The N10.33 trillion budget for 2020 submitted by President Muhammadu Buhari yesterday (October 9) has been condemned by the Senators for lacking the tendency to foster growth. The Senate in a recent debate has declared that they would “take over” and “redirect” the economy.
Kicking off the debate, Senate Majority Leader Yahaya Abdullahi said: “The Capital Budget to GDP Ratio is rather too small, (about two percent of GDP).” According to him, “The injection of this amount is a mere drop in the ocean and is incapable of stimulating the economy to higher growth, wealth creation, and employment generation.”
He noted: “The projections of increased oil production averaging 2.18 million barrels/day, in the medium term, are subject to very high risks that have had devastating consequences in recent times. Volatility, both at the international market and in the Niger Delta, is a factor that could make these expectations only tentative.”
Having revised the allocation for capital development in the budget bill, Abdullahi said: “When viewed in terms of per capita, the 2020 capital expenditure of N2.46 trillion, is paltry.”
He maintained that the projected high deficit of N2.18 trillion for 2020 is a direct function of the economy-wide revenue shortfall, and also a result of borrowing.
“Government, particularly the collecting agencies, must improve on their collection capacity. But to do this, there must be robust investments in the real sector so that it could grow to earn taxable revenues.”
He criticized the Central Bank of Nigeria’s limiting monetary policy in the face of a clear economic necessity to reflate the economy, particularly by ensuring cheap money to power the real sector of the economy.
“I have, on the floor of this chamber, repeatedly called for the realignment of the country’s monetary and fiscal policies to ensure the right structural momentum in the economy,” Abdullahi said.
Speaking in the same vein, Minority Leader Enyinnaya Abaribe said that the fiscal plan was nothing but a “budget of taxation”, wondering how Buhari intends to create jobs after failing in investing in things that can generate jobs.
He said: “Debt servicing, as a component, is higher than capital expenditure. The projected growth, as read by the president, is 1.9 percent less than the population growth of 2.6 per cent.
“So, if you look at it globally, we are still struggling. That is why I was very happy when the Senate Leader said we may have to take over and redirect the economic policy of this government, having seen that the executive has not done anything.”
Senator Gabriel Suswam advised that the economy should not be allowed to take a downward trajectory. “Our economy has come to a level that this Senate needs to take over and redirect its affairs,” he said. He warned that too much debt would increase the budget deficit.
However, Ike Ekweremadu, the Former Deputy Senate President urged lawmakers to create an excellent budget that would grow the economy. “The president has done his job,” he said but added: “It is left for us to subject the budget to legislative scrutiny. We can’t blame the president if we fail to subject the budget to scrutiny.”
Meanwhile, in an exclusive interview with the Guardian, Chairman of the Society for Analytical Economics, Prof. Godwin Owoh, said that Buhari should have added the expected half-year spillover that would be cut off in the event that the 2020 plan comes into force on January 1 next year.
“There should be a quantitative recall of the cut-off value, so that it can be reflected on the spending items of the current budget, failing which might lead to abuse because this is already approved spending. Alternatively, he has to present a bill to extinguish the spillover spending, to avert a situation where this spending will be outside the government’s financial control and might affect economic variables,” Owoh said.