ike Ekweremadu said the President had done his job and that it was left for the lawmakers to adjust the proposal where necessary.
N305 exchange rate unrealistic – LCCI
The LCCI though commended the return to the January – December cycle for the budgets, saying it would make for easy planning, it described as unrealistic the exchange rate assumption of N305 to the dollar.
The LCCI, which spoke through the Director-General, Muda Yusuf, said it was difficult to justify this assumption, especially when the country’s earnings were declining.
He said, “The key assumptions underpinning the budget are realistic except for the exchange rate assumption of N305 to the dollar. This is one assumption that is difficult to justify, especially at a time when declining revenue has become a major issue both for the government and the citizens.”
The LCCI also noted that from the total budget size of N10.3tn having a recurrent component of N4.88tn and debt service of N2.45tn, there was not much left for infrastructure development.
Yusuf said, “Debt service commitment and recurrent spending are beginning to crowd out capital expenditure. This scenario is not in alignment with the aspiration to build infrastructure and a competitive economy. Debt service of N2.46tn is more than the capital budget of N2.14tn.”
SOURCE: PUNCH NG
