Buhari signs 2021 Budget of N13.588trn, Finance Act

Buhari signs 2021 Budget of N13.588trn, Finance Act
APC to PDP: Nigeria nowhere close to a failed State
President Muhammadu Buhari

…Deliver on targets or be sanctioned, Buhari warns revenue generating agencies

By Johnbosco Agbakwuru, Yinka Kolawole & Nkiru Nnorom

PRESIDENT Muhammadu Buhari, yesterday, signed the 2021 Appropriation Bill of N13.588 trillion as well as the 2021 Finance Bill into law.

He also issued stern warning to agencies of government saddled with revenue generation to work hard to meet their targets or face severe sanction.

Speaking at the signing ceremony that took place at the Council Chamber, Presidential Villa, Abuja, President Buhari hinted that he will soon send a borrowing plan to the National Assembly since the 2021 budget has deficit and in view of the amendments made to the executive proposals by the lawmakers, he would revert to them for amendments, virements or other necessary adjustments.

Commenting on it, economic analysts commended the timely passage of the Budget 2021,  but cited revenue shortage, insecurity and timely release of funds as challenges to effective implementation of the budget.

Meanwhile,  the Senate President,  Ahmad Lawan,  has assured that the National Assembly would approve any loan request made by the President in as much as it would be in the overall interest of the country.

Recall that the National Assembly had on December 21, 2020, passed the 2021 Appropriation Bill with an aggregate expenditure of  N13. 588 trillion.

The Appropriation Act is comprised of total Capital Supplementation of N1,060,751,051,650 and total Capital Expenditure of N4,125,149,354,222, Statutory Transfer stands at N496,528,471,273; recurrent Expenditure of N5,641,970,060,680 and Gross Domestic Product, GDP growth rate of three percent.

The National Assembly, which provided the sum of N3,324,380,000 trillion for debt servicing, increased the budget estimate by the sum of N505, 607,317,942 from the estimate of N13, 082, 420, 568,233 presented to the joint sitting of National Assembly by the President on October 8, 2020.

Speaking shortly after appending his signature to the documents, President Buhari said that in designing the 2021 Budget, the government deliberately chose to pursue an expansionary fiscal policy, reiterating that it will accelerate the economic recovery process, promote social inclusion and strengthen the resilience of the economy.

According to him, “We are intensifying our domestic revenue mobilization efforts so that we can have adequate resources to fund the 2021 Budget.  Revenue Generating Agencies, and indeed all Ministries, Departments and Government-Owned Enterprises, must work very hard to achieve their revenue targets, control their cost-to-revenue ratios, as well as ensure prompt and full remittance of revenue collections.

“Relevant agencies are to ensure the realization of our crude oil production and export targets.  Heads of defaulting agencies are hereby warned that they will be severely sanctioned.  I also appeal to our fellow citizens and the business community, at large, to fulfil their tax obligations promptly.

“As you are all aware, our economy recently lapsed into its second recession in four years. I mentioned during the presentation of the 2021 Appropriation Bill that we intend to use the budget to accelerate our economic recovery process, promote social inclusion and strengthen the resilience of the economy.

“All Ministers are to ensure that their supervised Ministries, Departments and Agencies achieve the objectives set for their sectors.”

On the plan to send a borrowing plan to the National Assembly, President Buhari said, “Being a deficit budget, the specific borrowing plan will be forwarded to the National Assembly shortly. I count on the co-operation of the National Assembly for a quick consideration and approval of the plan when submitted. I assure you that all borrowings will be judiciously applied towards growth-enhancing critical expenditures.

“I am aware of the changes that the National Assembly has made to the 2021 Executive Budget proposal. We will examine these amendments and, where necessary, will revert to the National Assembly with a request for amendment, virement or other appropriate adjustments to ensure that the core objectives of the Budget are accomplished.”

The President affirmed that the 2021 Budget was critical to the delivery of his administration’s legacy projects and therefore directed the Ministry of Finance, Budget and National Planning to put the necessary measures in place to realize the objective.

He said, “The 2021 Budget is very critical to the delivery of the legacy projects of our administration. To fully achieve our objectives, the effective implementation of the 2021 Budget is imperative.

“Therefore, I have directed that the Ministry of Finance, Budget and National Planning should adopt all necessary measures in this regard to achieve the objectives of the Budget, including the targeted release of capital votes.”

President Buhari directed relevant agencies to ensure the realization of the nation’s crude oil production and export targets, warning heads of defaulting agencies that they will be severely sanctioned where they come short.

He also appealed to citizens and the business community, at large, to fulfill their tax obligations promptly.

Speaking on the 2020 Budget performance, the President revealed that it currently stood at “an impressive rate” of 97.7 percent.

He said, “This commendable outcome underscores the importance of our efforts, together with the Legislature, to return to the discipline of a January-to December fiscal year. The Minister of Finance, Budget and National Planning will provide further details on the 2020 Budget’s performance, in due course.”

He also directed all relevant agencies of government to scale-up budget implementation monitoring and evaluation efforts, noting, “In this regard, we continue to count on the support of Civil Society Organizations and the general public, at large.”

