BUDGET 2019: 5 Things You Need To Know
On Wednesday, December 19th, President Muhammadu Buhari, amid cheers and boos, presented the 2019 spending plan to a rowdy joint session of the national assembly.
So, here are5 things you need to know about the 2019 fiscal plan:
1. A total of 8.83 trillion naira is the proposed estimate for the 2019 expenditure.
2. The budget deficit is projected to decrease to 1.86 trillion naira or 1.3% of the GDP in 2019 from 1.95 trillion naira projected in 2018.
3. The proposed 8.83 trillion-naira 2019 aggregate expenditure comprises:
- Recurrent expenditure of 4.04 trillion naira.
- Debt service of 2.14 trillion naira.
- Statutory transfers of about 492.3 billion naira
- Sinking fund of 120 billion naira which will be used to retire obligations to local contractors.
- Capital expenditure of 2.071 trillion naira
4. The budget is based on a crude oil production of 2.3 million barrels per day and benchmark price of $60 per barrel.
5. The spending plan is also projected on an exchange rate of 305 naira to the dollar and at 9% inflation rate.
The 2019 spending plan of 8.8 trillion naira is not as ambitious as the record 9.12 trillion-naira budget which Mr. Buhari presented for 2018.
It's barely six months since the 2018 budget was signed into law and implementation is pegged at little over 15%.
During the presentation of the 2019 budget, Buhari said some of the capital projects in the 2018 budget will be rolled over to be accommodated.
Meanwhile, the fundamental challenge with the 2019 budget is the time factor.
With the Christmas holiday almost underway and the 2019 elections campaign on full throttle, it is highly unlikely that the national assembly members – most of whom are seeking reelection – will be able to sit before March 2019 to consider the budget for passage.
Even at that, the passage and implementation is much likely the job of whoever is elected in the February election.
Budget Still Much Dependent On Crude Oil
Other challenges with the budget is the oil production and price benchmark.
Take the oil production benchmark of 2.3 million barrels per day for example, despite the tranquility in the oil producing Niger Delta area, oil production barely reached 2 million barrels per day throughout 2018.
So, it remains to be seen how the government could easily ramp up production in the coming year, despite Nigeria joining the OPEC production cuts.
As for oil price benchmark of $60 per barrel, this could also be considered ambitious because as at 1400 GMT on Wednesday, the Brent crude traded at $56 per barrel, way below the projected $60 benchmark.
It cannot be ruled out that prices may go up, but government should do well to remember that prices have been on the decline since October this year when prices hit an all-time high of $78 per barrel before beginning the current decline.
The Political Power Play
Nigeria’s economy is not particularly in great shape. The economy grew by 1.81% in the third quarter of this year, the National Bureau of Statistics, NBS said last week.
And, in a separate data released days later, it said the inflation rate rose slightly in November to 11.28% compared with a year ago.
The economy also shed 9.9 million jobs as unemployment rose to 23.1% within the period under review.
Buhari’s main challenger in the election, former Vice President Atiku Abubakar has criticized Mr. Buhari for his handling of the economy and has promised to double the size of the economy to $900 billion by 2025 if elected.
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