The federal government yesterday indicated that it was targeting a tighter fiscal plan next year, with a projected budget of N8.65 trillion in 2019.
This was disclosed the minister of budget and national planning, Udo Udoma, during a public consultation on the 2019-2021 Medium Term Fiscal Framework and Strategy in Abuja.
The federal government explained that it would cut the budget from N9.12 trillion in 2018 to N8.65 trillion in 2019. This, it said, is predicated on the need to ensure prudence, reduce deficit and borrowing while laying greater emphasis on revenue drive.
The federal government also said it wanted to reduce the amount of borrowing to finance the nation’s budget deficit in the proposed 2019 fiscal year.
According to the government’s 2019-2021 Medium Term Expenditure Framework (MTEF), the government will cut deficit in the 2019 budget draft from N1.9 trillion in 2018 to N1.6 trillion in 2019.
LEADERSHIP Friday reports that there had been calls on the federal government to reduce its borrowing and pay more attention to internal revenue generation from the non-oil sector. While approving the federal government’s borrowing request on Wednesday, the Nigerian Senate re-emphasised the earlier call by the World Bank and the International Monetary Fund to either halt or slow down its debt accumulation.
The government is also proposing 2.3 million barrels per day oil production for 2019, at $60 per barrel oil benchmark for the year. The medium-term revenue and expenditure framework is driven by key parameters and macroeconomic projections, Udoma said.
The federal government proposes national Gross Domestic Product (GDP) growth rate at 3.01 per cent in 2019. Nominal GDP is put at 139.65 trillion. The government’s Economic Recovery and Growth Plan (ERGP) puts 2019 growth rate at 4.5 per cent in the same year.
In response to recent hard knocks from the World Bank on the country’s poor allocation to human capacity building, Senator Udoma assured that priority would be given to human capacity development, with a promise to increase allocations to health, education, pensions and other growth enhancing sectors of the economy.
Speaking at the forum with the organised private sector and CSOs in Abuja yesterday, the minister stressed the need for government to shift attention from borrowing to revenue generation to fund the national budget in 2019.
“We want to reduce deficit and borrowing. We must concentrate on our revenues. We need to get the money today and use it now to solve our problems. We also need to build up the non-oil sector. We need to do much better. Our ratio of taxes collected is still very low. We are looking at how to generate revenue to rely less on debt and rely more on revenue. That is the main focus of our strategy,” he said.
Speaking to concerns that the government’s 3.01 per cent GDP growth is over ambitious, Udoma said, “The economy is strong, confidence is coming up and the direction of movement is positive. However, we are not growing at the pace we ought to be. Our aim is to increase company income taxes.”
According to him, government is trying to make Nigeria more productive by investing in human capacity.
The draft 2019-2021 Medium Term Fiscal Framework shows that Nigeria faces significant medium-term fiscal challenges, especially with respect to revenue generation. Thus, Udoma said key reforms will be implemented with increased vigour to improve revenue collection and expenditure management.
“Achieving fiscal sustainability and macro-fiscal objectives of government will require bold, decisive and urgent action,” he said.
Based on that, the budget minister added: “We must look at ways of squeezing out the maximum we can get from oil because oil is a wasting asset; we need to get the money and use it to solve a lot of our problems.”
Udoma further noted that the government would invest in infrastructure, in human capacity development and in other areas needed in building up the country’s stock of capital.
“We also need to ensure we build up the non-oil sector,” he said.