Budget of Economical Growth and Sustainability
His Excellency, President Muhammadu Buhari
President, Federal Republic of Nigeria
At the Articulation Session of the National Assembly, Abuja
Thur, Oct 7, 2021
1. It is my great pleasance to be hither one time once again to nowadays the 2022 Federal Budget Proposals to this distinguished Articulation Session of the National Assembly.
2. Distinguished and Honourable leaders, and members of the National Assembly, allow me start by commending you for the expeditious consideration and passage of the Supplementary Appropriation Bill 2021. This farther underscores your commitment to our collective efforts to contain the COVID-19 Pandemic and address the various security challenges facing our country.
3. I will also take this opportunity to give thanks you for the quick consideration and approbation of the 2022-2024 Medium-term Expenditure Framework and Financial Strategy Paper. Our hope is that National Assembly will proceed to partner with the Executive by ensuring that deliberations on the 2022 Budget are completed before the cease of this yr so that the Appropriation Deed can come up into effect by the foremost of Jan 2022.
4. The 2022 Budget will be the in conclusion total yr budget to be implemented by this administration. We designed it to build on the achievements of preceding budgets and to deliver on our goals and aspirations as will be reflected in our soon-to-be launched National Evolution Program of 2021 to 2025.
5. Distinguished Senators and Honourable Members, in normal times, I create employment of this opportunity to supply an overview of global and domestic developments in the current yr, a summary of our achievements, and our plans for the next financial yr.
6. Notwithstanding, these are exceptional times. The grim realities of COVID-19 and its deadly variants are still upon us. From President to Pauper, the virus does not discriminate.
7. This is why our country still maintains its COVID -19 guidelines and protocols in location to protect its citizens and halt the spread of this illness.
8. Over the past times few days, we have consulted with the Presidential Steering Commission on COVID-19 and the leadership of the National Assembly on how best to nowadays the 2022 budget proposal keeping in brain the deep-rooted traditions in location and the guidelines for safe mass gatherings.
9. We ultimately decided that the most responsible and respectful approach was to take hold a shorter than usual gathering patch allowing the Honourable Government minister of Finance, Budget and National Planning to supply fuller details of our proposals in a smaller case.
10. I am certain many of you will be relieved as my in conclusion budget speech in Oct 2020 lasted over 50 minutes.
11. Still, over the next few minutes, I will provide key highlights of our 2021 performance as good as our proposals for 2022.
PERFORMANCE OF THE 2021 BUDGET
12. The 2021 ‘Budget of Economical Recovery and Resilience’ is based on a benchmark oil damage of 40 US Dollars per barrel, oil production of 1.6m b/d, and exchange rate of 379 Naira to US Dollar. Furthermore, a Supplementary budget of 982.73 billion Naira was of late enacted to address exigent issues in the Security and Health sectors.
13. Based on the 2021 Financial Framework, total revenue of 8.12 trillion Naira was projected to fund aggregate federal expenditure of 14.57 trillion Naira (inclusive of the supplementary budget). The projected financial deficit of 6.45 trillion Naira, or 4.52 percent of Gross domestic product, is expected to be financed mainly by domestic and external borrowings.
14. By July 2021, Nigeria’s daily oil production averaged one 1.70million barrels (inclusive of condensates) and the marketplace damage of Bonny Visible light rough averaged 68.53 US Dollars per barrel.
15. Accordingly, actual revenues were 34 percent below target as of July 2021, mainly due to the underperformance of oil and gas revenue sources. Federal Authorities’s retained revenues (excluding Authorities Owned Enterprises) amounted to 2.61 trillion Naira against the proportionate target of 3.95 trillion Naira for the period.
16. The Federal Authorities’s portion of Oil revenue totalled 570.23 billion Naira as of July 2021, which was 51 percent below target, patch non-oil revenue enhancement revenues totalled 964.13 billion Naira. The poor performance of oil revenue relative to the budget was largely due to the shortfall in production as good as important cost recovery by NNPC to cover the shortfall betwixt its cost of importing petrol and the pump damage.
