Director General of the Budget Office of the Federation Ben Akabueze made this disclosure in Abuja on Tuesday during the budget 2021 budget breakdown.
According to Akabueze, there is a global alliance to support economically weak nations with vaccines, our understanding of the current plan is that we will be getting vaccines donations to cover up to 20 percent of our population but then the global standards says that to achieve herd immunity you have to vaccine at least 70 percent of the population and so there is a 50 percent of the population that we may be required to pay for their own vaccination”.
Already, there is an “inter-ministerial committee looking at this matters and the assurance is that government will do whatever is needful to keep the citizens and economy safe even if it means coming back with a supplementary budget.”
The National Assembly reviewed the 2021 budget upward by N500 billion to accommodate purchase and distribution of vaccines against Coronavirus.
On her part, the finance minister Mrs. Zainab Ahmed prayed that the situation should not arise to warrant another lockdown.
According to her, “we hope we never have to lockdown the economy like we did before because the impact is very high on the economy but then if the health challenge becomes so large, and government has no option then that step might be taken.
“Right now what we are doing as government, is to reinforce the measures that needs to be taken by government, by companies, by individuals to mitigate the impact from the covid to reduce the expansion and also obviates the health challenges”.
“Currently the vaccines are now out and they are available and Nigeria is in the process of deciding and beginning to acquire its own vaccine so we do hope that a lockdown the type we’ve seen in 2020 will not happen.”
On the budget proper, the finance minister stated that in 2020, the federal government over-spent what was appropriated by the National Assembly for expenditure by 101 percent.
According to Zainab Ahmed, “on the expenditure side, N9.97 trillion was appropriated (excluding GO Project tied loans), while N10.08 trillion (representing 101%) was spent.” She attributed the excess spending on unforeseen expenditures brought on by the Coronavirus pandemic.
Zainab Ahmed stated that “of the expenditure, N3.27 trillion was for debt service, and N3.19 trillion for Personnel cost, including Pensions” amounting to N6.46 trillion. However, she did not elaborate on how government spent the balance of N3.62 trillion.
To retire maturing bonds to local contractors, she said sum of N200 billion had been provided for in the new budget, representing 1.68 per cent of the total budget, adding that, “overall, N5.60 trillion has been provided for borrowing to finance the budget deficit”.
By the end of 2020, Zainab Ahmed disclosed that “N1.80 trillion had been released for capital expenditure (that is, about 89% of the provision for capital). Out of this, up to N118.37 billion was released for COVID-19 capital expenditure”.
For 2021, the aggregate revenue available to fund the year’s budget is projected at N7.99 trillion (36.9% higher than the 2020 projection of N5.84 trillion).
According to the finance minister, “to promote fiscal transparency, accountability and comprehensiveness, the budgets of 60 Government Owned Enterprises (GOEs) are integrated in the FGN’s 2021 Budget proposal.”
In aggregate, 30 percent of projected revenues will come from oil-related sources while 70 percent is to be earned from non-oil sources.
Zainab Ahmed lamented that “overall, the size of the budget has been constrained by our relatively low revenues”.
In 2021, overall budget deficit is projected to be N5.60trillion. This represents 3.93 percent of GDP.
The budget deficit is to be financed mainly by borrowings in this order: Domestic sources, N2.34 trillion; foreign sources, N2.34 trillion; Multi-lateral/Bi-lateral loan drawdowns, N709.69 billion and Privatisation Proceeds, N205.15 billion.
Where is the money coming from: The finance minister gave a breakdown of how the government hopes to source for funds to finance the budget in 2021. These include: Share of Oil Revenue N2,011,017,892, 674; Share of Dividend (NLNG), N208,540,960,000; Share of Minerals and Mining N2,650,393,903; Share of Non-Oil N1, 488,924,372,031.
Other sources of revenue open to the government she said include: Share of Company Income Tax (CIT) N681,718,292,330; Share of Valued Added Tax (VAT) N238,426,227,556; Share of Customs N508,269,596,837; Share of Federation Acct. Levies N60,510,255,308.
Government will also fund the budget from revenue from Government Owned Enterprises (GOEs) N2,173,860,133,098; GOEs Operating Surplus (80% of which is captured in Independent Revenue) (N825,023,025,138); Independent Revenues N1,061,898,590,939; Transfers from Special Levies Accounts N300,000,000,000; Signature Bonus/Renewals/Early Renewals N677,015,511,478; Domestic Recoveries/Assets/Fines N32,675,085,307.
Stamp Duties or electronic transfers as they are known now will fetch the government N500, 000,000,000; Grants and Donor Funding N354, 852,661,650; Transfer from Special Accounts for COVID-19 Intervention across the Federation; Transfers from Special Accounts; and Grants and Donations for COVID-19 Crisis Intervention Fund.
In all N7, 986,412,575,941 is available to fund the 2021 budget.
On tax wavers, Zainab Ahmed said government is assessing “what it’s costing us; we are now in the process of reviewing what can be scaled back because the size of the cost of the tax waver is quite significant in terms of revenue for the country”.
Speaking in government’s spate of borrowing, the finance minister said “we are working with the CBN to regularize the previous borrowing that have been made to turn them into formal borrowing by the Nigerian economy and to this extent, the CBN and I need to agree on the rates and the tenures and the cost of the borrowing, so we would be formally doing that in the early 2021 on the previous borrowing that has been made, and also projected borrowings in 2021. So we will design special instrument that limits what is done in terms of domestic borrowing from the CBN.”
When asked about the status of fuel subsidy in the country, Zainab Ahmed said government is “not going to bring back fuel subsidy, we didn’t make provision for fuel subsidy in the budget. The impact of what was done is reducing some of the cost components that are within the fuel subsidy template. No provisions have been made for subsidy of fuel; no provisions have been made for subsidy of electricity.
Speaking in similarly tone, the Director General Budget Office Ben Akabueze said “with respect to electricity subsidies, we have arears of subsidies. Accumulated amount due to market players and you will find that we have provided or embed in the current budget that is over N30billion provided to wind down those but what we are not providing for is a further build-up of subsidies because the plan is to finally exit that by 2021, latest 2022”.
On the issue of unclaimed dividends and dormant accounts, the finance minister said government is targeting as much as N850billion, “we have to get the exact report from CBN and the registrars to ascertain that so it could be realised into this special trust fund for unclaimed dividends and dormant account.”
She reiterated that “this is a special trust fund, it means government is keeping the money in trust for the beneficiaries at any time a registrar or a bank confirms that this is a true and bonafide beneficiary of this fund then government will release from that trust fund to the investors/bankers bank entitlement”.
In 2021 budget government’s ministries with large chunk of capital allocations are: Ministry of education N1, 146.8 billion, health N600.52 billion, defence and security sector N1, 114.16 billion; railway N11.61 billion for rehabilitation and railway tracking.