Finance Bills to Accompany Annual Budgets Henceforth, Says FG

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  • Third Green Bond due for issuance in 2020
  • Vision 2040 to replace ERGP

Ndubuisi Francis in Abuja

To ensure the realisation of the country’s revenue projections to finance its yearly budgets, the federal government will henceforth accompany its annual budget with finance bills.

The federal government has also unveiled a plan to replace the 2017-2020 Economic Recovery and Growth Plan (ERGP) with a successive long-term Vision 2040 Plan as well as issue a third Green Bond.

The 2020 Appropriation Bill currently undergoing National Assembly scrutiny was presented on October 8, 2019 by President Muhammadu Buhari alongside a Finance Bill, which seeks, among others, to increase Value Added Tax (VAT) from 5 per cent to 7.5 per cent.

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who unfolded government’s plan to make finance bills part of annual budgets, said such bills would also provide additional opportunities to incrementally improve the fiscal policy and regulatory as well as legal environment in order to further strengthen domestic capital market and ultimately ensure sustained and inclusive growth and development.

Presenting a keynote address yesterday in Abuja at the BusinessDay Investment and Capital Market Conference with the theme “Market Recovery, Innovation and Regulation in Nigeria,” Ahmed stated that the draft Finance Bill, which accompanied the 2020 budget proposal, included five strategic objectives aimed at achieving incremental but necessary changes to the country’s tax and fiscal laws.

Among the objectives, the minister noted, is the introduction of tax incentives for investments in infrastructure and capital markets, and specifically the introduction of Tax Rules to complement existing Securities and Exchange Commission (SEC) Regulations for Securities Lending Transactions on The Nigerian Stock Exchange (NSE).

According to her, this strategic objective recognises the crucial relationship among fiscal policy, the regulatory environment and the strong capital market “we all seek to ensure in Nigeria.”

She said: “We plan that going forward, the annual budget will always be accompanied by finance bills to enable the realisation of revenue projections. Future finance bills will therefore also provide us with additional opportunities to incrementally improve the fiscal policy and regulatory/legal environment in order to further strengthen our domestic capital market, and ultimately ensure sustained and inclusive growth and development.”

The minister said the federal government was moving towards integrating annual budgets and Medium-Term Fiscal Strategies into rolling Medium and Long-term National Plans – with discussions between the executive and the legislative arms currently ongoing vis-a-vis the 2020 budget proposal, adding: “We are well on our way to ensuring a stable January to December budget cycle.”
The finance minister stressed that an important next step would be to transition the 2017-2020 Economic Recovery and Growth Plan (ERGP) to a successive long-term Vision 2040 Plan.

“To this end, I am currently working with the Minister of State for Budget and National Planning to prepare a Medium-Term Economic Growth Acceleration Plan for 2021-2024 as a successor to the ERGP,” she added.

Ahmed explained that government recognises the importance of maintaining a competitive, resilient and innovative capital market through, in part, the development of appropriate policies, and a strong regulatory and enabling environment, and continued implementation of the 10-year Capital Market Master Plan (2015 to 2025), aimed at positioning the capital market for accelerated development of the national economy.

According to her, in 2020, the government plans to issue a third Green Bond, with which it intends to triple Nigeria’s GHG emission reductions, stimulate economic growth and drive investment in social programmes such as education and health.

In December 2017, Nigeria became the third country in the world and the first emerging market sovereign nation to issue a Sovereign Green Bond of N10.69 billion for financing of solar-powered lighting for security on university campuses across the country, as well as solar powered electricity for small households.

A second Sovereign Green Bond was issued in June 2019, in the amount of N15 billion.

The total value of subscriptions received was N32.93 billion, representing 22 per cent of the N15 billion offered.

The Green Bonds issued so far have been used to provide off-grid renewable energy in seven federal universities in different geopolitical zones of the country, and to generate and distribute off-grid renewable energy resource in underserved and rural communities.