Analysts Upbeat on Economic Recovery as President Signs 2021 Budget

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•Considers sending amendment bill to N’Assembly
•Sanwo-Olu signs N1.16tn budget into law

Omololu Ogunmade, James Emejo in Abuja and Dike Onwuamaeze in Lagos

Analysts and members of the organised private sector (OPS) yesterday praised President Muhammadu Buhari and the National Assembly for making it possible for the 2021 Appropriation Bill to become a law in record time.

Speaking in separate interviews with THISDAY, they expressed optimism that the early passage of the bill and the consequent timely assent by the president will put the economy on the path of recovery from the current recession.

Earlier, the president, at a brief ceremony at the State House, Abuja, had assented to the N13, 588, 027,886, 175 trillion 2021 Appropriation Bill, passed on December 21.

He promised to study over N505 billion increase in the budget, added by the National Assembly and send amendments or virement back to the parliament if necessary.

The president who described the Act as a deficit budget, said details of borrowing plan to finance it would soon be sent to the National Assembly, imploring lawmakers to treat it with despatch.

He tasked revenue generating agencies and Ministries, Departments and Agencies (MDAs) to achieve their revenue targets and ensure full remittances.

He threatened to sanction defaulters just as he implored the private sector and individuals to fulfil their tax obligations.

The budget comprises a capital expenditure of N4,125,149,354,222 trillion, recurrent expenditure of N5,641,970,060,680 trillion, statutory transfer of N496,528,471,273 billion, N3.324 trillion for debt servicing, supplementary capital allocation of N1,060,751,051,650 trillion, and Gross Domestic Product (GDP) growth rate of 3.00 per cent.

The budget was N505. 607 billion higher than N13, 082, 420, 568,233 presented to the National Assembly by Buhari on October 8, last year.

The president said the 2021 budget was conceived to deliberately drive what he described as an expansionary fiscal policy, adding that in view of the economy’s recent slide into second recession in four years, the 2021 Appropriation Act is designed “to accelerate economic recovery process, promote social inclusion and strengthen the resilience of the economy.”

Buhari explained that adjustments to the budget would be made and sent back to the National Assembly with a view to ensuring that the objectives of the budget are not derailed.

According to him, despite the adverse effect of COVID-19 pandemic, notable progress has been made in the implementation of 2020 budget with 89. 1 per cent performance in capital project implementation and overall performance of 97.7 per cent.

He commended the eventual return of the country to the January – December budget cycle.

“I am aware of the changes that the National Assembly has made to the 2021 executive budget proposal. We will examine these amendments and, where necessary, will revert to the National Assembly with a request for amendment, virement or other appropriate adjustments to ensure that the core objectives of the budget are accomplished.

“In spite of the adverse impact of the coronavirus pandemic on the nation’s economy and the government’s revenues, we have made appreciable progress in the implementation of the 2020 Budget. As at December 2020, we had released about N1.748 trillion out of a total budget of N1.962 trillion voted for the implementation of critical capital projects; representing a performance of about 89.1 per cent.

“The overall performance of the 2020 Budget currently stands at an impressive rate of 97.7 per cent. This commendable outcome underscores the importance of our efforts, together with the legislature, to return to the discipline of a January-to December fiscal year. The Minister of Finance, Budget and National
Planning will provide further details on the 2020 budget’s performance, in due course,” he said.

The president described the 2021 budget as critical to the delivery of the legacy projects of the federal government.

He said he had directed the Ministry of Finance, Budget and National Planning to ensure the achievement of the objectives of the budget, including the targeted release of capital votes.

He expressed hope that the impact of COVID-19 on prices of food items and other essential commodities would be reduced during the year and consequently stimulate the economy and create jobs through the implementation of the budget.

Buhari also pledged the judicious use of the borrowings and tasked the MDAs to intensify budget monitoring and evaluation as he sought the support of civil society organisations.

He thanked the National Assembly for its cooperation and commended the sacrifice of Nigerians, expressing optimism that the future will be better.

“During the year, I expect that we would be able to significantly reduce the adverse impact of the Coronavirus pandemic on the cost and availability of basic food items, as well as other key commodities, in collaboration with all relevant stakeholders.

“I also expect that the 2021 budget will stimulate domestic economic activities and create employment opportunities, especially for our youth. We are intensifying our domestic revenue mobilisation efforts so that we can have adequate resources to fund the 2021 Budget.

