President Muhammadu Buhari on Wednesday presented N8.83tn budget estimates to a joint session of the National Assembly for their consideration.
The 2019 national budget proposal is N300bn lesser than the N9.12tn, which was the size of the 2018 budget.
The President said the fiscal document was predicated on an oil production estimate of 2.3 million barrels per day and an exchange rate of N305 to a dollar.
He also proposed a Gross Domestic Product growth rate of 3.01 per cent and an inflation rate of 9.98 per cent.
The total projected revenue, according to the President, is N6.97tn, which is three per cent lower than the 2018 estimate of N7.17tn.
Buhari said the expected income consisted of oil revenue projected at N3.73tn and non-oil revenue estimated at N1.39tn.
He explained that the sum of N8.83tn was estimated as the total expenditure with N4.04tn being recurrent expenditure and N2.031tn as capital expenditure.
He said apart from being less than the 2018 appropriated expenditure estimate of N9.12tn, the proposed budget was higher than the N8.6tn originally proposed by the executive to the National Assembly for 2018.
He added that the budget deficit was projected to decrease to N1.86tn (or 1.3 per cent of GDP) in 2019 from N1.95tn projected for 2018.
The reduction, he explained, was in line with his government’s plans to progressively reduce deficit and borrowings.
He said, “The estimate from non-oil revenue consists of N799.52bn from company income tax; N229.34bn from value added tax, and customs duties of N302.5bn.
“We have reduced our expectations from independent revenue to N624.58bn.
“Other revenues expected in 2019 include various recoveries of N203.38bn, N710bn as proceeds from the restructuring of government equity in joint ventures, and other sundry incomes of N104.1bn.
“The budget deficit is projected to decrease to N1.86tn or 1.3 per cent of the GDP in 2019 from N1.95tn projected for 2018.
“This reduction is in line with our plan to progressively reduce deficit and borrowings over the medium term,” he said.
He said the 2019 budget proposal was intended to further place the economy on the path of inclusive, diversified and sustainable growth in order to continue to lift significant numbers of our citizens out of poverty.
He added that the underlying drivers of the 2019 revenue projections had been adjusted to reflect current realities.
The total revenue projected at N6.97tn (which is three per cent lower than the 2018 estimate of N7.17tn), he said, consisted of oil revenue projected at N3.73tn while non-oil revenue was estimated at N1.39tn.
FG to spend N305bn on subsidy in 2019
He said, “We have allowed for N305bn ($1bn) for under-recovery by the Nigerian National Petroleum Corporation on PMS (Premium Motor Spirit) in 2019. We will continue working to bring it downwards so that such resources are freed up to meet the developmental needs of our people.
“Let me also take this opportunity to address and clarify the under-recoveries or subsidy on petrol. In a period of economic challenges where purchasing power is weak, we must reduce some of the burdens on Nigerians.
“The problem with subsidies in the past is abuse and corruption. Today the government through the NNPC is the sole importer of PMS and, therefore, the under-recovery is from the NNPC’s trading account. This means the possibility of some marketers falsifying claims is removed.
“The estimate for non-oil revenue consists of N799.52bn from Companies Income Tax, N229.34bn from Value Added Tax and Customs Duties of N302.55bn.
“We have reduced our expectation from Independent Revenues to N624.58bn. Other revenues expected in 2019 include various recoveries of N203.38bn, N710bn as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of N104.11bn.’
The President added that the Federal Government proposed to service debt with N2.14tn, Statutory Transfers of about N492.36bn; and Sinking Fund of N120bn which would be used to retire maturing bond to local contractors.
Salary payment bulk of recurrent expenditure
The President said a substantial part of the recurrent cost proposal for 2019 would be for the payment of salaries and overheads in ministries providing critical public services.
He said N569.07bn had been set aside for the Ministry of Interior; N435.62bn for the Ministry of Defence; N462.24bn for the Ministry of Education; and N315.62bn for the Ministry of Health.
He added that the allocation to the ministries represented a significant increase over votes in previous budgets, underscoring government’s commitment to increase investment in national security and human capital development.
He added that the 2019 budget proposal was a product of “an extensive consultations and stakeholders’ engagements reflecting our belief that all sectors have a critical role to play in our journey towards sustainable and inclusive development”
Buhari raises hope on minimum wage
The President also explained that the increase in the recurrent expenditure component of the budget was done to take care of the proposed implementation of the new minimum wage.
According to him, a bill that will stipulate the exact amount of the new minimum wage to be approved by the National Assembly will soon be sent to them.
He said, “I am accordingly setting up a High-Powered Technical Committee to advise on ways of funding an increase in the minimum wage, and the attendant wage adjustments, without having to resort to additional borrowings.
“The work of this Technical Committee will be the basis of a Finance Bill which will be submitted to the National Assembly, alongside the Minimum Wage Bill.
“In addition, the Technical Committee will recommend modalities for the implementation of the new minimum wage in such a manner as to minimize its inflationary impact, as well as ensure that its introduction does not lead to job losses.”
Huge sums voted for social funds, N/E commission
Buhari said, “The allocation to the Social Intervention Projects has been retained at N500bn, consisting of N350bn recurrent and N150bn capital. This reflects our continued determination to pursue inclusive gender-sensitive and pro-poor growth.
“In addition, to maintain the peace in the Niger Delta, the provision of N65bn for the Presidential Amnesty Programmer has been retained in the 2019 budget. Similarly, the sum of N45bn has been provided for the North-East Intervention Fund, as well as the sum of N10bn as take-off grant for the North-East Development Commission.’’