The Nigerian Fiscal Year is once again returned to run from January to December as President Muhammadu Buhari Tuesday signed the 2020 Budget into law and gave approval for implementation starting from January 1st 2020.
This is the earliest since the return to democracy in 1990 after several call by economic analysts. This was made possible by the efforts put in by the Executive and Legislative arms of Government to work in harmony towards the goal away from the palpable brawl that dominated the first regime of the Buhari administration. Despite insinuations in some quarters pointing at the National Assembly as being rubber-stamp to the Executive, it is for the good of Nigerians if positive moves of this nature will continue for the rest of the tenure and even for subsequent administration. This is actually expected since the ruling party dominates the two chambers.
With this early passage, it is expected that following early and concerted implementation, government injections into the economy will spur economic activities towards GDP growth. Investors will be able to understand the direction of economic trading and take off with it. This is expected to eliminate the waiting in speculation often experienced at the beginning of the year.
The initial 10.33 trillion 2020 budget was reviewed upward with additional N270 billion bringing the total budget past to N10.6 trillion. The National Assembly raised statutory transfers from the proposed N556.7bn to N560,470,827,235; raised debt service from N2.45tn to N2,725,498,930,000; reduced recurrent (non-debt) expenditure from N4.88tn to N4,842,974,600,640; increased development fund for capital expenditure from N2.14tn to N2,465,418,006,955 and raised its own budget from N125bn to N128bn.
The budget is based on an oil price benchmark of $57 per barrel, a daily oil production estimate of 2.18 mbpd. and an exchange rate of N305 per US Dollar. The projected GDP growth is 2.93 percent as proposed by the Executive. Other assumptions are Inflation rate of 10.1 percent, Nominal Consumption of N122.75 trillion and Nominal GDP of N142.96 trillion.
Of major concern is the funding of the 2020 budget. The Executive submitted a Finance Bill along with the budget which was passed in November raising VAT from 5 percent to 7.5 percent. The government proposed to raise estimated N8.155tn to finance part of the budget. The policy amended seven existing tax and fiscal policy laws which are the Companies Income Tax Act, 2004; Value Added Tax, 2007; Customs and Excise Tariff Consolidation Act, 2004; Personal Income Tax Act, 2007; Capital Gains Tax Act, 2007; Stamp Duties Act, 2007; and the Petroleum Profit Tax Act, 2004 .
Though the President noted that with global oil price outlook and the IGR projection, the budget will be well financed. It is however clear that the budget runs with a deficit of about N2 trillion which the government wish to fund through borrowing. This is a major concern considering the existing stock of debt. vis-à-vis the loan servicing obligation. The President of the Senate, Senator Ahmed Lawan, has though promised that the Senate will pass the $29.96bn external borrowing plan as presented by the Executive.
Nigerians are seriously hopeful that the budget be concertedly implemented with all funds, internally generated and borrowed prudently utilized.