FG: N1.2tn Allocated to Capital Projects in 2016 Budget Released

• Collected N2.3tn revenue in first half 2017
• This year’s projects to be rolled over to 2018

Damilola Oyedele in Abuja

The federal government has said it released N1.2 trillion between January and June 2017 for the 2016 capital budget, in addition to releasing N341 billion for capital projects approved under the 2017 budget.

The government equally confirmed that the N105.8 billion raised from the Sovereign Sukuk would be deployed to funding capital projects and was expected to increase capital releases from the 2017 budget to N441 billion by the end of next week.
This is as it also disclosed that the sum of N2.305 trillion was collected as revenue in the first half of 2017 out of the projected N2.542 trillion revenue for the first half of the year, representing a shortfall of 9 per cent.

The federal government had projected N5.084 trillion as total revenue in the 2017 budget.
These figures were presented by a team comprising the Minister of Finance, Mrs. Kemi Adeosun, Minister and Minister of State for Budget and National Planning, Senator Udo Udoma, and Mrs. Zainab Ahmed, and the Director General of the Budget Office of the Federation, Dr. Ben Akabueze, when they briefed the Joint Senate Committee on Appropriation and Finance on the implementation of the 2017 budget Tuesday.

The government team also urged members of the legislature to accelerate the process and approval of foreign borrowing, so that the funds could be deployed towards funding of the capital budget.
During his presentation to the Senate committee, Udoma dispelled what he said were insinuations that the government has not released substantial sums allocated to the capital budget.
“There is a general sense that since January we have not released much in terms of the capital budget. That is not the case. Between January and June, we still had the 2016 budget in operation and we allowed it to flow unhindered.

“Under the 2016 Appropriation Bill, we released over N1.2 trillion of the capital budget and most in the course of this year. It is partly because of those releases that we are out of the recession, because we realised the need to reflate he economy,” Udoma said.
He explained that there would be more releases before the end of 2017, further disclosing that some of the revenue collected in 2017 was spent on projects approved in the 2016 budget.

He also pointed out that while the government’s revenue had improved relative to last year’s earnings, external borrowing was still required to fund the capital component of the 2017 budget.
“This year’s revenue is better than last year’s, but not enough. So we need to borrow and we have been borrowing,” he said, adding that Nigeria’s oil output was currently at 2 million barrels per day.
He noted that the N2.3 trillion deficit in the 2017 budget, which comprises mostly the capital component, could only be funded by foreign borrowing.

“It is urgent that we get all the approvals from the National Assembly,” Udoma said.
The budget minister also canvassed for the support of the lawmakers in the restoration of the fiscal year to January-December in order to entrench an organic budget calendar.
To this end, he disclosed that the executive was ready to work with the lawmakers to ensure the submission of the budget in October to facilitate its passage before the end of the year.
“In order to go back to January-December as the fiscal year, this particular year would be very short in terms of implementation.

“You will not expect us to disburse N2.1 trillion (in the 2017 budget) in such a short time, the procurement processes would not even allow it. So we have told the MDAs to roll over 50-60 per cent of their projects, the projects will not be lost,” Udoma assured the committee.
He also assuaged fears that the proposal may have a negative effect, as it could eliminate a budget year.
“Yes, for the transition there would be issues, but we should bite the bullet and solve the problem once and for all,” he said.

Adeosun, in her presentation to the joint committee, said revenue figures had improved compared to similar periods in 2016.
She provided a breakdown of releases of the non-capital and capital component of the 2017 budget.
“Cumulative releases on recurrent expenditure stands at N1.5 trillion and we are fully on course in terms of salary releases. Statutory transfers amount to N128.8 billion, redemption funds for pensions – N37.8 billion, overheads – N92.4billion, Service Wide Votes – N223.6 billion, capital expenditure – N340.9 billion.

“We also successfully raised N100 billion (through the Sukuk) which will be released this week. At the end of this week, we would have released about N440.9 billion for the capital component of the 2017 budget,” Adeosun explained.
The finance minister also revealed that there was a rollover from the 2016 budget to the 2017 budget to fund the capital projects.
“We had a rollover from 2016 to the 2017 budget, so there was no stoppage in terms of capital spend. Projects simply continued. In terms of the way in which we allocated the funds, prioritisation was done in accordance with the objectives of the Economy Recovery and Growth Plan (ERGP).

“We were focused on project completion, we prioritised projects that were nearer completion and were critical in the first releases of the capital budget,” Adeosun said.
She explained that the government was more disposed to foreign borrowing than domestic borrowing, because the terms and conditions were more favourable.
“Foreign loans have longer tenure and lower interest rates, unlike the domestic market,” she said.
Speaking on why several agencies had been unable to pay their staff salaries, Adeosun blamed it on unapproved recruitment.

She said it had become the practice for several agencies of government to embark on recruitment exercises without receiving approval from the relevant agencies, one of which includes the Budget Office of the Federation.
“They load people onto the payroll and their personnel budget remains the same. Others choose to replace retiring officers with multiple officers,” she said, adding that President Muhammadu Buhari had set up a committee to probe why the agencies are unable to meet their salary obligations.
Adeosun, however, acknowledged that some agencies had shortfalls in the appropriations for their personnel.

Also speaking, the Director General of the Budget Office aligned with Adeosun on the government’s preference for foreign borrowing.
He added that borrowing from the domestic market had to be well paced to avoid collapse.
Akabueze also harped on the need for an organic budget calendar, which he said was very crucial particularly for the private sector and economic planning.

Related Articles