By Abdallah el-Kurebe, Editor
TrackNigeria: A civil society organisation, Social Action Nigeria has observed that with more of the cost of the 2019 budget fashioned to service debt than capital expenditure, the budget would lead to more debts.
A statement by the Head of Advocacy, Vivian Bellonwu-Okafor made available to Newsdiaryonline Monday, the capital projects would suffer while the over-dependence on loans to finance budget deficits would only lead to more debts.
Recall that Nigeria’s finance minister, while giving an insight into the budget recently, said the federal government planned to “fund the 2019 budget through borrowing locally and internationally with spread of 50:50”.
Social Action said a shocking reality of the Minister’s statement was confirmed by studying the content of the 2019 budget which has a deficit of over N1.8 trillion.
“Although the 2019 budget was tagged: “Budget of Continuity” with an expenditure line of N8.826 trillion, a close look at the budget however, raises many red flags therein; aside from being laden with frivolous expenditures such as a N3billion budgeted for clothing and uniforms for MDAs, N125 billion to NASS, N95.19 billion to NDDC among several others amorphous lump allocations, all with no breakdown of how these monies will be utilized, thereby make it impossible for citizens or groups to monitor.
“The fact that the recently approved minimum wage of N30,000 was not captured in the 2019 budget will contribute to a the serious revenue shortfall. Although the proposed 2019 budget was based on the benchmark of $60 per barrel, considering the under-performance oil revenue source in the past years, the estimated bench mark might not be practical. All this leads to the serious apprehension of how the budget will be financed.
“Upon further closer look, the proposed 2019 budget has a 24.29 percent of the total expenditure allocated for debt servicing. This is against a 23.02 percent earmarked for capital expenditure.
“Over the years, we have seen an increased variation between debt serving and capital expenditure, and while the present administration had at the onset of its lifespan, had committed to closing this gap, it is distressing to see that the 2019 budget continue to follow the same pattern as the preceding budgets.
“This means that, for over 4 years, Nigeria has been spending more money servicing debt than expending on its capital infrastructure. Placed comparatively, from 2015 to 2018, about N6.036 trillion was spent on debt serving while about N3.983 was spent on capital projects, how can a country serious with development maintain such budgetary cum expenditure pattern?
“Just as with the previous budget with similar flaws and dependent on loan, we do not see how the 2019 budget marks a departure from loan-dependency and budget-failures to bring about any significant growth to the economy, boost capital projects and thus grow the GDP. Rather, we see the country further hemmed by a crippling debt trap. This is simply unfortunate.
“As at September 2018, data provided by the DMO shows that the country’s external debt alone rose by $11.77 billion in just three years. This exponential growth attracted wide criticism and condemnation from bodies that are ordinarily pro-loans; the IMF, which strongly urged the government to exercise caution and restraint in borrowing.
“To all intent and purposes and, going by the proposed 2019 budget, this wise counsel was thrown to the winds as displayed by this fervid desire by the government to borrow even much more with no forethought to the sustainability or the burden of debt costs.
“In simple terms, the meaning and implication of this budget proposal is that, with the cost of serving debt surpassing capital expenditure, capital projects will suffer while and the over-dependence on loans to finance budget deficits will only lead to more debts,” the CSO stated.
It therefore called on the federal government and the National Assembly to review the 2019 budget, “eradicate the frivolous expenditure lines rife in the budget and further plug leakages and eliminate waste by cutting down on security vote. It should importantly also work to cut down the huge shortfall in revenue and halt all external borrowing.”
Social Action also charged government to “come up with a plan on how the existing debt will be liquidated to put an end to the huge sum being accrued through loans and save present and upcoming generations from the insalubrious burden of debt trap.”