The President explained that in spite of the adverse impact of the Coronavirus Pandemic (COVID-19) on the nation’s economy and the government’s revenues, the administration has made appreciable progress in the implementation of the 2020 Budget.

He said, “As at December 2020, we had released about N1.748 trillion out of a total of theN1.962 trillion voted for the implementation of critical capital projects, representing a performance of about 89.1 percent.

The President expressed hope  that in 2021, his administration would be able to significantly reduce the adverse impact of the COVID-19 Pandemic on the cost and availability of basic food items, as well as other key commodities, in collaboration with all relevant stakeholders.

“I also expect that the 2021 Budget will stimulate domestic economic activities and create employment opportunities, especially for our youths,” he said.

While commending the understanding, sacrifice and resilience of the people, both young and old, President Buhari said, “As a nation, we are currently confronted with diverse challenges at this time.

“I assure everyone that our hope and confidence of a greater future shall not be in vain. Let me conclude by commending the National Assembly, once again, for the steady support in safely steering our economy during these very challenging times. I remain committed to sustaining the partnership with the Legislature to jointly deliver on our mandate from our people.”

Responding to  the President’s plan to send a borrowing plan request  to the National Assembly to borrow money, the Senate President, Ahmad Lawan said, “I don’t think this is the right time to discuss this. But let me say that if we have to implement capital development in our country and we don’t have the funds readily available because we don’t have enough revenue, the alternative will be to look for another source of funding.

“We could go for Public, Private Partnership, we could go for borrowing. But I want to assure you that whatever request that will come to the National Assembly for borrowing, we must as a National Assembly ensure that such funds when borrowed, will be applied on capital projects for the development of the country.

“I want to assure you, that once it is in the interest of the people of Nigeria, the National Assembly will work on that. If however we have issues, then we will say so that we must apply such funds strictly on capital development of our country. When you are running a deficit budget, you have to make up for that shortfall somehow, somewhere and that is what happens in advance democracy.”

Also speaking on  debt servicing , Speaker of the House of Representatives, Rt. Hon. Femi Gbajabiamila said, “First of all,  for a country to develop and have an ambitious development plan, it’s almost inevitable that you borrow. What is important is: what are you borrowing for? How do you apply the borrowed funds?

READ ALSO: Buhari signs revised N10.8trn 2020 budget into law today

“It’s about the application of the borrowed funds. Is it for productivity or is it just for overhead and the rest of them? And that is where the National Assembly comes in. You left that out of Mr President’s statement. I heard him saying clearly that CSOs will also cooperate on this matter. Their conditions are precedent. He talks about transparency regarding the borrowed funds.

“So, those are the things we need to look out for. Where is this money going? Is it transparently and judiciously expended? And I believe the answer is clearly yes. If you don’t have money to inject into the system based on your revenue profile, and you want to develop, how do you do it?

“You are straight jacketed. It will affect everybody. Again, it’s a great question, but the answer is: where is this money going into? America borrows, everybody borrows, South Africa borrows. But they are borrowing towards something. And that is what we will do in 2021.”

Analysts highlight challenges to timely implementation

Commenting, economic analysts commended the timely passage of the Budget 2021,  but cited revenue shortage, insecurity and timely release of funds as challenges to effective implementation of the budget.

Speaking, Director General, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Amb. Ayo Olukanni, said the signing is hopefully a signal of the readiness of the government to do things as at when due.

Signing of the N13.5 trillion 2021 budget today by President Buhari is perhaps a reflection and signal from the President that things will be done as at when due and at the right moment in year 2021.

This is a welcome development which we hope will be applicable in all other areas as we contend with challenges in 2021. The real challenge however is timely implementation of the various provisions in the budget.

NACCIMA hopes that the respective MDA will also rise to the occasion both in the release of funds and in the implementation of the programmes and projects under the budget.

In this regard, projects that relate to development of infrastructure, energy, road, rail etc are of major importance. They should be given priority. This is against the background of our goal to work our way out of recession hopefully in Q1 of 2021.

Expressing similar sentiment, David Adonri, Managing Director/Chief Executive Officer, Highcap Securities hailed the early passage, but expressed doubt over the capacity of the budget to improve the economy owing to lack of implementation and the budget’s nature as a short-term fiscal measure.

“Early passage of the 2021 budget is good but judging from antecedents, its implementation may be a failure. Secondly, revenue shortage and insecurity may adversely affect its implementation.

“The budget is a short-term fiscal measure that may not materially improve the economy. The challenge is how to finance the budget deficit without further destabilizing the economy in 2021,” he said.

Also commenting, Ayodeji, Ebo, Senior Economist/Head, Research & Strategy, Greenwich Merchant Bank, described it as a positive development, saying that it would ensure that the January to December budget cycle is sustained for the second consecutive year.

This, according to him, would boost better budget implementation in 2021, needed to accelerate Nigeria’s economic recovery.

He, however, said that the implementation would be dependent on the government’s ability to achieve its revenue target from government owned enterprises to prevent a drag on the implementation of capital expenditure.

Vanguard News Nigeria

The post Buhari signs 2021 Budget of N13.588trn, Finance Act appeared first on Vanguard News.

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