Experts: 2019 Budget Unsupportive of Economic Growth

As Nigerians continue to relish last week’s passage of the 2019 Appropriation Bill into law by the Senate, some financial analysts have said the budget may not support the growth of economy as expected.

The Senate had passed the budget last week after increasing it by N86 billion to N8.9 trillion, from the initial N8.8trillion the federal government had proposed to spend in 2019,while the projected revenue at N7 trillion and all budget assumptions were retained by the law makers.

But analysing the budget, analysts at Afrinvest (West Africa) noted that beyond unrealistic revenue estimates, their biggest worry was the federal government’s spending plans, which they said reflected lack of fiscal discipline and was unsupportive of growth.

According them, spending to gross domestic product (GDP) was weak at 6.4 per cent, while capital expenditure was still below recommended levels.

“In 2019, total recurrent expenditure is projected at N6.9 trillion, crowding out capital spending which is 30 per cent of total spending. The recurrent expenditure is split between non-debt and debt at 67.4 per cent and 32.6 per cent respectively.

“An estimated 63 per cent of non-debt recurrent expenditure is to be spent on FG’s payroll, which is likely to rapidly expand by 2020 when adjustments are made to reflect the recently passed minimum wage of N30,000 per month. Considering our estimated revenue of N4.1 trillion in 2019, projected debt servicing is elevated at 54.9 per cent of revenue.

“Finally, the total recurrent expenditure to our 2019 revenue estimate is 168.3 per cent, suggesting that FG’s fiscal position is untenable. While the FG projects fiscal deficit at N1.9 trillion or 1.4 per cent of GDP, our estimates of N4.8 trillion and 3.4 per cent respectively shows that this is likely to be worse than expected,” they said.

The analysts added that petroleum subsidies remain a drain on the limited resources.

According to them, Nigerian National Petroleum Corporation (NNPC), about $2 billion was spent on “cost under-recovery” or petrol subsidies in 2018.”

“Our estimate of $2.6 billion