2018: Budget of Consolidation

Budget of Consolidation. Our principal objective will be to reinforce and build on our recent accomplishments. Specifically, we will sustain the reflationary policies of our past two budgets. In this regard, the key parameters and assumptions for the 2018 Budget are as set out in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). These include:

a. Benchmark oil price benchmark of US$45 per barrel; b. Oil production estimate of 2.3 million barrels per day, including condensates; c. Exchange rate of N305/US$ for 2018; d. Real GDP growth of 3.5 percent; and e. Inflation Rate of 12.4 percent.

Federally-Collectible Estimates Federal Estimates Government Revenue

Based on the above fiscal assumptions and parameters, total federally-collectible revenue is estimated at 11.983 trillion Naira in 2018. Thus, the three tiers of Government shall receive about 12 percent more revenues in 2018 than the 2017 estimate. Of the amount, the sum of 6.387 trillion Naira is expected to be realised from oil and gas sources. Total receipts from the non-oil sector are projected at 5.597 trillion Naira.

Revenue

The Federal Government’s estimated total revenue is 6.607 trillion Naira in 2018, which is about 30 percent more than the 2017 target. As we pursue our goal of revenue diversification, non-oil revenues will become a larger share of total revenues. In 2018, we project oil revenues of 2.442 trillion Naira, and non-oil as well as other revenues of 4.165 trillion Naira.

Non-oil and other revenue sources of 4.165 trillion Naira, include several items including: Share of Companies Income Tax (CIT) of 794.7 billion Naira, share of Value Added Tax (VAT) of 207.9 billion Naira, Customs & Excise Receipts of 324.9 billion Naira, FGN Independently Generated Revenues (IGR) of 847.9 billion Naira, FGN's Share of Tax Amnesty Income of 87.8 billion Naira, and various recoveries of 512.4 billion Naira, 710 billion Naira as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of 678.4 billion Naira.

Proposed Expenditure for 2018

A total expenditure of 8.612 trillion Naira is proposed for 2018. This is a nominal increase of 16 percent above the 2017 Budget estimate. In keeping with our policy, 30.8 percent (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget.

We expect our fiscal operations to result in a deficit of 2.005 trillion Naira or 1.77 percent of GDP. This reduction is in line with our plans under the ERGP to progressively reduce deficit and borrowings.

We plan to finance the deficit partly by new borrowings estimated at 1.699 trillion Naira. Fifty percent of this borrowing will be sourced externally, whilst the balance will be sourced domestically. The balance of the deficit of 306 billion Naira is to be financed from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE).

The proposed 8.612 trillion Naira of 2018 Aggregate Expenditure comprises:

a. Recurrent Costs of N3.494 trillion; b. Debt Service of N2.014 trillion; c. Statutory Transfers of about N456 billion; d. Sinking Fund of N220 billion (to retire maturing bond to Local Contractors); e. Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).

Statutory Transfers

456.46 billion Naira was provided in the 2018 Budget for Statutory Transfers. The 5 percent increase over last year’s provision is mainly due to increases in transfer to Niger Delta Development Commission (NDDC) and the Universal Basic Education Commission (UBEC), which are related directly to the size of oil revenue.

Debt Restructuring

We are closely monitoring our debt service to revenue ratio. We shall address this ratio through our non-oil revenuegeneration drive and restructuring of the existing debt portfolio. Presently, domestic debt accounts for about 79 percent of the total debt. Our mediumterm strategy is to reduce the proportion of our domestic debt to 60% by the end of 2019 and increase external debt to 40 percent. It is noteworthy that rebalancing our debt portfolio will enhance private sector access to domestic credit. In addition, annual debt service costs will reduce as external debts are serviced at lower rates and repaid over a longer period than domestic debt.

Recurrent Expenditure

A substantial part of the recurrent cost proposal for 2018 is for the payment of salaries and overheads in key Ministries providing critical public services such as: a. N510.87 billion for Interior; b. N435.01 billion for Education; c. N422.43 billion for Defence; and d. N269.34 billion for Health. The allocation to these Ministries represent significant increases over votes in previous budgets.

Personnel Costs

Personnel costs is projected to rise by 12 percent in 2018. Although we have made substantial savings by registering MDAs on the Integrated Personnel Payroll Information System (IPPIS) platform, the increase is mainly due to provision for staff promotion arrears, and recruitments by the Military, Police Force and paramilitary agencies. Furthermore, I have directed agencies are not to embark on any fresh recruitment unless they have obtained all the requisite approvals. Any breach of this directive will be severely sanctioned.

Overhead Costs

Overhead costs is projected to rise by 26 billion Naira in 2018, a modest increase of about 12 percent reflecting inflationary adjustments. MDAs are required to adhere to government regulations regarding cost control.

Capital Expenditure

To consolidate on the momentum of the 2017 Budget’s implementation, many ongoing capital projects have been provided for in the 2018 Budget. This is in line with our commitment to appropriately fund ongoing capital projects to completion. By allocating 30.8 percent of the 2018 Budget to capital expenditure, the Federal Government is also demonstrating its strong commitment to investing in critical infrastructure capable of spurring growth and creating jobs in the Nigerian economy.

