Budget disparity calls for urgent need to deal with debt burden, says Uwaleke
U C H E UWALEKE, A PRO FESSOR OF FI NANCE and capital markets at the Nassarawa State University, has called on the Federal Government to pay urgent attention to the debt burden of the country following the signing of the revised 2020 federal government budget in which provision made for debt service is higher than what was made for the country’s entire spend on capital expenditure.
President Muhammadu Buhari signed a budget of N10.8 trillion on Friday following a revision of the original budget passed last year was made nonsense of by the impact of the Coronavirus pandemic and massive fall in the price of crude oil in the international market.
But Uwaleke’s attention had been drawn to the fact that while N2.3 trillion is the total allocation for capital expenditure, nearly N3 trillion has been appropriated for debt service.
“It is disturbing that total capital allocation of about N2.3 trillion is less than allocation to debt service of nearly N3 trillion. This underscores the need to find a lasting solution to the huge debt burden currently facing the country,” Uwaleke said in a note to Business A.M.
Besides paying attention to the debt budrden, university don also suggested a reduction in the recurrent expenditure, especially that of the Ministry of Defence which stands at over N700 billion.
He also thinks that a number of items in the budget are not particularly clear, citing the case of service-wide votes.
“I also think the Recurrent expenditure can be reduced especially that of the Ministry of Deaccess fense at over N700 billion. Another area requiring searchlight is the over N1 trillion service-wide votes with items like contingency of N15 billion, the same amount provided for in 2019 budget. There is also a provision for ‘International Sporting competition’ of N5 billion when it is obvious that many of such competitions won’t be holding this year due to COVID’19,” he stated in the note to Business A.M. on the signed budget.
Overall, he described the document as a budget of necessity, stating that the crude oil price and output benchmarks used reflect current realities. “The capital allocations also reflect government priorities with Works and Housing getting the largest share. Other sectors that received attention include Power, Transport and Agriculture.
“Relatively speaking Education and Health got larger allocations compared to last year. The Health sector in particular will also be the greatest beneficiary of COVID’19 intervention allocations,” he wrote.
He commended the Federal Ministry of Finance, Budget and Planning for its effort in ensuring that the country’s disjointed budget cycle is normalized, adding that what remains now is effective implementation of the budget in order to ensure that the economy does not experience any severe recession.
“To this end, the directive by the President to the Ministry of Finance to ensure that MDAs get at least 50% of their revised capital budget before the end of this month is highly commendable. If that happens, there is the likelihood that unlike previous years, the capital component of the 2020 budget could attain a substantial level of implementation,” Uwaleke concluded in his note.