Debt Servicing Gulped N3.27trn In 2020 Budget – FG

source: leadership

The federal government has disclosed that out of N6.46 trillion spent on recurrent expenditure in 2020, the sum of N3.27 trillion was spent on debt servicing, while the balance of N3.19 trillion was spent on personnel cost, including pensions. The government also revealed that a total of N1.80trillion, about 89 per cent of the provision for capital expenditure, was released for the financing of capital projects under its N10.8trillion 2020 budget. Minister of Finance, Budget and National Planning, Zainab Ahmed, released the figures yesterday during the public presentation and breakdown of the 2021 approved budget in Abuja. A breakdown of the 2021 approved budget showed a total sum of N1,275.81 trillion was budgeted for security affairs. A further review of the figures showed that ministry of defence got the largest chunk of the budget – N 838.56 billion, while ministry of Police affairs got the second largest sum of N 437.25 billion from the appropriation bill that was signed into law by President Buhari in late December. The minister said the security “allocations underscore our commitment to increased investment in national security and human capital development.” Ministry of Works and Housing Has N399.69 billion, while ministry of Finance, Budget and National Planning has N376.36 billion. Ministry of education got the second largest budgetary allocation, with N545.24 billion allocation, while ministry of health got N380.21billion allocation under the 2021 fiscal year. Out of the N1.80 trillion capital expenses, N118.37 billion was released for COVID 19 capital expenditure, the minister said. The federal government will spend N3.32 trillion, which is a 24.5 per cent of the total expenditure, and 12.6 per cent higher than 2020 revised budget on debt servicing under the 2021 budget. 2021 aggregate FGN expenditure (inclusive of government owned enterprises and project-tied loans) is projected to be N13.59 trillion, which is 25.7 per cent higher than revised 2020 Budget. Recurrent (non-debt) spending is estimated to amount to N5.99 trillion. It is 44.1 per cent of total expenditure, and 13.3 per cent higher than 2020 revised estimates (mainly reflecting increases in salaries & pensions). Aggregate capital expenditure of N4.37 trillion is 32.2 per cent of total expenditure; and 62.9 per cent higher than the 2020 revised budget (inclusive of capital component of statutory transfers, GOEs capital & project-tied loans expenditures). The 2021 budget has overall budget deficit of N5.60 trillion, representing 3.93 per cent of GDP. Meanwhile, the minister stated that the budget deficit is to be financed mainly by borrowings: Domestic sources: N2.34 trillion; foreign sources: N2.34 trillion; multi-lateral/bi-lateral loan drawdowns: N709.69 billion; and privatisation proceeds: N205.15 billion. The aggregate revenue available to fund the 2021 budget is projected at N7.99 trillion (36.9 per cent higher than the 2020 projection of N5.84 trillion). To promote fiscal transparency, accountability & comprehensiveness, the budgets of 60 government owned enterprises (GOEs) are integrated in the FGN’s 2021 budget proposal. In aggregate, 30 per cent of projected revenue is to come from oil-related sources while 70 per cent is to be earned from non-oil sources. Crude oil price benchmark was retained at $40 per barrel. World Bank forecasts $44pb average crude oil price in 2021. Zainab also noted that the Finance Act 2020 is to ensure that there is a balance between broader macroeconomic strategies to attract investment, grow the economy, create jobs as well as provide immediate fiscal strategies for accelerated domestic revenue mobilisation, in response to the COVID-19 pandemic and the domestic/global economic downturn. A further look at the 2021 budget shows that N22.08 billion will be paid as balance payment for procurement of 3 X JF -17 Thunder Aircraft, support equipment and spares including targeting Pod for JF–17, complete with aircraft arms & ammunition N9.69 billion. There is also allocation for procurement of 30/32/35 metre hydro survey ship & Landing ship tankN10.44 billion Procurement of 3 X AW109 Helicopters and part payment for procurement of 1 X AW139 Helicopter. Also, N4.4 billion has been earmarked for the completion of Naval War College Nigeria complex and N3.89 billion for upgrade of Nigerian Navy reference hospital in Ojo, Lagos. According to the finance minister, “Revenue generation remains the most critical fiscal issue over the medium term. Several measures are being instituted to improve government revenue and entrench a regime of prudence with emphasis on achieving value for money. “Improving the tax administration framework to optimize government revenue is a major thrust of the Administration’s Strategic Revenue Growth Initiatives (SRGI).

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