President Muhammadu Buhari, Wednesday, sent a supplementary budget of N465,636,926,857 to the National Assembly for appropriation.
The president also sought for an upward review of the initial N882.1 billion borrowing in the 2015 budget to N2.103 trillion to finance the budget.
Of the N465.6 billion supplementary budget, N413.363 billion has been earmarked for the payment of subsidy for petrol, N39.65 billion for the fight against Boko Haram, code named ‘Operation Lafiya Dole’, N2 billion for the provision of prison rations, feeding for unity schools and others, and N10.62 billion for severance gratuity and allowances of outgone and incoming legislators and legislative aides.
The president, in letters addressed to Senate President Bukola Saraki and Speaker of the House of Representatives, Hon. Yakubu Dogara, urged both chambers of the National Assembly to expeditiously treat the budget.
Whereas the 2015 budget was predicated on a benchmark of $53 per barrel, foreign exchange at N190 to $1 and oil production of 2.2782 million barrels per day, the benchmark has now been revised downwards to $48 a barrel; foreign exchange remains at N190 to a dollar while oil production volume has been reduced to 2.2003 million per day.
He explained that the deficit of N1.041 trillion in the 2015 budget, translating to 1.09 per cent of the gross domestic product (GDP), would be largely financed by domestic borrowing of N502.1 billion and foreign borrowing of N380 billion culminating in total borrowings of N882.12 billion.
He added that the expected deficit arising from the supplementary budget is 2.103 trillion or 2.19 per cent of GDP to be financed by additional borrowing of 1.601 trillion through the Debt Management Office (DMO).
Buhari, accordingly, requested an upward review of the fiscal deficit from 1.09 per cent of GDP to 2.19 per cent as well as an upward revision of borrowings from 882.1 billion to 2.103 trillion in the 2015 budget.
While giving a breakdown of the 2015 budget and its shortfall, Buhari said: “The Federal Government of Nigeria’s budget revenue of N3.452 trillion was made up of the share of oil and mineral revenue of N1.645 trillion, share of non-oil revenue of N1.215 trillion and revenue of N489.3 billion.
“The Federal Government of Nigeria’s aggregate expenditure was estimated at N4.485 trillion, comprising of statutory transfers of N354.34 billion; debt service of N953.6 billion; recurrent-non debt personnel cost of N1.828 trillion; recurrent non-debt overheads of N791.2 billion; and capital expenditure of 536.6 billion.
“However, the implementation of 2015 budget has been flawed with significant revenue shortfalls due to the continuous decline in oil prices, oil production shortfalls and non-full non-oil revenue.
“You may wish to further note that owing to the need to sustain the current progress in addressing the security challenges and other important obligations of government, emergency expenditure items require urgent funding are projected at N465.64 billion.”
But the revised budget benchmark of $48 a barrel has raised concerns that the federal government may be over-optimistic about the likelihood of an oil price recovery in the near term.
With Iran preparing to resume exports as it edges closer to sealing a deal with the United States and its allies to control its nuclear development programme and get sanctions lifted, the possibility that oil prices will rally to above $50 a barrel, at least in the immediate term, remains very remote.
However, there was some positive news for the Lagos State Government Wednesday when the Senate gave the state the nod to borrow $200 million from the World Bank in accordance with the president’s request on September 29.
The approval was sequel to the presentation of the report of the ad hoc Committee on Local and Foreign Debt by its chairman, Senator Kabiru Gaya.
The report recommended the approval of the loan on the premise that the first and second tranches had been approved by the National Assembly while this third tranche has been captured in the 2015-2017 Medium Term Expenditure Framework (MTEF).
According to Gaya, Lagos State had justified the loan tagged development policy operation III (DPO) with an acceptable debt sustainability level and therefore was eligible to borrow more.
But Senator Danjuma Goje (Gombe Central) cautioned against frivolous approval of loans for state governors, saying most governors mortgage the future of their states by failing to service the loans obtained and consequently accumulate huge debts for their successors.
Goje advised Buhari to always scrutinise the request for loan approvals by state governors before giving them his support.
In the same vein, Senator George Sekibo (Rivers West), who said he was not opposed to the loan request, urged his colleagues to ensure that every loan approved by the National Assembly is thoroughly followed up by the lawmakers with a view to ensuring that it is well utilised.