Records: Budget proposals breakdown

Highlights of the 2019 Budget Proposals
Background and Context of the 2019 Budget
 The Nigerian economy emerged from recession in Q2 2017, and the macroeconomic environment has stabilized and is recovering gradually.
 This has renewed confidence in the country’s growth prospects.
 The Economic Recovery and Growth Plan (ERGP), which underpins government’s economic recovery actions, is the basis for medium term fiscal strategy to achieve sustained economic growth, diversification and social inclusion.
 Some of the underlying assumptions and targets in the ERGP have been updated to reflect current realities/projections.
 The Nigerian economy emerged from recession in Q2 2017, and the macroeconomic environment has stabilized and is recovering gradually.
 This has renewed confidence in the country’s growth prospects.
 The Economic Recovery and Growth Plan (ERGP), which underpins government’s economic recovery actions, is the basis for medium term fiscal strategy to achieve sustained economic growth, diversification and social inclusion.
 Some of the underlying assumptions and targets in the ERGP have been updated to reflect current realities/projections.
Summary of 2018 Budget Performance
1. GDP Growth Rate (%) 3.5*** 1.81%**
2. Oil Production (mbpd) 2.3 1.95
3. Oil Price (US $) 51 74+
4. Inflation Rate (%) 12.4 11.28*
5. Exchange Rate (N/$)(CBN Official Rate) 305 305.95
6. Revenue (N’trillion) 7.16 (Prorata – 5.38) 2.84
7. Expenditure (N’trillion) 9.12 (Prorata – 6.84) 4.59
*Inflation rate for September, 2018: As at November 2018, inflation rate is 11.28%
** GDP growth for Q2 2018 was 1.50%.
*** Subsequently revised to 2.1%
+ Bonny Light price average as at September 2018.
 As at the end of the third quarter, Federal Government’s actual aggregate revenue wasN2.84 trillion, which is 40 percent higher than 2017 revenue. This includes:
 Oil Revenue of N1.51 trillion(101 percent higher than 2017);
 Company Income Tax (CIT) of N500.37 billion (23 percent higher than 2017);
 Value-Added Tax (VAT) of N100.37 billion (5 percent higher than 2017); and
 Customs Collections of N229.62 billion (11 percent higher than 2017).
 The overall revenue performance is only 53 percent of the target in the 2018 Budget largely because some one-off items such as the N710 billion from Oil Joint Venture Asset restructuring are yet to be actualized and have been rolled over to 2019.
 Of the total appropriation of N9.12 trillion, N4.59 trillion had been spent by 30th September, 2018 against the prorated expenditure target of N6.84 trillion. This represents 67% performance.
 Debt service and the implementation of non-debt recurrent expenditure, notably payment of workers’ salaries and pensions are on track.
2018 Capital expenditures
 Capital releases only commenced after the signing of the 2018 Budget on 20th June, 2018. As at 14th December 2018, a total of N820.57 billion had been released for capital projects.
 Spending on capital has been prioritised in favour of critical ongoing infrastructural projects in the power, roads, rail and agriculture sectors.
 Implementation of the 2018 Capital Budget will continue into 2019 until the 2019 Budget is passed into law.
Key initiatives to improve FGN Revenues
 The Federal Government has also sustained its efforts to improve public financial management through the comprehensive implementation of the:
 Treasury Single Account (TSA),
 the Government Integrated Financial Management Information System (GIFMIS) and
 the Integrated Payroll and Personnel Information System (IPPIS).
 President has directed that immediate action be commenced to restructure the Joint Venture Oil Assets so as to reduce government shareholding to 40 percent and that this exercise must be completed within the 2019 fiscal year.
 The Department of Petroleum Resource shall, within three months, complete the collection of past-due oil license and royalty charges.
 Following Mr. President’s directive:
 The Ministry of Finance, working with all the relevant authorities, has been authorized to take action to liquidate all recovered, unencumbered assets; within 6 months.