“Revenue generating agencies, and indeed all ministries, departments and government-owned enterprises, must work very hard to achieve their revenue targets, control their cost-to-revenue ratios, as well as ensure prompt and full remittance of revenue collections.

“Being a deficit budget, the specific borrowing plan will be forwarded to the National Assembly shortly. I count on the co-operation of the National Assembly for a quick consideration and approval of the plan when submitted. I assure you that all borrowings will be judiciously applied towards growth-enhancing critical expenditures.

“As a nation, we are currently confronted with diverse challenges at this time. I commend the understanding, sacrifice and resilience of our people, both young and old.

I assure everyone that our hope and confidence of a greater future shall not be in vain,” Buhari said.

Answering questions from reporters after the assent, Senate President, Dr. Ahmad Lawan, expressed excitement that the National Assembly sustained its goal to return the country to the January – December budget cycle.

He explained how the president asked the National Assembly to extend the duration for the implementation of the 2020 budget to the first quarter of 2021, noting that with both the 2020 and 2021 budgets available for implementation this quarter, the economy will be adequately funded.

With the budget out of the way, Lawan listed four critical legislations before the National Assembly from January. These are: the Petroleum Industry Bill, Electoral Act amendment, constitution amendment and security challenges, which he said would require the cooperation of both the executive and the legislature.

Also, Speaker of the House of Representatives, Hon. Femi Gbajabiamila, listed the benefits of getting the budget passed and signed early enough.

“At the risk of sounding repetitive, it’s just to identify with everything the Senate president has said regarding the signing of the 2021 budget and Finance Bill.

“It’s important to emphasise, reiterate, and explain to people asking question: Why is it important that you sign the budget or you maintain January-December budget cycle? It’s absolutely important and it is evident in this 2020 Act.

“First of all, apart from investors’ confidence, both local and foreign, the cumulative effect is what we can see. The 2020 budget has been implemented 97 per cent. That’s almost 100 percent. It’s never heard of.

It’s not done anywhere in advanced democracies. So, when you have a budget that has been implemented fully and wholly at 97 per cent, it is because of the return to the January – December cycle. We are talking of confidence. Money is being pumped in.

There is fiscal discipline as well as capacity and ability to plan in your implementation. That is very important and we try to continue,” he said.

Aside Lawan and Gbajabiamila, others at the ceremony included Vice President Yemi Osinbajo; Secretary to the Government of the Federation (SGF), Mr. Boss Mustapha and Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed.

However, in their reactions to the signing of the budget into law, analysts and members of the OPS said returning the budget to the January – December cycle will, among other things, enhance clarity in the fiscal space, reduce uncertainty which is good for planning by firms as well as give confidence to local and foreign investors.

President, Capital Market Academics of Nigeria, Prof. Uche Uwaleke, said the passage was highly commendable, adding that it is further “indication that this administration has succeeded in fixing the hitherto broken budget cycle aligning the fiscal year with the calendar year”.

Also, a former Director-General, Abuja Chamber of Commerce and Industry (ACCI), Dr. Chijioke Ekechukwu, described the presidential assent to the budget as positive for the country.

He said: “We expect that any money spent from January 1st, 2021 is an appropriated amount in the budget or capital budget carried over from 2020.

“We need to have some fiscal responsibility and discipline to ensure implementation of the various projects the budget was meant for.”

An economist, Dr. Muhammad Rislanudeen, told THISDAY that the early capital expenditure budget, particularly in the COVID-19 pandemic period, will in part help in reviving the economy.

“First, it is important that we maintain the 12 month budget cycle beginning January each year to allow for effective planning of budget releases in tandem with revenue/ borrowing projections as encapsulated in the approved budget.

“This will also restore confidence in the economy and bolster more foreign investment with multiplier benefits of reducing unemployment and taming cost push inflation,” he added.

On his part, an Associate Professor of Agricultural Economics at University of Port Harcourt, Anthony Onoja, however, expressed concern that the budget largely relies on debts as a source of finance.

“With the rate of dependency on debts or loans for financing our budgets what is the hope for the future generations? When will we get out of debt?

“For instance, it provides N3,324,380,000 trillion for debt servicing while N5,641,970,060,680 is for recurrent expenditure; and N4,125,149,354,222 for capital expenditure.

