The N8.8trn 2019 Federal Budget
In a big psychological and fiscal about-turn, the President said N305 billion or $1bn is earmarked for petrol subsidy in the 2019 budget. Buhari had for long denied the reality of petrol subsidy, which he saw as a PDP mega corruption avenue, and refused t
On Wednesday last week, many weeks behind schedule, President Muhammadu Buhari presented before a National Assembly joint session the Federal Government’s budget proposal for 2019. The N8.8 trillion naira 2019 budget is N300 billion less than the 2018 budget. The key assumptions of the budget are an oil production estimate of 2.3 million barrels per day; a $60 per barrel international oil price, an exchange rate of N305 to a dollar, real Gross Domestic Product [GDP] growth rate of 3.01 percent and an inflation rate of 9.98 percent. These are overly optimistic estimates, with current oil prices already far below this target, though they are expected to pick up. A 3% GDP growth rate also looks farfetched, given the economy’s snail-paced growth since it emerged from recession.
President Buhari projects a total 2019 revenue of N6.97 trillion, lower than 2018’s N7.17 trillion. N4.04trn [50.31%] is for recurrent expenditure while N2.03trn [22.98%] is for capital projects. The capital vote is the lowest in three years, having fallen from 31.73% in 2017 and 31.50% this year. N492.36 billion is for statutory transfers; N2.14trn for debt servicing while N120 billion is a sinking fund. Four ministries got the largest chunks of the budget. Interior Ministry got N569.07bn; Defence got N435.62bn; Education got N462.24 billion while Health would get N315.62bn in 2019. While the first two ministries are in charge of internal security and insurgency which are at present the country’s top problems, Education and Health are the two sectors most impactful to future growth and prosperity.
In a big psychological and fiscal about-turn, the President said N305 billion or $1bn is earmarked for petrol subsidy in the 2019 budget. Buhari had for long denied the reality of petrol subsidy, which he saw as a PDP mega corruption avenue, and refused to make budgetary provision for it. Instead, under his rule, the state-owned NNPC became the sole importer of refined fuel, which it sells at a fixed price of N145 per liter against the landing cost of N185. It has been making huge “under recoveries” as a result. This it financed by dipping into the LNG dividend account, to the tune of $1.08bn this year.
Other important elements of the 2019 budget include N65bn for the Presidential Amnesty Program in the Niger Delta; N45bn for the North East Intervention Fund; N10bn take-off grant for the North East Development Commission and N500bn for the Social Intervention Projects, SIP. N1.1trn is to service local debts while N428bn is to service foreign debt. The president also pledged to review the N30,000 minimum wage proposed by a tripartite committee and send a bill to the National Assembly.
Almost all of these critical budgetary measures got drowned because of the chaos that enveloped the joint session during the presentation. Some PDP House of Representatives members tried to disrupt the session by jeering at the president when he walked in. They repeatedly interrupted the president when he was outlining his regime’s achievements with yells of “lies.” In response, ruling APC MPs created a scene of their own by loudly cheering Buhari. The president himself added to the confusion when he flashed a 4+4 sign as he walked in.
All told, the atmosphere at the 2019 budget presentation was the most partisan and most chaotic in memory. We join well meaning Nigerians in condemning what happened as a show of shame and in urging all sides to show restraint and decorum next time. Meanwhile, we also urge MPs not to treat the budget in the same partisan manner but to place the higher interests of the country above all else and ensure a quick and smooth passage.