 Given the improved oil prices and production levels, Nigerian National Petroleum Corporation (NNPC) is to immediately commence the recovery of all outstanding obligations, including those due from Nigerian Petroleum Development Company (NPDC) (a subsidiary of NNPC), which it had agreed to pay since 2017.
 Finally, amongst other revenue generating initiatives, Mr. President has directed that work should be immediately concluded on the deployment of the National Trade Window and other technologies to enhance Customs collections efficiency from the current 64 percent to up to 90 percent over the next few years.
 Following Mr. President’s directive:
– The Ministry of Finance, working with all the relevant authorities, has been authorized to take action to liquidate all recovered, unencumbered assets; within 6 months.
– Given the improved oil prices and production levels, Nigerian National Petroleum Corporation (NNPC) is to immediately commence the recovery of all outstanding obligations, including those due from Nigerian Petroleum Development Company (NPDC) (a subsidiary of NNPC), which it had agreed to pay since 2017.
 Finally, amongst other revenue generating initiatives, Mr. President has directed that work should be immediately concluded on the deployment of the National Trade Window and other technologies to enhance Customs collections efficiency from the current 64 percent to up to 90 percent over the next few years.
Key assumption and Macro-framework of 2019 Budget
 Oil Production 2.3 mbpd
 Oil Price $60/b
 Exchange Rate N305/$
 Inflation Rate 9.98%
 Nominal Consumption N119.28 trillion
 Nominal GDP N139.65 trillion
 GDP Growth Rate 3.01%
 Notwithstanding the recent softening in international oil prices, the considered view of most reputable oil industry analysts is that the downward trend in recent months is not necessarily reflective of the outlook for 2019.
 However, we will closely monitor the situation and will respond to any changes in the international oil price outlook for 2019.
 Mr. President has directed the NNPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day.
Approach to the 2019 Budget
 The 2019 Budget proposal seeks to continue the reflationary & consolidation policies of the 2017 and 2018 Budgets respectively, which helped put the economy back on the path of growth
 On the expenditure side, allocations to Ministries, Departments and Agencies (MDAs) of Government were guided by the 3 core objectives of the ERGP, which are, (i) Restoring and Sustaining Growth; (ii) Investing in our People and (iii) Building a Globally Competitive Economy.
 As with 2016, 2017 and 2018 Budgets, the 2019 Budget has been prepared on the Zero Based Budget (ZBB) Principles.
 The 2019-2021 Medium Term Fiscal Framework (MTFF), Medium Term Sector Strategies and proposed 2019 Budget reflect many of the reforms and initiatives in the ERGP, which is our roadmap to economic recovery and a more sustainable growth.
 Projects are linked to government policies and overarching strategic priorities.
2019 Budget revenue Proposals
 Distribution of expected FGN revenue are as follows:
 Oil Revenue – 52.9%
 CIT – 11.5%
 VAT – 3.3%
 Customs – 4.3%
 Independent Revenue – 9.0%
 Signature Bonus – 1.2%
 JV Equity Restructuring – 10.2%
 Grants & Donor Funding – 3.0%
 Domestic Recoveries & Fines – 2.9%
 Others* – 1.7%
Note:
We have again, reflected projected proceeds from oil assets ownership restructuring as revenues for transparency & monitoring.
Expected funds have been earmarked to fund critical capital projects as this was not achieved in 2018.
Highlights of the 2019 Budget Expenditure Proposal (Expenditure framework)
 2019 FGN spending (exclusive of GOEs/BT Loans) is projected to be N8.83 trillion, less than FY2018 approved budget by 3.22%.
 Recurrent (non-debt) spending expected to rise by 34.17%, from N3.52 trillion in FY2018 to N4.72 trillion (reflecting increases in salaries & pensions including provisions for implementation of a new minimum wage)
 Capital Expenditure (Inclusive of Transfers, GOEs Capital & Project-tied loans) as % of FGN Expenditure is 30%
 At N2.14 trillion, debt service is 24.24% of planned spending
 Provision to retire maturing bond to local contractors decreased by 36.84% from N190 billion in FY2018 to N120 billion…
 Personnel costs (MDAs & GOEs) account for 52% of non-debt recurrent planned spend
 11% for Pensions (SWV & CRF)
 9% for Overheads (MDAs & GOEs)
 7% allocated to Social Investment Programme
 1% to Basic Health Care Provision Fund
 9% to other service wide votes (including GAVI/Immunization)
 3% as SWV provisions for the Power Sector Recovery Programme
 8% Transfer of GOEs Operating Surplus.
