The President, Major General Muhammadu Buhari ( retd.), on Thursday presented to the National Assembly, N13.08tn budget estimates for 2021 with N3.12tn (23.85 per cent) earmarked for debt servicing.Buhari, who said the nation’s economy might relapse into recession, stated that N3.85tn (29.43 per cent) was voted for capital projects, while personnel costs (salaries and allowances) would gulp N3.76tn (28.75 per cent).With 23.85 per cent allocated for debt serving and personnel costs gulping 28.75 per cent, it means 52.60 per cent of the budget or N6.88tn will be spent on both items next year.Giving other highlights of the appropriation bill, Buhari said the budget was premised on daily crude oil production of N1.86m and oil price of $40 per barrel.The President, who tagged the proposed fiscal document, ‘Budget of Economic Recovery and Resilience’, assured Nigerians that his regime would do everything possible to take the economy out of recession in 2021.The President said, “The Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the coronavirus pandemic.“The Real Gross Domestic Product growth declined by 6.1 per cent in the second quarter of 2020. This ended the three-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017.“I am glad to note that, through our collective efforts, our economy performed relatively better than that of many other developed and emerging economies.“The GDP growth is projected to be negative in the third quarter of this year. As such, our economy may lapse into the second recession in four years, with significant adverse consequences.”Giving a breakdown of the 2021 budget proposal, Buhari put aggregate expenditure at N13.08tn, which includes N1.35tn spending by government owned firms and grants/aid funded expenditures of N354.85bn.
He added that the proposed N13.08tn expenditure also comprised a non-debt recurrent costs of N5.65trn; personnel costs of N3.76tn; and pensions, gratuities and retirees’ benefits of N501.19bn.
The President said overhead would gulp N625.50bn; debt servicing, N3.12tn; statutory transfers N484.49bn; and sinking fund of N220bn meant to retire certain maturing bonds.
He said, “ The 2021 budget deficit, inclusive of government owned enterprises and project – tied loans, is projected at N5.20tn, representing 3.64 per cent.”
The President added that the fiscal document would be predicated upon the 2021 – 2023 Medium Term Expenditure Framework and Fiscal Strategy Paper already approved by the National Assembly
The assumptions, according to him, include an oil benchmark of $40 per barrel and daily oil production estimate of 1.86m barrels, inclusive of condensates of 300,000 to 400,000 barrels per day.
Buhari said the exchange rate would be based on N379 per dollar, GDP growth projected at 3.0 per cent and inflation closing at 11.95 per cent
He said the Federal Government revenue, based on the above fiscal assumptions and parameters was estimated at N8.433tn in 2021.
He, however, said the total revenue available to fund the 2021 federal budget was estimated at N7.886tn.
This, according to him, includes grants and aid of N354.85 bn as well as the revenues of 60 government-owned enterprises.
The President put the projected oil revenue at N2.0tn, and non-oil revenue at N1.49tn.
He noted that the country still faced the existential challenge of coronavirus pandemic and its aftermath, stressing that the development had provided a justification to exceed the threshold as provided for by the appropriation bill.