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2021 budget projections not realisticExperts

Published by The Nation on Sun, 29 Nov 2020

Charles OkonjiANALYSTS have raised fears over successful execution of the proposed N13.08 trillion 2021 budget, termed budget of economic recovery.Relaying his fears, Professor Akpan Hogan Ekpo an economist and public policy analyst stated that the instability in the global oil price and uncertainties in the oil market will be a very big challenge to actualising the budget.Ekpo said, I have always argued that oil price is an outside thing because we do not control the price. We cannot be planning our economy or budget on oil prices, oil prices are not stable, so we must have a non-oil budget and it does not mean that oil will be zero. For example, if you budget with oil price at $40 per barrel, what if it becomes $30 or $20, how do we generate the difference' Again, we all know oil is a wasting asset because it will finish one day. The revenue projection of 2021 budget still takes oil as the main source of revenue, which in my mind is dangerous.He pointed out that one of the ways to augment source of revenue generation is for the country to be ready to scale down on what it wants to do in 2021, stressing that the other way is to raise the Internally Generated Revenue. There are many people who are not in the tax bracket and I am not saying the government should increase the tax rate, but expand the tax net so that many people outside the tax will be included so that the government can increase the revenue base.The next thing to do is expenditure switching. Some expenditure is not necessary. For example, why would the government and some of its agencies continue to budget for furniture every year' Has the furniture depreciated' We can cancel all of that and use the money for health and education in 2021.We also have to reduce the cost of governance, because right now, the cost of governance is too high in Nigeria. If we bring down the cost of governance by even 30 per cent we will save a lot of money. Generally speaking, there is nothing wrong with borrowing if it is borrowed to finance projects that will induce economic growth, the Professor of economics emphasised.Advising the government on what to do, Ekpo said, You must carry out a feasibility study for any project before it enters the budget, but I am not sure we do that in Nigeria. If you want to bring in any capital project into the budget proposal, you must do the feasibility study to know the actual cost of the project before it enters the budget.Read Also:National Assembly gives ultimatum on budgetIf they do that, a lot of the expenditure at the capital side may not be what it is because our budget has a problem. We are serving about 70 per cent of recurrent and with that, we will not make much progress. We borrow too much and if you look at the budget, about N3 trillion or more is to service debt it is just too high.While commenting on dwindling revenue, he said that the major source of revenue for Nigeria is oil, explaining that the revenue is very volatile and uncertain.In his submission, Dr. John Isemede, an International Market Expert, stated that it is too early to comment on the 2021 budget, saying that most MDAs cannot defend their budget yet.Isemede said, Though, very many of them were set up after selling most critical infrastructure in Nigeria. And those who are supposed to be revenue generation do not know the direction and we cannot blame them, because these agencies were set up to help the private sector, but they deviated into seminars and workshops and travelling abroad all in the name of training.Dr. Kester Erawoke, an Economist in the Department of Economics, Delta State University, Abraka, stressed that for any budget to be progressive and have impact on growth, such a budget must recognise human capital development, noting that the 2021 budget didnt recognise this.Erawoke stated that for the budget to be impressive, such a budget must have divergent means of revenue generation to avoid a deficit that will lead to borrowing at the end of the day.In his word, The federal government hopes to generate almost N8 trillion for budget 2021. However, the amount budgeted for debt servicing is about N3.12 trillion, this means most of the proposed 2021 budget will be used to service loans, what will be left for capital and recurrent expenditure' It is a big problem. Remember the loan obtained from China, they will not let go of any debt because all monies are for specific projects and if they are not paid, they will take over such project with respect to agreement reached.You and I know that Nigerians dont do projects and even if they do, they will not do it to specification, how then will the expectation of the budget be achieved' Remember our debt issues started with the first loan contracted to do railway in late 70s to early 80s and up till this date, the rails are not completed, how will such a budget have any impact'Raising some posers, the university don said, How can we achieve the budget when we have numerous MDAs, over 40 percent of them cannot pay salaries. So, the question is, were they set up in line with the needs of the private sector' So if you set up an organisation without a target, there is no way they can generate revenue, so you should not expect anything from them.
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