Buhari presented N8.8trn budget - 9IJA TALKS

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Buhari presented N8.8trn budget

































President Muhammadu Buhari yesterday presented N8.83 trillion budget proposal for 2019 fiscal year to the joint session of the National Assembly. This estimate is N300 billion lower than the current budget.
The 2019 estimate was based on an oil production estimate of 2.3 million barrels per day and an exchange rate of N305 to a dollar.
The proposal was based on real Gross Domestic Product (GDP) growth rate of 3.01 percent and an inflation rate of 9.98 percent, with a total projected revenue of N6.97 trillion, about three percent lower than the 2018 estimate of N7.17 trillion.
Capital expenditure drops again
President Muhammadu Buhari places the 2019 Appropriation Bill on the table after his presentation to a joint season of the National Assembly in Abuja yesterday


The budget breakdown shows that N4.04 trillion (50.31 percent) was for recurrent expenditure and  N2.03 trillion representing (22.98 percent) allocated to capital projects.
Capital expenditure fell from 31.73 percent in 2017 to 31.50 percent in 2018, and drastically to 22.98 percent in the 2019 budget.
There was also the N492.36 billion for statutory transfers; N2.14 trillion for debt servicing, and N120 billion as a sinking fund.







How to fund the budget
The projected revenue comprised of oil revenue projected at N3.73 trillion, and non-oil revenue estimated at N1.39 trillion.
The estimate from non-oil revenue consists of N799.52 billion from company income tax; N229.34 billion from value added tax, and customs duties of N302.5 billion, the president said.
“We have reduced our expectations from independent revenue to N624.58 billion.
“Other revenues expected in 2019 include various recoveries of N203.38 billion; N710 billion as proceeds from the restructuring of government equity in joint ventures, and other sundry incomes of N104.1 billion,” he said.
The president explained that the total N8.83 trillion proposed expenditure for 2019 included grants and donor funds amounting to N209.92 billion.
Buhari said although the 2019 estimate was lower than the 2018 budget of N9.1 trillion, it was higher than the N8.6 trillion originally proposed by the executive to the National Assembly.
The budget deficit is projected to decrease to N1.86 trillion or 1.3 percent of the GDP in 2019 from N1.95 trillion projected for 2018.
“This reduction is in line with our plan to progressively reduce deficit and borrowings over the medium term,” he said.

N1.78trn for health, interior, education, defence
The budget‎ proposal showed that the ministries of interior, defence, education, and health got the lion’s share of N1.782trn.
The president said the interior would get N569.07billion, defence N435.62 billion, education N462.24 billion, and health N315.62 billion.

N305 billion for subsidy
President Buhari said N305 billion had been earmarked for petrol subsidy in the 2019 budget proposal.
“We have allowed N305 billion equivalent to one billion U.S. dollars for under-recovery by the NNPC (Nigeria National Petroleum Corporation) on Premium Motor Spirit in 2019.
“Let me take this opportunity to address and clarify the under-recoveries on petrol.
“In a period of economic challenges where purchasing power is weak, we must reduce some of the burden on Nigerians,” he said.
Their withdrawal left the NNPC as the sole importer of petrol, whose pump price remained capped at N145 per litre against a landing and supply cost of N185/litre.
Since then, the NNPC has been drawing from the Nigeria Liquefied Natural Gas (NLNG) dividend fund to cover the under-recoveries amounting to N40/litre in the importation of petrol.
So far, the NNPC has utilised 1.05 billion dollars or N320 billion of the fund to cover the under-recoveries, according to its Group Managing Director, Mr Maikanti Baru.
N65bn for Niger Delta amnesty, N10bn Northeast commission
The president said to maintain the peace in the Niger Delta, “the provision of N65 billion for the Presidential Amnesty Programme has been retained in the 2019 budget.
“Similarly, the sum of N45 billion has been provided for the North East Intervention Fund, as well as the sum of N10 billion Naira as take-off grant for the North East Development Commission.”
“The allocation to the Social Intervention Projects (SIP) has been retained at N500 billion, consisting of N350 billion recurrent and N150 billion capital. This reflects our continued determination to pursue inclusive gender-sensitive and pro-poor growth,” he said.

N1.712 trillion for local debts servicing
The central government is planning to spend N1.712 trillion to service local debts in 2019.
The amount represents 80 percent of the N2.14trillion proposed to service Nigeria’s domestic and foreign debts in 2019‎.
A balance of ‎N428 billion will be used to service foreign debts.
The amount to be spent on debt servicing for 2019 will outweigh what will be spent on capital projects.
While N2.14 trillion will be used for debt servicing, N2.031 trillion will be expended on capital expenditure.
The Debt Management Office (DMO) had in August said Nigeria’s total debts have hit N22.38 trillion (‎$73.21bn) as at June 2018.

To review N30,000 proposed minimum wage  
The president said there would be a review of the N30,000 proposed by a tripartite committee as the minimum wage in the country.
“Again, we have included provisions for the implementation of a new national minimum wage. To avoid a system crisis on the Federal Government and states, it is important to devise ways to ensure that its implementation does not lead to an increase in the level of borrowing,” Buhari said at the presentation.
“I am, accordingly, setting up a high-powered technical committee to advice on ways of funding an increase in the minimum wage and attendant wage adjustments without having to resort to additional borrowing,” Buhari said.
A bill to that effect would then be sent to the National Assembly alongside the report of the technical committee, the president said.

Budget too small to make impact – Expert
The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr Muda Yusuf yesterday the budget is too small to make an impact on the economy.
“The 2019 budget to GDP is just about 5 percent and this is economy of $450 billion or N113 trillion and we have a budget slightly above N8 trillion. Such budget is immaterial. It can’t make any difference,” he said.
He said there is a need to grow the budget and this can be done by broadening the tax base by targeting high net worth individuals and also attract more investment into the economy.
“Budget to GDP of other advanced economies like South Africa, for instance, is more than 30 percent to GDP ratio,” he said.
On the structure of expenditure, Yusuf said: “If you look at the recurrent expenditure to debt service, debt service is still very high at N2.14 trillion while recurrent expenditure is N4.04 trillion. This is N6.18 trillion, almost equal to the total revenue of N6.97 trillion the federal government is expecting in the year.”
Chief Executive Officer of FinHub Limited, Abiodu Ogunleye, however, said it was a good decision to narrow borrowing and think inwards on how to fund the budget.
He praised the decision of the federal government to shrink the 2019 budget deficit by 1.3 percent of GDP from the N1.95 trillion posted in 2018 to N1.86 trillion.
Ogunleye said the federal government would eventually find the way out of the woods by depending more on internally generated revenues to fund the budget and limited borrowing to only funds needed to fund critical infrastructure. LADOL is the first company in the whole of West Africa to meet this standard. This wholly Nigerian owned company continues to break new grounds and prove that Nigerian companies can lead the way and exceed international standards.
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The certification reflects the fact that LADOL’s success is built on hard work, consistency, long-term planning and sustainable business practices – all of which are reflected in the Company’s policies and procedures. The staff and management also believe in continuous learning, training and improvement.
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According to ISO, achieving 9001:2015 certification means that an organization has demonstrated the following:
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Being the first company in Nigeria to achieve the new ISO 45001:2018 Occupational Health and Safety Management certification and the only one to have both that standard, ISO 9001 and ISO 14001:2018 has placed LADOL among an elite category of companies which are internationally recognized for best practices.

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