2020 Budget projectors unrealistic- Senators.
It’s a budget of taxation – Minority Leader.
Debt service percentage high, GDP ratio too small, capital expenditure paltry – Majority Leader Reps shutdown move to stop debate on estimates
By Henry Umoru & Tordue Salem
Some senators, yesterday, dismissed projections of President Muhammadu Buhari’s N10.33 trillion 2020 budget proposal as unrealistic. Senators, who shared the view, cut across the various political parties. A host of them said apart from the projections being unrealistic, the budget was enveloped in taxation at a time the level of poverty in the country was still very high.
The members of the Upper Chamber of the National Assembly spoke when they began debate on the general principles of the 2020 Appropriation Bill presented by President Buhari, on Tuesday. They spoke as Speaker of the House of Representatives, Mr. Femi Gbajabiamila, yesterday shutdown a move to stop debate on the budget estimates in the House. The senators did not hide their reservations as they lampooned the entire budget proposal, with some of them calling for increase in the oil price benchmark from $57 to $69 per barrel. Some took a swipe at the exchange rate of $305/naira, saying it was not realistic.
The purpose of the debate on the general principles of the budget, yesterday, was for the budget to pass through second reading. The debates will continue today as only 16 senators contributed to the debate yesterday. Today, 20 senators will speak.
Capital expenditure paltry – Yahaya, Senate leader
The tone for the discourse was set when the Senate Majority Leader, Senator Abdullahi Yahaya, All Progressives Congress, APC, Kebbi North presented the bill for consideration. Leading the debate, he fired the first salvo, saying: “The Capital Budget to GDP Ratio is rather too small (about 2% of GDP). The injection of this amount is a mere drop in the ocean and is incapable of stimulating the economy to higher growth, wealth creation and employment generation. “The projections of increased oil production averaging 2.18 million barreIs/day, in the medium term, are subject to very high risks that have had devastating consequences in recent times. Volatility, both at the international market and in the Niger Delta are factors that could make these expectations only tentative.” The Senate leader, who reviewed the allocation for capital development in the budget bill, said that “when viewed in terms of per capita, the 2020 Capital Expenditure of N2.46 trillion, is paltry” Senator Abdullahi who stressed that the projected high deficit of N2.18 trillion for 2020 was a direct function of the economy-wide revenue shortfalls, as well as the choice and cost of borrowing, said, “Government, particularly the collecting agencies, must improve on their collection capacity. But to do this, there must be robust investments in the real sector so that it could grow to earn taxable revenues. “Debt service as a Percentage of Capital Expenditure is still high, while debt service as a Percentage of Revenue should be diminishing.’’ The Senate leader advised the Federal Government ‘’to dedicate itself to raising more revenue by investing in the real sector to grow the economy and boost employment and productivity; broadening the tax base in order to capture more revenue sources; improving our transparency and reduce pilferage by intensifying the drive against corruption; and ensuring that there is security for economic operators, both local and foreign.” Speaking further, Yahaya, who lampooned the Central Bank of Nigeria, CBN, said: “The continued pursuit of CBN’s restrictive Monetary Policy in the face of a clear economic necessity to reflate the economy, particularly by ensuring cheap money to power the real sector of the economy, is still baffling. I have, on the floor of this chamber, repeatedly called for the realignment of the country’s monetary and fiscal policies to ensure the right structural momentum in the economy.”
It’s budget of taxation, assumptions unrealistic – Abaribe
Concurring, Senate Minority Leader, Senator Enyinnaya Abaribe, Peoples Democratic Party, PDP, Abia South, hailed the majority leader for making his job as the leader of opposition very easy. Describing the 2020 Appropriation Bill as that of taxation, Abaribe stressed that it was contradictory that President Buhari could talk about job creation when he had failed to invest in what should create jobs adding that “debt servicing as a component is higher than capital expenditure.’’ He noted that the projected growth as read by the President was 1.9% less than the population growth of 2.6%, saying: “So if you look at it globally, we are still struggling that is why I was very happy when the senate leader said we may have to take over and redirect the economic policy of this government having seen that the executive has not done anything.” According to Abaribe, the budget assumptions are completely unrealistic, and the Appropriation Bill is a budget of taxation based on 7. 5 per cent VAT and other increases. “The fact is that this is not a sustainable budget. The fact also tell us that where we are going if we need a change we must be able to look at the critical fundamentals of this budget speech and make adjustments.”
