The 2021 budget is based on wrong assumptions and unrealistic expectations, the Senate Minority Leader, Enyinnaya Abaribe, has said.
His view was also echoed by other opposition lawmakers
Mr Abaribe said this during the deliberations on the general principles of the budget on Tuesday.
President Muhammadu Buhari had, on Thursday, presented the 2021 budget estimate to a joint session of the National Assembly.
The proposed budget expenditure is put at N13.08 trillion with a crude oil benchmark price of $40 per barrel and daily oil production estimate of 1.86 million barrels (inclusive of condensates of 300,000 to 400,000 barrels per day).
This includes N1.35 trillion spending by Government Owned Enterprises and Grants and Aid funded expenditures of N354.85 billion.
The budget also contains recurrent expenditure of N5.65 trillion, personnel cost of N3.76 trillion and Debt Service of N3.12 trillion.
Other details are Statutory transfers of N484.4 billion, Pension, Gratuities & Retirees Benefits of N501.19 billion and Overhead cost of N625.50 billion with a projected inflation rate of 11.95 per cent and GDP growth rate of 3.00 per cent.
In his contribution, Mr Abaribe said the projections of the budget were unrealistic.
”It seems the government does not have an over-reaching view of what it needs to do with the economy and is insensitive to the Nigerian public – increasing taxes and making sure that everything and everyone is taxed,” he said.
“This budget is nothing but the same. We have a budget based on unrealistic expectations. We are not also so sure what the oil situation is going to be
“If the budget is based on assumption, I agree but why are you not assuming properly. I want to go ahead and say it does not reflect the understanding of the fundamental challenges of today.
“This budget is nothing but old news. Every time the same old news. How will you budget 100 per cent knowing that you will only get 30 per cent and how can you have a budget where the capital budget and the debts are almost equal. What does that tell us?” he said.
In the same vein, Benue lawmaker, Gabriel Suswam, said if the budget is themed economic recovery and resilience, it means something has gone wrong and needs repair.
The president’s intention of creating jobs is not actualisable, he said.
“We are literally violating the laws we have set out. The leader mentioned that the budget is not sustainable. The deficit has gone beyond three per cent.
“For every N100 earned, N60 goes to debt servicing. When will borrowing end?”
Consistent borrowing worrisome
For the former deputy senate president, Ike Ekweremadu, the government’s continuous plan to borrow is a cause for concern.
“I have been very worried about the way we are going in terms of borrowing. I am concerned on the loan being given by China.
“They will not let you go off any of the debt because all the monies are for specific projects and if they are not done they take over.”
He also faulted the huge amount of money spent on social intervention despite the growing unemployment rate.
”We need to deal with the real issues by investing in ICT, modern agriculture. We must create life style centre around agriculture and in modern farms. Until we do that, it will remain unattractive to our young people,” he advised.
“There is also the issue on value to cost. The government is making certain expenditures on health centres but what has happened is that those health centres are not put to use because there are no doctors or nurses.”
Messrs Abaribe, Suswam and Ekweremadu are members of the main opposition party, PDP
Why borrowing is best option
In his presentation, the Senate Leader, Abdullahi Yahaya, explained that borrowing is one of the best ways to tackle revenue shortfalls.
”Recurrent expenditure is still too high, constituting over 43 per cent of the total budget and contains personnel cost, pension benefits, overheads and some coronavirus palliatives,” he said.
“These expenses are necessary for stabilizing the government. Issues of revenue shortfall and meeting unexpected emergencies can only be tackled in two ways: borrowing and cutting expenditure; shrinking the economy and the government and social services rationalisation, job cuts etc.
“While the first option will pile up debts, which must be paid in the future, it allows you to survive the present and stabilise you to enable you devise the means of paying the debt, if invested properly, debts could provide one of the platforms and the capacity to pay the debt itself and catapult one into a brighter future.
“The second option which is more dangerous, is to shrink the economy and risk political suicide and economic turbulence by obliterating opportunities, cutting social services and starving our communities to death and oblivion.
“While the first option requires management discipline, the second option risks chaos, suffering and destitution. Of the two options, the first is better than the second.”
A budget deficit of N5.19 trillion represents 3.64 per cent of GDP and is therefore above the threshold set by the Fiscal Responsibility Act, 2007, Mr Yahaya bragged.
He said even though the deficit is covered by N4.28 trillion of new borrowing and funds obtainable from privatisation proceeds and multilateral and bilateral sources, “it is important for our committees on finance to raise the matter for the National Assembly to permit this increase, as specified in the extant law, particularly given the special circumstances which made this necessary.”
Deliberations on the budget will continue on Wednesday and Thursday.