The raising of the Federal Government’s 2019 budget deficit financing level by N90 billion in the just-approved fiscal spending plan by the National Assembly has drawn different reactions from some economists in Abuja.
An economist and presidential candidate of the Abundant Renewal Party of Nigeria (ARPN) in the last general elections, Mr. Tope Fasua, said increasing the size of the budget was desirable but not for “unproductive spending.”
“The disturbing issue is the purpose for this additional spending, which has already increased the fiscal deficit. It is for unproductive ventures like the settlement of National Assembly severance packages and allowances and security support to Zamfara State. Why should the Federal Government single out a state for additional spending when such a state is an autonomous entity? This is not spending that can catalyse growth and development.”
Economist and public commentator, Mr. Odilim Enwegbara, also criticised the planned spending of additional revenue by the National Assembly members, saying: “I won’t worry myself if the N90 billion increase was targeted at addressing national security. But I am worried that some people simply generate some level of insecurity and then the national budget takes care of it. Secondly, for how long will our federal lawmakers just increase their upkeep spending?
“I will still continue to argue that our budget to GDP ratio is the lowest among peer economies. And that this is happening because our tax to GDP ratio, along with our tax to budget ratio, is embarrassingly the lowest among peer economies. This is the reason our recurrent spending has remained always over 80 per cent of our overall fiscal spending. As a result, our infrastructure deficit has been dangerously growing at such a geometric progression while infrastructure investment, at best, remains stagnant.”
But a consultant to the Economic Community of West African States (ECOWAS), Prof. Ken Ife, sees the National Assembly’s action differently. According to him, “The addition of N90 billion by the National Assembly seems justifiable given the breakdown in security in Zamfara, Katsina and Kaduna States. Some of that money should also go to conditional cash transfer, the TraderMoni initiative and youth employment and empowerment programme. At N1.9 trillion plus N90 billion, we are well within our fiscal responsibility legal limits of three per cent fiscal deficit to GDP ratio and within the benchmark of 40 per cent debt servicing to govt revenue ratio. There has been additional borrowing of bond that was four times over-subscribed. Some of these proceeds would go to retire long-outstanding debt to the private sector to stimulate the economy.”
Meanwhile, Prof. Segun Ajibola, also an economist, said the low allocation of N2 trillion for capital expenditure in the budget shows pressure on the economy.
The budget’s statutory transfer stands at N502 billion; fiscal deficit is N1.9 trillion; special intervention, N500 billion; recurrent expenditure N4 trillion; capital expenditure, N2 trillion and Deficit to Gross Domestic Product (GDP), 1.37 per cent.
The cost of governance is high and it is making the capital expenditure drop, Ajibola said.
Recall that the provision for capital expenditure in the 2018 budget was N2.8 trillion.
“We have a lot of pressure on the budget. We have debts to service. It is the capital budget that will bear the brunt. I believe we will be able to moderate the allocation to capital budget by the time we generate sufficient returns from the investment from ongoing projects. If we are able to recoup the initial expenditure on the projects, then the burden on capital budget will be down,” he said.
Ajibola, a former president of the Chartered Institute of Bankers of Nigeria, however, insisted that the implementation of the budget is feasible.