Key capital spending allocations in the 2018 Budget include:

a. Power, Works and Housing: N555.88 billion; b. Transportation: N263.10 billion; c. Special Intervention Programmes: N150.00 billion; d. Defence: N145.00 billion; e. Agriculture and Rural Development N118.98 billion; f. Water Resources: N95.11 billion; g. Industry, Trade and Investment: N82.92 billion; h. Interior: N63.26 billion; i. Education N61.73 billion; j. Universal Basic Education Commission: N109.06 billion; k. Health: N71.11 billion; l. Federal Capital Territory: N40.30 billion; m. Zonal Intervention Projects N100.00 billion; n. North East Intervention Fund N45.00 billion; o. Niger Delta Ministry: N53.89 billion; and p. Niger Delta Development Commission: N71.20 billion.

As I had previously indicated, we aim to consolidate on our achievements in 2017. We shall meet our counterpart funding obligations. We shall complete all ongoing projects. And we shall carry forward all strategic projects that were budgeted for but which we were unable to kick start due to liquidity challenges, late passage of the budget, prolonged contractual negotiations, and other matters.

Specifically, I would like to bring your attention to the following key projects and programmes that we are determined to implement in 2018:

a. N9.8 billion for the Mambilla hydro power project, including N8.5 billion as counterpart funding;

b. N12 billion counterpart funding for earmarked transmission lines and substations;

c. N35.41 billion for the National Housing Programme;

d. N10.00 billion for the 2nd Niger Bridge; and

e. About N300 billion for the construction and rehabilitation of the strategic roads mentioned earlier.

Consolidating on Intervention Programme the Social

This Administration remains committed to pursuing a gender-sensitive, pro-poor and inclusive growth. We are keenly interested in catering for the most vulnerable. Accordingly, we have retained the 500 billion Naira allocation to the Social Intervention Programme. Under the programme, 100 billion Naira has been set aside for the Social Housing Programme.

Government will also continue to implement the Conditional Cash Transfer (CCT) programme, as well as the National Home-Grown School Feeding programme in 2018. These initiatives are already creating jobs and economic opportunity for local farmers and cooks, providing funding to artisans, traders and youths, as well as supporting small businesses with business education and mentoring.

Regional Spending Priorities for Peace, Security and Development

To maintain peace and security in the Niger Delta for economic and social activities to thrive, the provision of 65 billion Naira for the Presidential Amnesty Programme has been retained in the 2018 Budget. In addition, the capital provision for the Ministry of Niger Delta has been increased to 53.89 billion Naira from the 34.20 billion Naira provided in 2017. This is to further support the development in the region. We will complete all critical projects, including the East-West Road, which has a provision of about 17.32 billion Naira in 2018.

Across the nation, and particularly in the North East region, our commitment to the security of life and property remains absolute. We will ensure that our gallant men and women in arms are properly equipped and well-motivated. The result of our efforts is evident in the gradual return to normalcy in the North East. It is in this spirit that I recently assented to the North-East Development Commission Bill that was passed by this Distinguished House. We expect that this development will consolidate on our ongoing efforts to combat insurgency, reintegrate Internally Displaced Persons and rebuild communities in the North East Region, which have been adversely affected by the insurgency.

Similar attention is being given to efforts

to reduce violent crime across the country. The Nigerian Army was recently deployed to combat the growing scourges of cattle rustling and banditry that have plagued our communities in Kaduna, Niger, Kebbi, Katsina and Zamfara States. We will also continue to arrest the incidence of Armed Robbery, Kidnapping and other Violent Crimes across our nation.

We have also increased our focus on cyber-crimes and the abuse of technology through hate speech and other divisive material that is being propagated on social media. Whilst we uphold the Constitutional rights of our people to freedom of expression and association, where the purported exercise of these rights infringes on the liberties of other citizens or threatens to undermine our National Security, we will take firm and decisive action.

In this regard, I reiterate my call for Nigerians to exercise restraint, tolerance and mutual respect in airing any grievances and frustrations. Whilst the ongoing national discourse on various political issues is healthy and welcome, we must not forget the lessons of our past. I trust that the vast majority of our people would rather tread the path of peace and prosperity, as we continue to uphold and cherish our Unity in Diversity.

CONCLUSION

Distinguished and Honourable Members of the National Assembly, you will recall that in my 2017 Budget Speech, I promised a new era for Nigeria and an end to the old ways of overdependence on oil revenues. The statistics and initiatives I mentioned clearly show that this new era has come and the old Nigeria is surely disappearing. We must, therefore, all work together to protect and sustain this CHANGE to create a new Nigeria:

a. A Nigeria that feeds itself; b. A Nigeria that optimally utilizes its resources; c. A Nigeria with a diversified, sustainable and inclusive economy.

Mr. Senate President, Mr. Speaker, Distinguished and Honourable Members of the National Assembly, this speech would be incomplete without commending the immense, patriotic and collaborative support of the National Assembly in the effort to move our great nation forward. I wish to assure you of the strong commitment of the Executive branch to deepen the relationship with the Legislature.

Nigeria is currently emerging from a very difficult economic period. If we all cooperate, and support one another, we can consolidate on our exit from the recession and firmly position Nigeria for economic prosperity. All the projects presented within this Budget have been carefully selected and subjected to extensive consultations and stakeholder engagements. As a Government, we are determined to bring succour to our people, improve their lives, and deliver on our promises to them. 2018 is a crucial year as we strive to ensure that we consolidate our successes and institutionalize the policies and practices that drove this turnaround.

I appeal to you to swiftly consider and pass the 2018 Appropriation Bill.

It is therefore with great pleasure and a deep sense of responsibility, that I lay before this Distinguished Joint Session of the National Assembly, the 2018 Budget Proposals of the Federal Government of Nigeria. I thank you most sincerely for your attention. May God bless the Federal Republic of Nigeria. Budget speech by President Buhari.