Key Highlights of the Expenditure Framework
 Some provision for possible minimum wage increase
 Government is set to redress years of underfunding of pensions and gratuities
 Significant provision for National Health
 1% of CRF goes to the Basic Health Care Fund
 Provision for counterpart funding for immunization (GAVI)
 Overall, there is significant provision for investment in Human Capital over the medium term
Financing Budget Deficit – Highlights
 Overall budget deficitof N1.859 trillion in 2019 represents 1.33% of GDP.
 Projected deficit within threshold stipulated in the Fiscal Responsibility Act (FRA) 2007.
 Budget deficit is to be financed mainly by borrowing N1.649 trillion.
– Domestic sources N824.82 billion
– Foreign sources (gradual shift away from commercial to more concessionary financing)
N824.82 billion
Minimum Wage
 Government committed to an increase in the Minimum Wage
 Provision has been made for this in the 2019 Budget
 A High-powered Technical Committee has been set up to advise on ways to:
• ensure that the attendant wage adjustments for those already over the Minimum Wage can be funded without increasing the level of borrowing
• implement these consequential adjustments in such a manner as to minimize their inflationary impact
 The recommendations of the committee will be captured in the Finance Bill to be presented to the National Assembly together with the Minimum Wage Bill
MDA capital Expenditure Allocations in the 2019 Budget
 We have allocated N2.28 trillion for capital spending, inclusive of capital in statutory transfers.
 For comprehensiveness and transparency, the expenditure plans of the top 9 GOEs, as well as Multi-lateral and Bi-lateral project-tied loans have been integrated into the 2019 – 2021 Medium Term Fiscal Framework.
 With the inclusion of N275.88 billion representing capital for the top-nine GOEs and N556.02 billion for Multi-lateral/Bi-lateral project-tied loans, the aggregate capital budget is N3.12 trillion. This represents 30 percent of the total FGN proposed expenditure for 2019.
 In order to get full value for monies expended by the Government over time and to avoid duplication and waste, our emphasis will continue to be on completion of existing projects. Accordingly, provisions have been made to carry over projects that are not likely to be fully funded under the 2018 budget to the 2019 capital budget.
Some Projects in the 2019 Budget
 Transport
• N80.22 billion Counterpart funding for Railway projects including:
1. Lagos-Kano (Ongoing)
2. Calabar-Lagos (Ongoing)
3. Ajaokuta-Itakpe-Aladja (Warri ) (Ongoing)
4. Port Harcourt- Maiduguri (New)
5. Kano-Katsina-Jibiya-Maradi In Niger Republic (New)
6. Abuja-Itakpe and Aladja (Warri)-Warri Port And Refinery Including Warri New Harbour (New)
7. Bonny Deep Sea Port & Port Harcourt and other Rail Projects
• N1.008 billion for construction of Terminal Building at Enugu Airport
• N13 billion for construction of Second Run-Way at NnamdiAzikiwe International Airport Abuja
• N27.12 billion for various rehabilitation of railway tracks including
o Rehabilitation of track from Port-Harcourt to Makurdi
o Maintenance of track (including emergency recovery, bridge and culverts repair)
o Procurement of spare parts (including lubricants) for the locomotives, coaches and wagons.