17. The National Assembly will recall that in March 2020 the Crude Products Pricing Regulatory Agency announced that the damage of petrol would henceforth be determined by marketplace forces.
18. Notwithstanding, as the combination of rising rough oil prices and exchange rate combined to force the damage the hitherto regulated damage of 145 Naira per litre, opposition against the policy of damage deregulation hardened on the section of Labour Unions in specific.
19. Authorities had to suspend farther upward damage adjustments patch engaging Labour on the subject. This petrol subsidy significantly eroded revenues that should have been available to fund the budget.
20. On a positive notation, we surpassed the non-oil taxes target by 11 (11) percent in aggregate. The sustained improvement in non-oil taxes indicates that some of our revenue reforms are yielding positive results. We await farther improvement in revenue collections later in the yr as to a greater extent corporate entities file their revenue enhancement returns and we accelerate the implementation of our revenue reforms.
Improving Revenue Generation and Administration
21. We have stepped upwardly implementation of the strengthened framework for performance direction of authorities owned enterprises (GOEs), with a view to improve their operational efficiencies, revenue generation and accountability. The 50% cost-to-income ratio imposed on the GOEs in the Finance Deed 2020 has contributed significantly to rationalizing wasteful expenditures by several GOEs and enhanced the level of operating surpluses to be transferred to the Consolidated Revenue Fund (CRF). I solicit the cooperation of the National Assembly in enforcing the cost-to-income ratio and other prudential guidelines during your consideration of the budget proposals of the GOEs, which I am also laying before you nowadays.
22. On the expenditure side, as at cease of July 2021, a total of 6 dot seven-nine (6.79) trillion Naira had been spent as against the pro-rated expenditure of 7 dot nine-one (7.91) trillion Naira. Accordingly, a deficit of 4 dot one-seven (4.17) trillion Naira was recorded as at cease of July 2021. The deficit was financed through domestic borrowing.
23. Despite our revenue challenges, we have consistently met our debt service commitments. We are also upwardly to date on the payment of staff salaries, statutory transfers, and overhead costs. As at (4th of Oct 2021, a total of 1.732 trillion Naira had been released for working capital expenditure.
24. I am delighted to inform you that we await to fund MDAs’ working capital budget fully by the cease of the financial yr 2021.
25. Working capital releases thus far have been prioritised in favour of critical ongoing infrastructural projects in the powerfulness, roads, rail, agriculture, wellness and education sectors.
26. We have made progress on the railway projects connecting different parts of the country. I am glad to study that the Lagos-Ibadan Line is at present completed and operational. The Abuja-Kaduna Line is running efficiently. The Itakpe-Ajaokuta rail Line was finally completed and commissioned over 30 (30) years after its initiation.
27. Arrangements are underway to finish the Ibadan-Kano Line. Also, work will before long commence on the Port Harcourt-Maiduguri Line and Calabar-Lagos Coastal Line, which will connect the Southern and Eastern States to themselves and to the Northward.
28. Pace is also existence made on several powerfulness generation, transmission, and distribution projects, as good as off-grid solutions, all aimed towards achieving the national goal of optimizing powerfulness render by 2025.
29. I am once again happy to study that we proceed to create visible progress in our strategic route interpretation projects similar the Lagos – Ibadan expressway, Apapa – Oworonsoki expressway, Abuja – Kano expressway, East-Due west Route and the moment Niger bridge. We hope to commission most of these projects before the cease of our tenure in 2023.
30. The Pandemic revealed the urgent demand to strengthen our wellness system. Towards this cease, we constructed 52 Molecular labs, 520 bed intensive attention units, 52 Isolation centres and provision of Personal Protective equipment across 52 Federal Medical Centres and Teaching Hospitals.
31. We proceed to force our expenditure rationalization initiatives which we commenced in 2016. For illustration, on personnel costs, the number of MDAs captured on the Integrated Payroll and Personnel Information Scheme increased from 459 in 2017 to 711 to date.
