President Muhammadu Buhari has formally presented the 2019 budget proposal of N8.83 trillion at a joint session of the National Assembly on Wednesday 19, December 2018.The ceremony was presided over by Senate President Bukola Saraki (PDP: Kwara) who welcomed the President before inviting him to deliver his budget speech and lay the 2019 budget proposal.
It would be recalled that President Muhammadu Buhari had written to the National Assembly in a letter dated 12 December 2018 informing them of his intentions to present the 2019 budget proposal on Wednesday, 19 December 2018.
The 2019 budget proposal of N 8.83 trillion comprises of:
- Statutory transfers – N 492.36 billion;
- Debt service – N2.14 trillion;
- Sinking fund – N120 billion to retire certain maturing bonds;
- Non-debt recurrent expenditure – N2, 427, 665,113, 222 trillion; and
- Capital expenditure – 2.031 trillion
The 2019 budget proposal is also premised on the following assumptions:
- Oil benchmark price: $60 per barrel
- Oil production: 2.3 million bpd
- Exchange rate: N305/$1
- Inflation Rate: 9.98%
- Oil Revenue: 3.73 trillion
- Non-Oil Revenue and Other Sources: 1.39 trillion
In his budget speech, the President stated that the 2019 Appropriation Bill had been termed the “BUDGET OF CONTINUITY”, as it sought to continue on the achievements of previous budgets and deliver on Nigeria’s Economic Recovery and Growth Plan (ERGP).
His speech also highlighted the following:
Overview of Economic Developments
The President stated that the last three and a half years had been challenging within and outside the country with commodity prices from oil and non-oil sources being volatile. He mentioned that global trends in security, trade and politics in addition to domestic issues relating to exports; security challenges and devastating floods had impacted on the economy. However, he was optimistic that the economy had recovered from recession with six quarters of growth. Nonetheless, he emphasized the importance of consolidating efforts in agriculture, infrastructure and social investments and hoped for a better working relationship between the Federal Government and States on non-partisan lines, in view of States’ obligations to pay salaries and pensions.
Performance of the 2018 Budget
Speaking about the 2018 Budget performance, the President stated that 2018 Budget was based on a benchmark oil price of $51/b, oil production of 2.3 million barrels per day and an exchange rate of N305 to the dollar. Based on these, the Federal Government’s aggregate revenue of N7.17 trillion was projected to contribute to the 2018 Budget of N9.12 trillion while the projected deficit of N1.95 trillion (1.73 percent of GDP) would be financed from borrowing.
He also revealed a fall in forecasts in 2018, as the average oil production up to end of the third quarter was 1.95 mbpd, as against the estimated 2.3 mbpd for the entire year. However, the average market price of Bonny Light crude oil was higher (an average of $74 per barrel as at October) than the benchmark price of $51. As it stands, Federal Government’s actual aggregate revenue from the 2018 Budget is N2.84 trillion, which is 40 percent higher than 2017 revenue.
His speech highlighted that the overall revenue performance was only 53 percent of the target in the 2018 Budget due to some one-off items yet to be actualized now rolled into revenue items in the 2019. Budget. Of the total appropriation of N9.12 trillion, N4.59 trillion had been spent by 30th September 2018 against the prorated expenditure target of N6.84 trillion; representing a 67 percent performance while debt service and the implementation of non-debt recurrent expenditure, (payment of workers’ salaries and pensions) were on track. Despite the delay in the passage of the 2018 Budget on 20th June 2018, the Commander in Chief stated that the sum of N820.57 billion had been released for capital projects as at 14th December 2018 while capital projects not likely to be fully funded by year-end 2018 would be included in the 2019 Budget.
Proposed Expenditure from the 2019 Budget
The President explained that a total expenditure of N8.83 trillion (including grants and donor funds of N209.92 billion) is estimated for 2019. This provision is less than the 2018 FGN appropriated expenditure estimate of N9.12 trillion but higher than the N8.6 trillion originally proposed by the Executive Branch to the National Assembly for 2018. Additionally, he stated that the budget deficit was projected to decrease from the N1.95 trillion projected for 2018 to N1.86 trillion (or 1.3 percent of GDP) in line with the administration’s commitment to progressively reduce deficit and borrowings.
He also stated his administration’s commitment to addressing the issue of minimum wage by promising to send a Bill to the National Assembly on the matter. The President also revealed plans to set up a Technical committee to devise ways to ensure its implementation did not lead to an increase in the level of borrowing to avoid a fiscal crisis for the Federal Government and States. He promised that the work of this Technical Committee would be the basis of a Finance Bill that would be submitted to the National Assembly, alongside the Minimum Wage Bill.
Other major highlights from the key capital spending allocations in the 2019 budget include:
- 07 billion for the Ministry of Interior;
- 62 billion for the Ministry of Defence;
- 24 billion for the Ministry of Education; and
- 62 billion for the Ministry of Health.
Concluding his budget speech, the President called on the National Assembly to swiftly consider and pass the 2019 Appropriation Bill despite the current preoccupation with political activities as it was within in the larger interest of Nigerian citizens and the national economy to do so.
