*How FG can reduce borrowing – Lawan
President Muhammadu Buhari has presented a N16.39 trillion budget proposal for the 2022 fiscal year to the National Assembly.
The presentation of the Appropriations Bill 2022, was made at a joint session attended by members of both chambers of the National Assembly.
President Buhari arrived the House of Representatives Chamber where the joint session held at about 12:04pm.
The presentation which lasted for an hour ended at 1:05pm.
President Buhari, in his presentation, said the Appropriations Bill 2022, was tagged “Budget of Economic Growth and Sustainability.”
He said allocations to MDAs in the budget were guided by the strategic objectives of the National Development Plan of 2021-2025.
According to him, the plan includes diversifying the economy with robust MSME growth; investing in critical infrastructure; strengthening security and ensuring good governance; enabling a vibrant, educated and healthy populace; reducing poverty; and minimizing regional, economic and social disparities.
He added that defence and internal security would continue to be top priority for his administration.
“We remain firmly committed to the security of life, property and investment nationwide.
“We will continue to ensure that our gallant men and women in the armed forces, police and paramilitary units are properly equipped, remunerated and well-motivated” President Buhari said.
On parameters and fiscal assumptions of the 2022 Appropriations Bill, he explained that same was based on the 2022-2024 Medium Term Expenditure Framework and Fiscal Strategy Paper.
He said oil price benchmark was pegged at 57 US Dollars per barrel; oil production estimate at 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per day); Exchange rate at N410.15 per US Dollar; and Projected GDP growth rate at 4.2 percent and 13 percent inflation rate.
He stated that based on these fiscal assumptions and parameters, total federally-collectible revenue wasestimated at N17.70 trillion Naira in 2022.
Buhari explained further that while total federally distributable revenue is estimated at 12.72 trillion Naira,total revenue available to fund the 2022 Federal Budget was estimated at 10.13 trillion Naira, an amount which includes Grants and Aid of 63.38 billion Naira, as well as the revenues of 63 Government-Owned Enterprises.
According to him, Oil revenue was projected at 3.16 trillion, Non-oil taxes estimated at 2.13 trillion Naira and FGN Independent revenues projected at 1.82 trillion Naira.
He said out of the total expenditure of N16.39 trillion Naira proposed for the Federal Government in 2022, N768.28 is for Statutory Transfers of 768.28 billion Naira; N6.83 trillion is for Non-debt Recurrent Costs;and N4.11 trillion for Personnel Costs.
Others are N577.0 billion for Pensions, Gratuities and Retirees’ Benefits; N792.39 for Overheads; N5.35 trillion for Capital Expenditure, including capital component of statutory transfers; N3.61 trillion for Debt Service; and N292.71 billion Naira for Sinking Fund to retire certain maturing bonds.
He, however, emphasised that the expected total fiscal operations of the Federal Government would result in a deficit of 6.26 trillion Naira, an amount representing 3.39 percent of estimated GDP, which, according to him, is slightly above the 3 percent threshold set by the Fiscal Responsibility Act 2007.
In addition, the President disclosed that efforts were being made by his administration to partly support the realization of fiscal projections by reviewing the current tax and fiscal laws to produce a draft Finance Bill 2022.
It is our intention that once ongoing consultations are completed, the Finance Bill would be submitted to the National Assembly to be considered alongside the 2022 Appropriation Bill”, he said.
how to cut borrowing
President of the Senate, Ahmad Lawan, has said that for the deficit in the country’s budget to be drastically reduced, concerted effort must be made by the Executive and Legislature to explore alternative sources of funding to reduce borrowing.
The Senate President explained that such sources of funding can come by way of Public-Private Partnerships on infrastructural projects, as well as compulsory remittances of generated revenues by Ministries, Departments and Agencies of Government.
Lawan made this known on Thursday in a speech delivered during the presentation of the 2022 budget to the National Assembly by President Muhammadu Buhari.
He, therefore, insisted that the policy of zero allocation for MDAs that fail to remit revenues for the 2022 Appropriation must be sustained for positive results to be achieved.
Lawan said, “Your Excellency, generating and collecting revenues have remained major challenges in our quest for development.
“The recent efforts by the National Assembly as well as the Executive to challenge the revenue generating agencies is a step in the right direction.
“Equally important is the recent position taken by the Legislature and the Executive to insist on zero allocation for Ministries, Departments and Agencies (MDAs) that fail to remit/upload their revenues for the 2022 Appropriation.
“This saw an increase in the contribution of the MDAs by over N400 Billion.
“It is my view that MDAs can contribute to the Federation account much more than that. This policy should be expanded and deepen to cover more MDAs.”
Speaking further, he said, “Mr President, the need to enhance revenue generation and collection cannot be overemphasized.
“The level of budget deficit is high, and both the Legislature and the Executive should work to reduce this deficit through the availability of more revenues.
“I must commend the Senate and House Committees on Finance and the Ministry of Finance, Budget and National Planning for working together to improve the level of revenues for the government.”
“Mr President, we understand that due to paucity of revenue, the Federal Government has to resort to raising funds from foreign and domestic sources to provide infrastructure across the country. That is why, the National Assembly approved the requests for borrowing.
“The Commitment of the Federal Government in providing infrastructure across the country means that the funds must be raised one way or the other.
“Government should also explore other sources of funding its projects in order to reduce borrowing”, the Senate President advised.
On the timely consideration of the 2022 budget, Lawan said that the Ninth Assembly remains committed to sustaining the January to December budget timeline hitherto reverted to after its inauguration.
He recalled that the early passage of the 2020 and 2021 budget helped Nigeria to deal with the economic recession it faced as a result of the COVID-19 pandemic.
Baring his thoughts on the security situation in the country, Lawan advocated for adequate funding of security agencies in the 2022 budget.
“Mr. President, the security of lives and property of Nigerians is still a challenge.
“The National Assembly is ever willing to work with the Executive arm of Government to continue to work for better security for our citizens.
“The recent changes in the leadership of the armed forces is a clear testimony of the collaboration between the Legislature and the Executive to overhaul the security architecture for better outcomes in our fight against the myriads of security challenges.
“Mr President, the recent passage of the supplementary budget 2021 that appropriated over eight hundred billion naira to our security agencies is a commendable step in the right direction.
“Federal Government should therefore continue to provide more resources to our security agencies to sustain the gains made so far.”
The Senate President assured that the National Assembly would pass the 2022 Appropriation Bill before the end of this year.