o Kuru to Maiduguri narrow gauge track rehabilitation project
o Track rehabilitation from Makurdi to Jos to Kafanchan to Kaduna junction
o Procurement and rehabilitation of locomotives and rolling stock
o Procurement of workshop equipment and rolling stocks
o Design, manufacture, supply, installation, testing and commissioning of electric overhead travelling cranes for carriage and wagons workshop
o Upgrading of signaling & telecom system on Eastern Line (Port Harcourt, Maiduguri, etc) including revised estimated total cost for extension to Western Line
 Power
• N1.02 billion set aside as fund for the Mambilla Hydro Power project
• N400 million for construction of 215MW LPFO/ Gas Power station Kaduna
• N388.5 million for Kashimbilla transmission
• N398 million for Fast Power Programme Accelerated Gas and Solar Power Generation
 Housing
• N30.04 billion for Federal Government National Housing Programme
 Works
• About N280.44 billion for the construction and rehabilitation of roads in every geo-political zone of the country, such as:
• Counterpart Funding for the Dualizationof Makurdi – Enugu Road
• Counterpart Funding for the Dualization of Akwanga – Jos – Bauchi – Gombe Road
• Reconstruction of the Outstanding Sections of Benin – Ofosu – Ore – Ajebandele – Shagamu Expressway
• Construction of Bodo – Bonny Road
• Pavement Strengthening and Asphalt Overlay of Ajebandele – Ijebu Ode – Shagamu Road
• Construction of Oju/Loko – Oweto Bridge to link Loko and Oweto
• Dualization of Ilorin – Jebba – Mokwa/Bokani Junction Road
• Kano – Maiduguri Road (Various Sections)
• Abuja – Lokoja Road (Various Sections)
• Dualization of Obajana Junction to Benin (Various Sections)
• Lagos – Shagamu – Ibadan Dual Carriageway
• Early Works for the Construction of 2nd Niger Bridge in Anambra/Delta States
• Construction of Kaduna Eastern By-pass
• Abuja – Kano Dual Carriageway
• Dualization of Odukpani – Itu – IkotEkpene Road
• Construction of Kano Western Bye Pass
• Abuja – Abaji
• Suleja – Minna Road
• Rehabilitation & Expansion of Lagos – Badagry Expressway
• Rehabilitation of Vandeikya – Obudu – Obudu Cattle Ranch Road
• Rehabilitation of Ilorin – Kabba – Obajana Road In Kwara/Kogi
• Reconstruction of Nasarawa – Loko Road
• Dualisation of Sapele – Ewu Road (various sections)
• Reconstruction of Bida – Lambata Road in Niger State
• Rehabilitation of Ikorodu – Shagamu Road
• Rehabilitation of 9th Mile – Orokam Road In Enugu State
• Re-construction of Sokoto – Tambuwal – Jega – Kontagora – Makera
• Design and Construction of Bridge Across the Cross River at Uwana (Ebony State) to Nkomoro (Cross River State)
• Construction of Road Falali, Birni, Bako to Furoja Town (Ningilga), Bauchi State
 Health
• N51.22 billion Provisioned for the implementation of the National Health Act
• N21.25billion provided for GAVI/Immunization
• N1.26 billion for the procurement Of Non Polio SIA Vaccine
• N1.12 Billion for the procurement Of Kits And Commodities For Community Health Influencers
• N780 million for the establishment Of Chemotherapy centres in UBTH, UITH, ABUTH, UMTH, OAUTH, UNTH, UPTH, FMC Owerri, FMC Abeokuta
• N7.63 billion for procurement of RI vaccines and devices
• N3.5 billion for counterpart funding including global fund/health
 Water Resources
• N1.8 billion provisioned for the Zobe Water Supply Project – Phase I & II
• N1 billion for Partnership for Expanded Water, Sanitation and Hygiene (PEWASH)
• N1 billion for Special Intervention for North East and IDPs – Potable of Portable Water
• Over N53 billion for water supply, rehabilitation of dams, and irrigation projects nationwide
 Agriculture & Rural Development
• N3.64 billion Support For Infrastructure, Projects and Coordination Services
• Over N15.66 billion for Promotion and Development of Value Chain across in more than 30 different commodities
• N5.46 billion for Veterinary and Pest Control Services
• N7.90 Billion for Rural Roads And Water Sanitation
• N3.27 billion for National Grazing Reserve Development
• N1.09billion for Mechanization
• N1.99 billion for Livelihood Improvement Family Enterprise (Life) Programme
• N2.52 billion for Food and Strategic Reserves
• N2.49 Billion for Agribusiness and Market Development
• N2.69 billionfor Extension Services
• N1.72 billion for Land and Climate Management
• N1.03 billion for GES – Delivery Platform, Roll-out and Management
 Industry, Trade & Investment
 Special Economic Zone Projects
 N42 billion for ongoing and planned Special Economic Zone Projects across the geopolitical zones to drive manufacturing/exports.