32. The recent passage of the Crude Industry Deed 2021, and consequent incorporation of the Nigeria National Crude Corporation should also resultant in rationalisation of expenditure, as good as increased investments and improved output in the oil and gas industry.
33. Distinguished Senators and Honourable Members, you will hold with me that a lot has been accomplished over the in conclusion yr but there is still much to be done. I will at present proceed with a review of the 2022 Budget proposal.
THEME AND PRIORITIES OF THE 2022 BUDGET
34. The allocations to MDAs were guided by the strategic objectives of the National Evolution Program of 2021 to 2025, which are:
a. Diversifying the economic system, with robust MSME growth;
b. Investing in critical infrastructure;
c. Strengthening security and ensuring good governance;
d. Enabling a vibrant, educated and salubrious world;
e. Reducing poverty; and
f. Minimizing regional, economical and social disparities.
35. The 2022 Appropriation thus is a Budget of Economical Growth and Sustainability.
36. Defence and internal security will proceed to be our top precedence. We remain firmly committed to the security of life, asset and investment nationwide. We will proceed to ensure that our gallant men and women in the armed forces, police force and paramilitary units are properly equipped, remunerated and well-motivated.
37. The 2022 budget is also the foremost in our history, where MDAs were clearly advised on gender responsive budgeting. These are section of critical steps in our efforts to distribute resources fairly and arrive at vulnerable groups of our society.
PARAMETERS AND FISCAL ASSUMPTIONS
38. Distinguished Members of the National Assembly, the 2022 to 2024 Medium Term Expenditure Framework and Financial Strategy Paper sets out the parameters for the 2022 Budget as follows:
a. Conservative oil damage benchmark of 57 US Dollars per barrel;
b. Daily oil production judge of 1.88 million barrels (inclusive of Condensates of 300,000 to 400,000 barrels per daytime);
c. Exchange rate of 4 410.15 per US Dollar; and
d. Projected Gross domestic product growth rate of 4.2 percent and 13 percent inflation rate.
2022 REVENUE ESTIMATES
39. Based on these financial assumptions and parameters, total federally-collectible revenue is estimated at 17.70 trillion Naira in 2022.
40. Total federally distributable revenue is estimated at 12.72 trillion Naira in 2022 patch total revenue available to fund the 2022 Federal Budget is estimated at 10.13 trillion Naira. This includes Grants and Assist of 63.38 billion Naira, as good as the revenues of 63 Authorities-Owned Enterprises.
41. Oil revenue is projected at 3.16 trillion, Non-oil taxes are estimated at 2.13 trillion Naira and FGN Independent revenues are projected to be 1.82 trillion Naira.
PLANNED 2022 EXPENDITURE
42. A total expenditure of 16 dot three-nine (16.39) trillion Naira is proposed for the Federal Authorities in 2022. The proposed expenditure comprises:
a. Statutory Transfers of 768.28 billion Naira;
b. Non-debt Recurrent Costs of 6.83 trillion;
c. Personnel Costs of 4.11 trillion Naira;
d. Pensions, Gratuities and Retirees’ Benefits 577.0 billion Naira;
e. Overheads of 792.39 billion Naira;
f. Working capital Expenditure of 5.35 trillion Naira, including the working capital constituent of Statutory Transfers;
g. Debt Service of 3.61 trillion Naira; and
h. Sinking Fund of 292.71 billion Naira to retire sure maturing bonds.
43. We await the total financial operations of the Federal Authorities to resultant in a deficit of 6.26 trillion Naira. This represents 3.39 percent of estimated Gross domestic product, slightly the 3 percent threshold set by the Financial Responsibleness Deed 2007. Countries around the world have to of necessity over-shoot their financial thresholds for the economies to go and thrive
44. We demand to top this threshold considering our collective want to proceed tackling the existential security challenges facing our country.
