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The Centre for Social Justice (CENSOJ) has expressed concern over the government’s revenue and funding options for the 2019 budget, which has been signed into law by President Muhammadu Buhari on Monday, noting that the government still faces stiff revenue generation options on the heels of Nigeria’s heavy reliant on oil revenue resources.
The President signed the N8.91 trillion budget into law in the early hours of Monday, at a ceremony held at the Presidential Villa in Abuja.
Following the signing, the CENSOJ noted that late approval and signing of the budget, coming the last days of the fifth month of the year for a budget that should have started in January was a major source of worry for Nigeria.
“For a country going through a period of economic stagnation marked by growth figures which are outpaced by population growth figures, a little more sense of timeliness and urgency on the path of the executive and legislature would have done the country a lot of good,” Eze Onyekpere, lead partner, CENSOJ, states in a statement.
On the revenue concerns, he states, “We see a central challenge in the realization of the revenue and funding needed to implement the 2019 budget against the background of the revelation by the Minister of Finance that only 55% of the 2018 projections were realised. This follows the trajectory in previous years where the federal government consistently failed to realise budgeted revenue. We are worried that despite the price of crude oil selling above the benchmark price in the last couple of years, we have hardly met the production target of 2.3million barrels a day.”
According to Onyekpere, “The recent disclosure that the country produces less than 2mbpd falls in line with the trajectory of this challenge. The dominance of oil in the revenue profile, as well as the relatively meagre revenue expected from the non-oil sector, compounds the revenue challenge.”
He states further that the proceeds from minerals and mining being the solid sector minerals are still very low despite overwhelming evidence of massive illegal mining, while revenue leakages from operating surpluses of scheduled MDAs, non-remittance and utilisation of accrued stamp duties are the order of the day.
To worsen the concern, Onyekpere says the executive has not taken steps for the review of Petroleum Production Sharing Contracts as recommended in various Nigerian Extractive Industries Transparency Initiative studies.
This will bring in additional revenue of not less than $1.6 billion every year. Also, the Petroleum Industry Bill is stuck in executive legislative bickering and this has stalled reforms in the oil and gas sector, which would have increased revenue available from oil and gas extraction.
Speaking further on revenue constraint, he said, “Increasing recurrent expenditure accruing from the increased public minimum wage will imply that we have to part fund salaries with borrowed money which is not sustainable either in the short, medium or long term. Also, continuing subsidies on petrol will compound our funding crisis.
“The clamour for the reduction of the cost of governance was not taken on board in the approved budget as the key cost centres (legislature and executive) maintained their very high running costs. Apparently, the Nigerian public has only been fixated with the cost of running the National Assembly to the neglect of the heaviest cost centre.”
On the expectations from the budget as the President got sworn in today, he states, “The implementation should therefore signal a departure from the old thought process and implementation strategy, which was steeped in delays and failure to follow the defined procedures of the Fiscal Responsibility Act 2007 (FRA).
He states further, “The President in collaboration with the legislature should take steps to reduce the cost of governance – the Oronsaye Committee Report is still relevant. The Minister of Finance should stick to the accountability and transparency provisions of the FRA.”