President Muhammadu Buhari had yesterday predicted that the country’s economy may lapse into the second recession in four years, with the projected negative Gross Domestic Product (GDP) growth in the third quarter of this year.
Buhari, who disclosed this when he presented a N13.08 trillion budget proposal for the 2021 fiscal year to the joint session of the National Assembly, however, assured Nigerians that his government will do everything possible to get the country out of recession in 2021.
While the All Progressives Congress (APC) has commended the president for the presentation of the proposal, the opposition Peoples Democratic Party (PDP) caucus in the Senate has condemned it, describing the estimates as stale and uninspiring.
However, the President of the Senate, Dr. Ahmad Lawan; and the Speaker of House of Representatives, Hon. Femi Gbajabiamila, have promised a speedy passage of the estimates.
Buhari stressed that the economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by Coronavirus Pandemic.
The president explained that GDP growth declined by 6.1 per cent in the second quarter of 2020, adding that this ended the three-year trend of positive, but modest GDP growth recorded since the second quarter of 2017.
He, however, said: “I am glad to note that, through our collective efforts, our economy performed relatively better than that of many other developed and emerging economies.
“GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences. “However, we are working assiduously to ensure rapid recovery in 2021. We remain committed to implementing programmes to lift 100 million Nigerians out of poverty over the next 10 years.”
Buhari noted that the 2021 appropriation with the theme, “Budget of Economic Recovery and Resilience” is designed to further deliver on the goals of Economic Sustainability Plan.
The president said the exchange rate has been fixed at N379 per US dollar; while the GDP growth is projected at three per cent and inflation closing at 11.95 per cent.
He proposed an aggregate expenditure of N13.08 trillion, including N1.35 trillion spending by Government-Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion.
He said the 2021 budget deficit (inclusive of Government-Owned Enterprises and project-tied loans), is projected at N5.20 trillion, representing 3.64 per cent of the estimated GDP, slightly above the three per cent threshold set by the Fiscal Responsibility Act, 2007.
“It is, however, to be noted that we still face the existential challenge of Coronavirus pandemic and its aftermath,’ he said, adding: “I believe that this provides a justification to exceed the threshold as provided for by this law. The deficit will be financed.”
Buhari said based on the foregoing fiscal assumptions and parameters, total federally distributable revenue is estimated at N8.433 trillion in 2021; while total revenue available to fund the 2021 Federal Budget is estimated at N7.886 trillion, adding that this includes grants and aid of N354.85 billion as well as the revenues of 60 Government-Owned Enterprises.
He noted that oil revenue is projected at N2.01 trillion, while non-oil revenue is estimated at N1.49 trillion.
According to him, “As you will observe, the format of the 2021 Appropriation Bill has been modified to include budgeted revenues, no matter how small, for each MDA, to focus on internal revenue generation.
“Accordingly, I implore you to pay as much attention to the revenue side as you do to the expenditure side in the Planned 2021 Expenditure.”
The President explained that the budget deficit would be financed mainly by new borrowings totaling N4.28 trillion, N205.15 billion from privatization proceeds and N709.69 billion in drawdowns on multilateral and bilateral loans secured for specific projects and programmes.
He stressed further that the sum of N484.49 billion provided for Statutory Transfers in the proposal represent an increase of N56.46 billion (or 13 per cent) over the revised 2020 provision.
The president said statutory transfer provisions are Niger Delta Development Commission – N63.51 billion; North East Development Commission – N29.70 billion; National Judicial Council -N110.00 billion; Universal Basic Education Commission -N70.05 billion; Independent National Electoral Commission -N40 billion; National Assembly -N128.00 billion; Public Complaints Commission -N5.20 billion; Human Rights Commission – N3 billion; and Basic Health Care Provision Fund – N35.03 billion.
He said in order to enhance national security and human capital development, a major part of the 2021 recurrent cost estimate is allocated to paying salaries and overheads in MDAs providing critical public services.
To this end, the sum of N227.02 billion was budgeted for the Ministry of Interior; N441.39 billion for the Ministry of Police Affairs; N545.10 billion for Ministry of Education; N840.56 billion for Ministry of Defence; and N380.21 billion for the Ministry of Health.
The president revealed that the budget of the Ministry of Education has been increased by 65 percent to develop the education sector.