The President of the Senate, Dr Bukola Saraki, has reiterated the need to capture subsidy in the nation’s annual budget if government still funded it.
He made the remark when President Muhammadu Buhari presented the 2019 Budget of N8.83 trillion before the joint session of the National Assembly on Wednesday.
President Buhari during the budget presentation said that N305 billion had been earmarked for petrol subsidy in the 2019 budget.
Buhari administration had withdrawn subsidy on petrol in 2016, forcing independent oil marketers to pull out of importation of the product.
Buhari said the problem with subsidy in the past was abuse and corruption especially by independent oil marketers.
The President further said that with the NNPC solely handling the subsidy funds, the possibility of some oil marketers filing bogus claims would be removed.
Saraki, however, said it was better to capture petroleum subsidy as a line item in the Budget if government must continue to finance it.
He said capturing it in the budget was a more transparent practice “as against the erroneous and illegal approach of cost recovery for payment for importation of petroleum products.”
“We cannot shy away from this issue. The current system is opaque at best, fraught with inefficiencies and is a sure pathway to corruption.
“Estimated deductions for petroleum subsidy claims by NNPC year-to-date can neither be explained by the higher Premium Motor Spirit(PMS) landing cost nor the increased supply of petroleum to the domestic market.
He commended President Buhari and the Economic Management Team for putting together the 2019 budget.
According to him, it is expected to give life to economic and social programmes that are pivotal to the country’s development.
“Without doubt, the last three-and-a-half years have been eventful ones at the global level and in our domestic economy.
“From dips in oil prices to major shifts in the economic landscape, crude oil production shut-ins and security challenges, the economy and Nigerians have been directly impacted by these events.
“Many businesses closed down and many people lost their jobs during the recent recession.
“In the same period, we lost innocent citizens to insurgency in parts of the North-East, thousands were displaced, and many lives also lost due to clashes between farmers and herders, in addition to the general hardship unleashed by unstable economic winds.
“These are some of the security challenges we have faced. We must take them head-on; it is a battle we must win as a country,” he said.
Saraki further said, “it must be admitted that we are not there presently. For one, these security challenges now pose a threat to the viability of the agricultural sector.”
“This is clear in the marked reduction in agricultural output observable since the first quarter of 2018. There is the need for more efforts by all. We here are prepared to give all necessary support to the Executive.
“We stand ready and committed to assist in every way we can, in order to ensure food security and the protection of lives and property,” the senate president said.
He noted that the recovery from the recession was still fragile, adding that the fundamentals underlying the recovery remained weak, and if unchecked, could lead to dire consequences.
According to him, the economy still runs on oil and very little progress had been made in terms of diversification.
He stressed that as a result, the expansionary budget policy aimed at raising spending and stimulating growth in the economy, since 2016 was not matched by achievable revenue targets.
Saraki pointed out that the corollary was higher with rising deficit as well as a considerable debt burden, all due to an unsustainable fiscal stance.
“The under-performance of independent revenues is straining government’s ability to meet its expenditure, especially investments in critical infrastructure.
“This further exposes government to higher deficit levels which have been largely financed by borrowing.
“To be clear, two scenarios will play out if we do not deal decisively with challenges to revenue.
“They are, accommodating higher debt with higher repayment costs, which is not sustainable, reduction in the capital budget, which would mean a slow-down in government investment in critical infrastructure.
“This, again, does not aid growth or economy development,” he said.
Saraki emphasised that it was for these reasons that the National Assembly required that the 2018 Budget proposal and future ones be accompanied by a Finance Bill.
He said the bill would give credence to the financial proposals of government, adding that it was one way of establishing credibility in projected revenues.
According to him, it is imperative, that a 2019 Finance Bill is submitted to the National Assembly for consideration and approval.
“I have always stressed the importance of setting realistic revenue targets, because we cannot afford to rely on borrowing to finance recurrent expenditure.
“It is critical we shift focus to generating as much money as required for spending, at least for recurrent needs, so loans can be used solely to fund capital projects.
” I should also say that we will not get things right if we do not match budget credibility with predictability.
“It is in this regard that the National Assembly passed several constitution alteration bills including Sections 82 and 122 of the Constitution of the Federal Republic of Nigeria.
“The amendments to these sections are intended to engender timeliness in the formulation and approval of annual budgets as well as restore the country to a January to December fiscal year.
“May I use this opportunity to request Mr President to prioritise the assent of this important Bill.
“That way, delays in the submission and passage of the Budget will be a thing of the past.
“Also, the private sector, including local and foreign investors doing business in Nigeria, can plan their investment activities along predictable timelines,” he said.
The News Agency of Nigeria(NAN) reports that President Muhammadu Buhari on Wednesday unveiled a federal budget proposal of N8.83 trillion for the 2019 fiscal year.
The 2019 total budget estimate is N300 billion lower than the N9.1 billion being implemented for the current fiscal year.
The sum of N4.04 trillion or 50.31 per cent is earmarked for Recurrent Expenditure and N2.03 trillion representing 22.98 per cent for capital projects.
Other estimates are N492.36 billion for Statutory Transfers, N2.14 trillion for Debt Servicing and N120 billion as Sinking Fund.
The 2019 budget proposal is based on an oil production estimate of 2.3 million barrels per day and an exchange rate of N305 per dollar.
Other benchmarks are: Real Gross Domestic Product (GDP) growth rate of 3.01 per cent and inflation rate of 9.98 per cent.
The total projected revenue is N6.97 trillion, which is three per cent lower than the 2018 estimate of N7.17 trillion.
The expected income consists of oil revenue projected at N3.73 trillion, and non-oil revenue estimated at N1.39 trillion.
Meanwhile, estimate from non-oil revenue consists of N799.52 billion from company income tax; N229.34 billion from value added tax, and customs duties of N302.5 billion.
“Other revenues expected in 2019 include various recoveries of N203.38 billion; N710 billion as proceeds from the restructuring of government equity in joint ventures, and other sundry incomes of N104.1 billion.
The N8.83 trillion proposed expenditure for 2019 includes grants and donor funds amounting to N209.92 billion.
The budget deficit is projected to decrease to N1.86 trillion or 1.3 per cent of the GDP in 2019 from N1.95 trillion projected for 2018.
On sectoral allocation, the Ministry of Interior would get N569.07billion, Defence-N435.62 billion, Education-N462.24 billion and Health-N315.62 billion.
The 2019 estimate is lower than the 2018 budget of N9.1 trillion, but higher than the N8.6 trillion originally proposed by the Executive to the National Assembly”.