Exchange rate unrealistic —Alimikhena
In his contribution, Chairman, Senate Committee on Customs, Excise and Tariff, Senator Francis Alimikhena, APC, Edo North, noted that no budget was free of criticisms. However, he said that the projected exchange rate was not realistic, just as he said that the CBN cannot get realistic rate, adding that Nigeria as a country needed more money and that if the CBN fixes the rate, there will be more money to the country’s coffers. Senator Alimikhena said that he would hail the increase in the Value Added Tax, VAT if it will block leakages and the proceeds utilized for the Common Man, adding that Ministry of Works should be able to carry out serious work on projects with the money available to it, especially the completion of Okene- Auchi- Benin Road to serve the people of the South-South.
Allocations to education, health insufficient —Suswam
On his part, Chairman, Senate Committee on Power, Senator Gabriel Suswam (PDP-Benue North-East) described the budget as very ambitious as it was intended to address infrastructural deficit, said that the economy had contracted to a level that the senate needed to critically address some very “germane and pregnant issues. The legislator said he was worried about VAT increment. “I am worried about the area that talks about revenue. I am worried with that because Value Added Tax that had been moved from 5 per cent to 7.5 per cent is one of the sources that we tend to raise revenue, finance critical areas of education and the health sector. “In the same budget that we propose 2.93 Gross Domestic Product Growth, we have also taken policies that will further contract the economy. If we say that VAT will be moved from 5 per cent to 7.5 percent, the exemptions from the VAT are small because most of the aggregate economic activities are small business enterprises.” Suswam who explained that most of the small business enterprises would be unable to address the issue of 7.5 per cent VAT, said, “7.5 per cent VAT is on the high side and has exempted mostly food items.” On the sectoral allocations, Suswam who noted that the money for the education and health was insufficient, said that to address infrastructure from a wholistic point of view, “outside of roads and power; education and health should have also been enhanced.”
Allocation to Power, Works, Housing shows FG is serious —Barau Jibrin
In his contribution, Chairman, Senate Committee on Appropriations, Senator Barau Jibrin, APC, Kano North said that the sectoral allocation of N262 billion to Works, Housing and Power, N127 billion showed that government was serious in providing the necessary infrastructure to drive and sustain the economy. According to him, government was serious to actualise its long term objective of diversifying the economy.
Our job is to make necessary adjustments —Ekweremadu
Speaking, former Deputy President of the Senate, Senator Ike Ekweremadu, PDP, Enugu West, said he was pleased with the emphasis on road sector development and the marginal increase in allocation to Human Rights Commission. “These are indeed very commendable steps,’’ he said: “The President has done his best by presentation of the Appropriation Bill pursuant to Section 81 of the Constitution. Now the job is left with us to consider and make appropriate adjustments. We cannot blame the President or anybody else to fail in this responsibility of adjusting the proposal where necessary. Once the budget is passed, the rest is implementation.” According to him, in order to ensure full implementation of the budget, revenue generation must be emphasised and certainly not at the expense of ordinary Nigerians. Ekweremadu noted that there was the need to block all leakages, saying: “I am happy that the Federal Government is now clear on its position on IPPIS that Federal Government agencies on the civil service of the federation must be captured under IPPIS.” He further said that there was the need to show more interest in mineral sector development, adding, “We need to remove so much emphasis on oil and gas and see what we can do to take advantage of all the deposits of solid minerals in our country.”
Reps shutdown move to stop debate on estimates Meanwhile, Speaker Gbajabiamila blocked an attempt by a factional leader of People’s Democratic Party, PDP, Kingsley Chinda (Rivers), to suspend debate on the 2020 budget. The House had resolved yesterday to consider the budget proposal. However, as soon as a motion by the Leader of the House, Hassan Ado Doguwa (Kano-APC), was seconded by the Minority Leader, Ndudi Elumelu (Delta-PDP), for deliberations to commence on the money bill, Chinda cited Order 12 Rule 19 to oppose it. Chinda noted that Order 12 Rule 19 of the Standing Orders of the House, as amended, imposed on the President and his Minister of Finance the responsibility to avail the House of details of the budget before legislative consideration. “Order 12 Rule 19 of our Standing Orders, says the President or his Minister of Finnance, must lay before us, estimates or details of the financial requirements of the ministries and agencies (of government), but unfortunately, here, in this budget laid before us, those details are not provided by the President nor Minister of Finance, contrary to the provisions of Order 12 Rule 19,’’ he stated. But the speaker, who was unsettled in his chair while Chinda’s two-minute counter lasted, shut it down as soon as Chinda rounded off his submission. The speaker said: “I rule you out of Order!’’ and slammed the gavel to the applause of majority of the lawmakers. The speaker, before shutting down Chinda’s motion, explained: “Chinda, you are long enough in the House to know that details or general principles of the Budget are not debated during second reading. Therefore, I rule you out of order.’’ Over 105 committees of the House are expected to commence budget defence on the estimates of the budget, next week.
First Seen on Vanguard News, written by Urowayino Jeremiah.