FG releases N4.24trn so far for 2017, spells out funding mechanism for 2018 budget

Abuja, Nov. 14, 2017 (TNE) Sen. Udoma Udo Udoma, Minister of Budget and National Planning, says recurrent releases to Federal Ministries, Departments and Agencies (MDAs) under the 2017 budget have reached N4.24 trillion.

Udoma said this on Wednesday in Abuja while giving an overview of the 2018 Budget Proposal, tagged “Budget of Consolidation”.

He gave a breakdown on recurrent and capital releases to MDAs from January to September under the 2017 Appropriation Act.

The non-debt recurrent expenditure shows that personnel costs including pension and gratuities have so far gulped N1.85 trillion, while N138 billion has been released to MDAs to cover their overhead costs.

Udoma also said that Service Wide Votes, the Social Investment Programme and the Presidential Amnesty Programme gulped N689.7 billion from January to September this year.

He said that so far, N1.54 trillion has been used for debt service obligations.

Udoma said that because the government was concerned with the welfare of its workers, it made it a priority to start paying arrears of personnel emoluments dating back to 2012.

On releases for capital projects, Udoma said that N450 billion had been released as at October 2017.

“Spending on capital projects has been prioritised in favour of critical ongoing infrastructure projects such as power, roads, rail and agriculture.

“The N100 billion Sukuk Bond raised in October, for instance, was deployed to the construction of 25 roads around the country,” he said.

Udoma recalled that while the releases for the recurrent component of the budget started in January 2017, the capital releases did not commence until the budget was signed in June, 2017.

He also said that releases for capital projects are being delayed as they were designed to be funded by borrowings, hence as the planned borrowings materialised, spending would be stepped up.

Meanwhile, the Federal Government is to fund the 2018 budget using key reform initiatives contained in the Economic Recovery and Growth Plan (ERGP), Sen. Udo Udoma announced on Tuesday while presenting an overview of the 2018 budget proposal.

Udoma said Federal Government would deploy new technology to improve revenue collection, enhance tighter performance management framework for State Owned Enterprises (SOEs) and stronger enforcement action against tax defaulters.

He added that the 2018 revenue projections reflect new funding mechanism for Joint Venture (JV) operations, allowing for cost recovery in lieu of previous cash call arrangements.

He noted that “there will be restructuring of government’s equity in JV oil assets, reduction in equity holding with proceeds to be reinvested in other assets.

“This will improve efficiencies in the operations of the JVs and position them for better revenue performance in future, increase in excise duty rates on alcohol and tobacco.

“Tax administration improvement initiatives to positively affect collection efficiencies across various tax categories such as tax amnesty programme.’’

Udoma said additional oil-related revenue including: royalty recovery, new/marginal field licences, early licencing renewals and review of the fiscal regime for oil Production Sharing Contracts (PSCs), would also be employed.

He explained that oil revenue would account for 37 per cent of the estimated revenue, while independent revenue was put at 12.8 per cent, JV equity restricting, 10.7 per cent, Company Income Tax (CIT), 12 per cent and Value Added Tax (VAT), 3.1 per cent.

“Customs is expected to account for 4.9 per cent, recoveries, 7.8 per cent, tax amnesty 1.3 per cent, signature bonus 1.7 per cent, grants and donor funding 3 per cent and other unnamed sources to account for 5.5 per cent of the revenue.

He said just like earlier budgets by the administration, it would ensure that funds are geared toward financing various capital projects.

He cited some projects the Federal Government would embark on across several sectors of transport, power, health, education, works, housing, water resources agriculture and rural development, mines and steel development and special intervention programmes among others.

The minister said although the Federal Government had earmarked N2.42 trillion for capital projects, it would attract private sector involvement in the implementation of the projects, especially roads.

“What we need to construct roads is in trillions and we do not have that money now that is why we are involving Public Private Partnerships (PPP).

The budget, tagged “Budget of Consolidation’’, which was presented to the joint session of the National Assembly by President Muhammadu Buhari on Nov. 7 is expected to reinforce and build on recent accomplishments of the government.

The key parameters of the budget include a crude oil benchmark price of 45 dollar per barrel, oil production estimate of 2.3 million barrels per day and exchange rate of N305 per dollar.

The budget also has projected oil revenue of N2.442 trillion and non-oil projection of N4.165 trillion.

It has a capital expenditure projection of N2.428 trillion, recurrent expenditure of N3.494 trillion, N2.014 trillion for debt servicing and fiscal deficit of N2.005 trillion.

(TNE)

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