45. We program to finance the deficit mainly by new borrowings totalling 5.01 trillion Naira, 90.73 billion Naira from Privatization Proceeds and 1.16 trillion Naira drawdowns on loans secured for specific evolution projects.
46. Some have expressed concern over our resort to borrowing to finance our financial gaps. They are right to be concerned. Notwithstanding, we believe that the debt level of the Federal Authorities is still within sustainable limits. Borrowings are to specific strategic projects and can be verified publicly.
47. As you are aware, we have witnessed 2 economical recessions within the period of this Administration. In both cases, we had to pass our way out of recession, which necessitated a resort to growing the public debt. It is unlikely that our recovery from each of the 2 recessions would have grown as fast without the sustained authorities expenditure funded by debt.
48. Our target over the medium term is to grow our Revenue-to-Gross domestic product ratio from in relation to 8 percent currently to 15 percent by 2025. At that level of revenues, the Debt-Service-to-Revenue ratio will cease to be worrying. Position simply, we do not have a debt sustainability job, but a revenue challenge which we are determined to tackle to ensure our debts remain sustainable.
49. Real importantly, we have endeavoured to employment the loans to finance critical evolution projects and programmes aimed at improving our economical environs and ensuring effective delivery of public services to our people. We focused on;
a. the completion of major route and rail projects;
b. the effective implementation of Powerfulness sector projects;
c. the provision of potable body of water;
d. interpretation of irrigation infrastructure and dams across the country; and
e. critical wellness projects such as the strengthening of national emergency medical services and ambulance system, procurement of vaccines, polio eradication and upgrading Primary Health Tending Centres across the 6 geopolitical zones.
Innovations in Infrastructure Financing
50. In 2022, Authorities will farther strengthen the frameworks for concessions and public private partnerships (PPPs). Working capital projects that are good candidates for PPP by their nature will be developed for private sector participation.
51. We will also explore available opportunities in the existing ecosystem of dark-green finance including the implementation of our Sovereign Greenish Bond Programme and leveraging debt-for-climate swap mechanisms.
Enhancing Revenue Mobilisation
52. Our strategies to improve revenue mobilisation will be sustained in 2022 with the goal of achieving the next objectives:
a. Heighten revenue enhancement and excise revenues through policy reforms and revenue enhancement administration measures;
b. Review the policy effectiveness of revenue enhancement waivers and concessions;
c. Boost customs revenue through the e-Customs and Single Window initiatives; and
d. Safeguard revenues from the oil and gas sector.
53. Distinguished Senators and Honourable Members, I commend you for the passage of the Crude Industry Deed 2021. It is my hope that the implementation of the law will boost confidence in our economic system and attract substantial investments in the sector.
Finance Bill 2022
54. In line with our program to accompany annual budgets with Finance Bills, partly to back up the realization of financial projections, current revenue enhancement and financial laws are existence reviewed to create a draft Finance Bill 2022.
55. It is our intention that one time ongoing consultations are completed, the Finance Bill would be submitted to the National Assembly to be considered amongst the 2022 Appropriation Bill.
56. Mr. Senate President, Mr. Speaker, Distinguished and Honourable Members of the National Assembly, this speech would be incomplete without commending the immense, patriotic, and collaborative back up of the National Assembly in the elbow grease to deliver socio-economic evolution and democracy dividends for our people.
57. I wishing to guarantee you of the strong commitment of the Executive to strengthen the human relationship with the National Assembly.
58. Nigeria is currently emerging from a rattling hard economical challenge. We must proceed to cooperate and ensure that our actions are aimed at accelerating the pace of economical recovery so that we can accomplish economical prosperity and deliver on our promises to the Nigerian people.
59. The financial yr 2022 is rattling crucial in our efforts to ensure that critical projects are completed, set to employment and improve the full general living conditions of our people.
60. It is with great pleasance thus, that I lay before this distinguished Articulation Session of the National Assembly, the 2022 Budget Proposals of the Federal Authorities of Nigeria.
61. I give thanks you most sincerely for your attending.
62. May God bless the Federal Republic of Nigeria.
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