“A study by Emejulu (2019) indicated that recurrent expenditure has no significant effect on economic growth in Nigeria, while transfers have significant effect on economic growth in Nigeria.

“The implication of the findings is that accumulation of foreign debts by government should be discouraged,” he stated.

Also, representatives of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Lagos Chamber of Commerce and Industry (LCCI) hailed the government for the timely passage and signing into law of the 2021 Appropriation Act.

They urged the federal government to ensure that funds are provided for the execution of infrastructure projects.

The Director-General of NACCIMA, Ambassador Ayo Olukanni, described yesterday’s signing of the N13.5 trillion 2021 budget into law as a reflection and signal from the presidency that things would be done as and when due.

He said: “This is a welcome development, which we hope will be applicable in all other areas as we contend with challenges in 2021. The real challenge, however, is timely implementation of the various provisions in the budget.

“The NACCIMA hopes that the respective MDAs will also rise to the occasion both in the release of funds and in the implementation of the programmes and projects under the budget. In this regard projects that relates to development of infrastructure, energy, roads, rails etc., are of major importance. They should be given priority.”

Olukanni’s counterpart in LCCI, Dr. Muda Yusuf, commended the president for sustaining the January-December budget cycle, which will enhance implementation and planning by other economic actors in the economy, especially the private sector.

Yusuf said: “But it is important that the government should prioritise infrastructure in the area of releasing funds to execute projects because most of the time the releases often fall short of what had been budgeted. It is one thing to appropriate. It is another thing to release the funding.”

Sanwo-Olu Signs N1.16tn Budget into Law

Also yesterday, Lagos State Governor, Mr. Babajide Sanwo-Olu, ushered in the state’s new fiscal year as he assented to the N1.163 trillion 2021 Appropriation Bill approved last Monday by the House of Assembly.

Sanwo-Olu said the speedy consideration and passage of the budget reflected the dedication to the progress and prosperity of the state by both the executive and legislature.

Describing the past year as a peculiar era in the annals of the state, the governor said the economic paralysis caused by the COVID-19 pandemic and destruction wreaked in the wake of the hijacked EndSARS protests delayed Lagos’ development.

According to him, the state will, however, walk into 2021 with strong will and high determination to rebuild lost assets, advance its economic growth and expand opportunities for residents to flourish despite the economic challenges caused by the double whammy of the pandemic and the protests.

He said: “With the passage of the 2021 Appropriation Bill, and the signing of the document into law today, our will to rebuild Lagos, advance the state’s economic growth, and expand opportunities for Lagosians to flourish despite the economic challenges caused by the coronavirus, has now been reinforced.

“As we already know, 2020 will go down in history as a peculiar year largely defined by the COVID-19 pandemic and the ENDSARS protests, which were recklessly hijacked by those who destroyed some of our public assets and private businesses. We are fortunate to be going into the New Year with an already passed budget, which will help to expedite our recovery process.”

Sanwo-Olu said significant parts of the state’s 2021 spending are committed to human capital development, youth engagement, social intervention initiatives,.

Also, a portion is for the completion of ongoing projects critical to achieving the objectives of his administration’s T.H.E.M.E.S agenda.

The governor reassured residents that the budget will rekindle their hopes and deliver substantial economic growth. He said tough choices would be made where necessary and leverage opportunities required to engender sustainable and inclusive growth.

Sanwo-Olu promised that the budget would be prudently implemented, with the focus on provision of the right economic environment for people to thrive.

He said: “With the enormous challenges of the outgoing year, we are conscious of the fact that in order to efficiently and successfully implement the 2021 Budget, we must be selfless and dedicated. We are up to the task; with our collective resilience, we will achieve our key goals in all sectors, and nothing will stop us from justifying the trust of the people in this Government.

“I assure you that the 2021 budget will be prudently implemented with the people as our focus, as we are determined to provide the right economic environment for Lagosians to thrive. As the world combats COVID-19, we will make the necessary sacrifices to further place our State on the path of abundance and economic recovery.

We are going into 2021 with the unwavering determination to engender sustainable and inclusive growth.”

About N703 billion, representing 60 per cent of the budget, is earmarked for capital expenditure, while N460.5 billion is for recurrent expenditure.