By Sanni Onogu, Abuja
Senators were on Wednesday divided over the sustainability or otherwise of the N10.33trillion 2020 budget presented to a joint session of the National Assembly on Tuesday by President Muhammadu Buhari.
The Senators spoke while debating the general principles of the fiscal document tagged: Budget of Sustaining Growth and Job Creation.
Majority Leader Senator Yahaya Abdullahi, had moved a motion that the a Bill for an Act to authorize the issue from the consolidated revenue fund of the Federation the total sum of N10,330,416,607,347.00 …. be considered for second reading.
In his lead debate, Abdullahi described the budget to GDP ratio as very small and incapable of stimulating needed investment.
He said: You could see the kind of programme that we have and the major problem that we have is that the economy is very short of revenue.
We have an economy with a GDP of about N140trillion out of which we can only get about 10 per cent or less.
Now when you look at the budget to the GDP ratio, it is very low. The total Federal Governments revenue is N8.155trillion. If you add the deficit, the budget comes to about 10.7trillion.
The capital budget to GDP ratio is too small. It is just two per cent of the GDP.
This is a very low figure indeed and when we look at it as an issue of investment, it is a mere drop in the ocean, therefore, incapable of stimulating the economy to a higher growth trajectory. That has been the problem of the national economy for more than 30 years.
We have been tethering on the edge, any small disturbance either in the domestic or international scene will bring economic crash.
When we realised the need to diversify the economy away from oil we also refused to accept the fact that we have to change our approach to revenue generation and even approach to budgeting.
He said that the country has done well with inflation by bringing it down from 18.72 per cent to around 11.22 per cent.
Our balance of payment is positive. Exchange rate has been stable, foreign reserve has been raised from $25 to $44.2billion by March 2019, he said.
He noted that Capital importation has increased while Foreign Direct Investment have also been returning with confidence on the economy rising.
The major problem with the nations economy, according to him, is that the countrys economic growth rate is about 2.93 per cent while the population is growing at about 2.6 per cent.
He said that the borrowing programme projected at N1.3trillion could be a good starting point but there are a lot of foreign loan sources that could agree on a reasonable concessionary terms that government should explore to further weaken down the ratio.
Abdullahi said that the issue of economic policy cannot be left to the people in the executive alone.
Minority Leader, Senator Enyinnaya Abaribe, said the Federal Government talked about job creation without investing in ventures that would create jobs.
Abaribe said: Following the lead debate of the Senate leader who mentioned 15 lows.
The biggest low that we have is the fact that, how would you talk about job creation when you do not invest in what would create jobs?
He noted that the Debt Service component of the 2020 budget is higher than capital expenditure at N2.14trillion for capital expenditure and N2.4trillion for debt servicing.
He added: The projected growth as read by the President is 1.9% less than the population growth of 2.6% so if you look at it globally we are still struggling that is why I was very happy when the Senate leader said we may have to take over and redirect the economic policy of this government having seen that they have not done anything and that they have failed.
Let me go next to the assumptions, two assumptions that are critical for this budget. One is the assumption on oil prices.
I know that our people were very happy when there seemed to be a little problem in the Middle East with Iran which will lead to a slide in oil prices, which means that our projection for the cost of oil may also be off the mark.
Second one is our projection for the oil production levels daily. Last year, the average oil production level was 1.8million barrels of oil per day.
Why wont we keep it there? Why must we go to 2.18million barrels only to be disappointed at the end of the day?
Mr. President, I know that you have promised the executive that you are going to work very well with the executive to produce the budget. But I plead with my colleagues, look at the facts.
You cant run away from the facts. The facts say that this is not a sustainable budget.
The facts also tell us that where we are going, if we need to change we must be able to look at the critical fundamentals of this budget and make adjustments as deemed necessary, Abaribe said.
Senator Gabriel Suswam described the proposal as a very ambitious budget to address the infrastructural deficit.
The President submitted financial bill with five thematic concerns. Tax that has been moved from 5% to 7.5% is the source that will generate the revenue to carry infrastructure, he said.
He noted that the 7.5 per cent Value Added Tax (VAT) rate proposed in the Financial Bill that accompanied the budget from the executive is on the high side.
If we are trying to raise 7.5 from VAT, it is a double edge sword and it will undermine small scale enterprises, he said.
He said that the amount for debt service would become unsustainable if the country continues to borrow.
The former Governor of Benue State called on the Nigerian National Petroleum Corporation (NNPC) to be specific in its daily oil production rate to enable the government track the true volume of oil production by the corporation.
Senator Barau Jibrin noted that the Federal Government has done well in its revenue drive and also doing enough to diversify the economy.
All agents of government that have the responsibilities of driving the budget should work harder to make the government achieve its target, Jibrin said.
Former Deputy Senate President, Senator Ike Ekweremadu, commended the sectoral allocation to the Ministry of Works and Housing and the National Human Rights Commission.
Ekweremadu said: The President has done his job, we can’t blame him but it becomes our responsibility to ensure judicious application of our revenue.
While we look at expenditure we must also look at revenue drive. There is need to block all the leakages.
I am happy that we are dealing with the Production Sharing Contract Bill but we shouldn’t stop there.
We shouldn’t stop at only oil and gas, but we encourage the private sector. We must remove emphasis on oil and gas. We need to look at the mineral sector, he said.
Other Senators that contributed to the debate include Senators Yahaya Ibrahim Oloriegbe, Adamu Aliero, Buhari Abdulfatai, Francis Alimikhena, Olubunmi Adetumbi, Kabiru Gaya and Opeyemi Bamidele.
Author: Mustapha Temidayo