Election to further delay passage of the 2019 appropriation bill

ANALYSTS AT UNITED CAPITAL have raised further concerns about the expected untimely passage of the 2019 appropriation bill, owing to the prioritisation of the coming elections instead of the state of the Nigerian economy.

The market analysts said, “Beyond the budget proposal, we believe effective implementation is of utmost importance, which is usually dragged by the late passage. However, as Nigeria heads into an election year, we do not expect a speedy passage of the appropriation bill”

The Nigerian fiscal environment has continued to suffer the recent debacle of late passage of the appropriation bill for varying reasons, be it, the clash between the presidency and the legislative arm, or issues of budget padding,

Just before the commencement of the yuletide season, the President of Nigeria, Mohammadu Buhari presented the 2019 appropriation bill to the National Assembly with expenditure and revenue estimates in the budget came in at N8.8 trillion and N6.9 trillion respectively, implying a deficit of N1.9 trillion,

A further breakdown of the proposed expenditure showed that non-debt recurrent spending, statutory transfers, and debt servicing account for 76.0 percent of the total proposed expenditure while the much-needed capital expenditure takes a paltry 23.0 percent. From a wider perspective, the sum of all recurrent expenditure lines almost entirely offset the revenue target of N6.9 trillion, suggesting that CAPEX spending will be financed by debt.

As in the 2018 budget, the budget is cloaked in lofty assumptions ranging from oil production target of 2.3mbpd despite OPEC’s cuts, an inflation rate of 9.9 percent amid minimum wage expectations and a GDP growth forecast of 3 percent.

The United Capital analysts also pointed out the urgent need for the economy to be diversified from crude oil exportation and the growth of various revenue sources.

“Overall, the budget presentation draws our mind to the urgent need to not only diversify and grow revenue sources because a drop in oil price can send the Nigerian economy down the recession lines once again, but there is also a need to moderate cost of governance and judiciously boost allocation for CAPEX spend to reach the citizens,” they said.