 Construction/Provision of Road for Ikpokri Energy City Project
 Completion of Lekki Model Textile and Garment Industrial Park
 Provision of Infrastructure at Brass Free Zone, Bayelsa State
 Construction of Textile & Garment Park, Lekki
 Construction of Special Economic Zone (SEZ) Sokoto
 Construction of Special Economic Zone (SEZ), Makurdi
 Completion of Consultancy Works On Ebonyi, Edo, Adamawa, Rivers, Bauchi, Enugu, Gombe, Nnewi, Abuja
 FGN investment in Enyimba Industrial Park, and Ibom Deep Sea Port and City
 N1 billion for Industrial Policy Reforms and Enabling Business Environment
 Export-Expansion Grant (EEG)
 N5.12 billion in the form of tax credit to support export via the Export Expansion Grant
 Recapitalisation of Bank of Industry (BOI) and Bank of Agriculture (BoA)
 N15 billion provisioned to support these development finance institutions to support Micro, Small and Medium Scale Enterprises (MSMEs)
 N10 billion provided as a grant to BOI to subsidize interest rate charged on loans to SMEs. This is intended to make it possible for the Bank to give them single digit interest loans.

 Education
 N3 billion Provision of Security Infrastructure in 104 Colleges
 N1.8 billion for Payment of 5000 Federal Teachers Scheme Allowance
 N6.8 billion for various Scholarship allowances
 Niger Delta
 N1 billion for the construction and supervision of Gberegolor – Ogriagbene Road, Delta State
 N2 billion for the Construction of Agadagba – Akotogbo – Iyasan – Ovia River bridge Irele LGA,Ondo State
 N7.1 billion for various sections of the East-West Road
 N2 billionfor the construction of skills acquisition centres with resident supervision and furnishing/equipping in nine states of the Niger Delta Region
 Regional Interventions
 N65 billion for reintegration of transformed ex-militants under the Presidential Amnesty Programme.
 N45 billion for Federal Initiative for North-East (Pilot Counterpart funding contribution)
 N10 billion as take-off grant for the North East Commission
 SDGs
 N40 billion for SDGs Intervention Programmes/Conditional Grants
 N5.5 billion for other SDGs Projects
 Special Intervention Programme
 N500 billion for FGN Special Intervention Programme (including Social Housing, Home Grown School Feeding Programme, Government Economic Empowerment Programme, N-Power Job Creation Programme, Conditional Cash Transfers, etc)
Conclusion
▪ The 2019 Budget of Continuity is intended to further reposition the economy on the path of higher, inclusive, diversified and sustainable growth, and to continue to lift significant numbers of our citizens out of poverty.
▪ The Budget also reflects the key execution priorities of the ERGP, namely Restoring Macroeconomic Stability; Agriculture and Food Security; Energy Sufficiency (in Power and Petroleum Products); Transportation Infrastructure; and Industrialization (focusing on SMEs).
▪ Government will continue to create the enabling environment for private sector to increase their investment and contribute significantly to job creation and economic growth.
▪ Already, diversification efforts are yielding positive results with significant growth in the non-oil sector (2.32% growth in Q3 2018, up from 2.05% in Q2 2018).
▪ Nigeria faces significant challenges with respect to revenue generation and this is being tackled vigorously. Key reforms will be implemented with increased vigour to improve revenue collection and expenditure management.
▪ Our aim is to take all measure necessary to ensure that we grow rapidly while maintaining fiscal sustainability
Abbreviations
GOE: Government-owned Enterprises
CIT: Company Income Tax
TSA: Treasury Single Account
SWV: Service-wide Vote
CRF: Consolidated Revenue Fund