On Tuesday, President Muhammadu
Buhari presented the 2020 appropriation bill of N10.33 trillion to the national
assembly.
The appropriation bill also
comprises statutory transfers of N556.7 billion, non-debt recurrent expenditure
of N4.88 trillion and N2.14 trillion of capital expenditure.
We bring you key other highlights
of the budget below:
WORKS GETS LION SHARE, NIGER
DELTA MINISTRY GETS LEAST
The ministry of works and housing
got the highest allocation among the ministries with N262 billion, followed by
ministry of power which has N127 billion, and transportation with N123 billion.
The social investment programmes
including the N-Power scheme and the school-feeding initiative among others got
N30 billion while the ministry of Niger Delta affairs got least allocation with
N24 billion (this is, however, aside the N62 billion budgeted for the amnesty
programme). You can check out other MDAs allocations here.
CAPITAL PROJECTS GET N2.46TRN
Buhari said the federal
government hopes to spend a total of N2.46trn on capital projects during the
2020 fiscal year, inclusive of N318.06 billion in statutory transfers.
“Although the 2020 capital budget
is N721.33 billion (or 23 percent) lower than the 2019 budget provision of
N3.18 trillion, it is still higher than the actual and projected capital
expenditure outturns for both the 2018 and 2019 fiscal years, respectively,” he
said.
PRIORITY FOR ONGOING PROJECTS
The president said the emphasis
of the 2020 budget will be the completion of “as many ongoing projects as
possible”, rather than commencing new ones.
“MDAs have not been allowed to
admit new projects into their capital budget for 2020, unless adequate
provision has been made for the completion of ALL ongoing projects,” he said.
“Accordingly, we have rolled over
capital projects that are not likely to be fully funded by the end of 2019 into
the 2020 Budget. We are aware that the National Assembly shares our view that
these projects should be prioritised and given adequate funding in the 2020
Appropriation Act.”
ESTIMATES BASED ON VAT INCREASE,
OVERHEAD COSTS AT N426.6BN
The 2020 appropriation bill is
proposed based on the planned increase of the VAT rate from 5% to 7.5%, while
the overhead costs are projected at N426.6 billion.
Buhari said the additional revenues
will be used to fund health, education and infrastructure programmes, with 85
percent going to states and local governments.
“Additionally, our proposals also
raise the threshold for VAT registration to N25 million in turnover per annum,
such that the revenue authorities can focus their compliance efforts on larger
businesses,” Buhari said, adding that this is to enable proper growth of
MSMEs.”
FISH, YAM AND BREAD AMONG ITEMS
EXEMPTED FROM VAT
Buhari said some of the items
which will be exempted from the VAT, in addition to the pharmaceuticals,
educational items, and basic commodities already excluded by the VAT act,
include brown and white bread, cereals, fish of all kinds, flour and starch
meals.
Others are fruits, vegetables,
roots (yams etc), herbs. salt, milk, meat and water.
BUDGET DEFICIT OF N2.18TRN, GDP
GROWTH RATE AT 2.93% AND N2.45TRN FOR DEBT SERVICE
The appropriation bill further
proposes a budget deficit of N2.18 trillion in 2020, including drawdowns on
project-tied loans and the related capital expenditure.
“This represents 1.52 percent of
estimated GDP, well below the 3 percent threshold set by the Fiscal
Responsibility Act of 2007, and in line with the ERGP target of 1.96 percent,”
the president said.
The president also said the federal
government is setting aside N2.45 trillion for debt service during the 2020
fiscal year, out of which 71 percent is to service domestic debt which accounts
for about 68 percent of the total debt.
He said there is an expected GDP
growth of 2.93% in 2020, “driven largely by non-oil output, as economic
diversification accelerates” with inflation expected to remain slightly above
single digits in 2020.
MDAS PROHIBITED FROM SETTING UP
NEW LIASON OFFICES
Buhari said he has directed the
stoppage of the salary of any federal government staff that is not captured on
the Integrated Payroll and Personnel Information System (IPPIS) platform by the
end of October 2019.
The current administration had
introduced the platform to help manage personnel costs among other reasons.
He added that the proliferation
of zonal, state and liaison offices by MDAs will no longer be tolerated as part
of efforts to “sustain our efforts in managing personnel costs.”
“All agencies must obtain the
necessary approvals before embarking on any fresh recruitment and any
contraventions of these directives shall attract severe sanctions,” he added.
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