President Muhammadu Buhari
presented the 2019 budget to a joint session of the national assembly in Abuja
on Wednesday, despite initial challenges.
While presenting the budget, the
president presented the progress his administration had made in the last three
budgetary cycles, stating the recovery from recession, reduction in insecurity,
and the war against corruption as the some of the rewards of those years.
He also gave the details of the
2019 fiscal year as outlined by the budget.
Here are top seven highlights of
the 2019 and what it means for Nigeria and Nigerians in the coming year:
OIL BENCHMARK OF $60
Again, Nigeria is taking a risky
bet on crude oil prices by setting the budget benchmark for crude oil prices at
an optimistic $60 per barrel.
As at 2pm on Wednesday, when the
budget was being presented, Brent crude was trading at $57.20 per barrel —
$2.80 below the benchmark. But the president said reputable analysts have said
the prices will not continue on the downward trend in 2019.
If oil prices remain at current
state or falls in 2019, the proposed budget will incure more deficit and debts
for the country. For 2018 the benchmark was set at $51 per barrel. The average
price of crude was higher through the first three quarters of the year.
OIL PRODUCTION SET AT 2.3M BARRELS PER DAY
The president said crude oil
production has continued to increase within the country, stating that the Egina
project will add 200,000 barrels to Nigeria’s production.
Therefore, for 2019 budget, the
oil production benchmark was set at 2.3 million barrels per day, including
condensate. This was the case for 2018, but up until Q3 2018, actual production
has been 1.95m.
This also means a reduction in
estimated revenues for 2019 budget.
INCREASE IN MINIMUM WAGE
According to the president, N4.04
trillion or 50.31 percent has been earmarked for recurrent expenditure
Nigeria’s recurrent expenditure
has moved from N2.59 trillion in 2015 (under Goodluck Jonathan administration)
to N2.35 trillion in 2016 (President Buhari’s budget of change), N2.99 trillion
in 2017 and now N3.51 trillion in 2018.
With addition N900 billion for
recurrent expenditure, the budget reflects an increase in minimum wage as
agreed by the federal government and labour congresses.
“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 device
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.”
DEBT SERVICING OUTWEIGHS CAPITAL EXPENDITURE
According to the figures reeled
out by the president, the amount to be spent on debt servicing for 2019 will
outweigh what will be spent on capital projects.
The president estimates that
N492.36 billion will be spent on statutory transfers, and N120 billion as
sinking fund.
While N2.14 trillion will be used
for debt servicing, N2.031 trillion will be expended on capital expenditure.
Capex fell from 31.73 percent in
2017 to 31.50 percent in 2018, and drastically to 22.98 percent in the 2019
budget.
N300BN SMALLER THAN 2018 BUDGET
The budget is surprisingly
smaller than the 2018 budget, which was N9.1 trillion at presentation. This is N300
billion smaller than the 2018 appropriation bill. For an election year, this
was unexpected.
However, to keep inflation in
check, this may be a good idea.
SINGLE DIGIT INFLATION
Inflation has declined from 18.2%
in January to 11.28% in November, 2018, while foreign capital Influence has
also improved, with foreign reserves peaking at over $44 billion in 2018.
The president, during his
presentation, said inflaton rate is projected to fall as low as 9.98 percent in
2019 — despite the elections.
$1BN ON FUEL SUBSIDY
For the first time in the life of
his administration, President Muhammadu Buhari says the federal government is
setting aside $1 billion for fuel subsidies.
“We have allowed N305 billion,
equivalent to $1 billion for under-recoveries by NNPC on premium motor spirit
in 2019,” Buhari said.
“We will continue working to
bring it downwards, so that such resources are freed to meet the developmental
needs of our people.”
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