Low capital release, utilisation rate, others threaten implementation of N8.92trn 2019 budget

President Muhammadu Buhari on Monday signed the 2019 Appropriation Bill of N8.92 trillion into law. The N8.92 trillion 2019 budget is N90.3 billion higher than the N8.83 trillion earlier presented before a joint session of the National Assembly in December last year.

However, there are concerns that the full implementation of the budget may be marred by low capital release, utilisation rate, among other factors. These concerns arise from a historical analysis of the implementation of previous budgets.

Checks by Businessday reveal that a large chunk of the budgetary allocation to Minis

tries, Departments, and Agencies (MDAS) of the Federal Government were not released in the past, while a small percentage of the released funds was eventually utilised by the MDAS.

Buhari, while speaking at the signing ceremony in Abuja on Monday, expressed his displeasure on the reduction in budgetary allocations by the National Assembly. He noted that this would make it difficult to implement projects targeted at diversifying the economy.

In the signed budget, N2.094 trillion was allocated to capital expenditure, recurrent expenditure got N4.055 trillion, statutory transfers N502 billion, the fiscal deficit was raised to N1.908 trillion, and special intervention fund N500 billion.

The budget was also calculated using an estimated crude oil price of $65 per barrel with 2.3 million barrels per day as the production volume.

Despite the increasing budgetary figures, previous budgets have been marred by poor implementation while the government continues to miss its revenue target.

The 2018 third quarter budget implementation report by the Budget Office attributed the poor implementation of the budget to the poor revenue outturn as oil production and exports remained below the budget estimates while the performance of the economy, though now improving, continues to impact negatively on non-oil revenue.

In the report, gross oil revenue of N4.08 trillion was realised representing a 28.59 percent drop in the target for the period and N1.2 trillion or 42.75 percent above the N2.85 trillion realised in the corresponding period in 2017.

While the gross non-oil revenue of N2.4 trillion was received in the first three quarters of 2018, this represents a shortfall of N918.27 billion or 27.63 percent below the estimate of N3.3 trillion.

Also apart from revenue shortfall, late release of funds to MDAS caused by bureaucratic bottlenecks has also hampered the implementation of previous budgets.

The negative effect of late release of budgetary funds will, like the previous budget cycles, manifest in sub-optimal implementation of the capital component of the budget.

For instance, out of N1.56 trillion released to MDAS for various capital projects and programmes in the 2017 fiscal year, only N1.44 trillion was utilised by the MDAS as of June 12, 2018 when the implementation of the budget ended.

Specifically, a total sum of N553.71 billion was allocated to the Ministry of Works, Power and Housing in 2017. Only N336.58 was released to the ministry to execute its projects for the year, while just N269.58 billion was eventually used. This represents 80 percent utilisation rate of the total amount received.

A similar trend of using a lower proportion of released capital budget was also observed in 34 other MDAS. However, only five MDAS including Federal Capital Territory Abuja, Communication Technology, National Salary and Wages, Code of Conduct Tribunal, and the Police Service Commission had 100 percent utilisation of their respective cash-backed funds.

Unlike the 2017 budget, the utilisation of funds released to MDAS in the 2018 budget was worse. Over N682 billion was allocated for the Ministry of Works, Power and Housing in 2018. Out of this amount, N122 billion was released as at the third quarter of the 2018 fiscal year and only N45 billion was spent, indicating 36.9 percent utilisation of the funds received.

Similarly, only N38 billion out of N603 billion assigned for the Transport Ministry in the budget was released. Of the amount, the ministry utilised N2.2 billion within the first nine months of 2018, making it achieve 5.8 percent utilisation of its released funds.

The Ministry of Agriculture recorded 33 percent utilisation rate; Education, 3.32 percent; Health, 7.36 percent; Science and Technology, 9.36 percent; while the Ministry of Niger Delta utilised nothing out of N5.81 billion capital release it received.

The Presidency spent N7.66 billion, representing 54.38 percent of the total N14.08 billion released to it, while interior ministry utilised N2.55 billion, implying 16.1 percent of N15.85 billion it got as at the third quarter of the 2018 fiscal year.

“Only the Public Complaints Commission had 100 percent utilisation of its cash-backed funds,” the Budget Office said in its budget performance report for the period.

Other MDAS which recorded more than 50 percent utilisation rate for the review period are Defence, Budget and National Planning and Office of the National Security Adviser.