The Federal Government has revealed that 69% of the 2021budget will be funded with revenue from the non-oil sector while the oil revenue will fund 31%.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed who made this known during the public presentation of the 2021budget in Abuja on Tuesday, also said there is no going back on implementation of the Integrated Payroll and Personnel Information System(IPPIS) for all category its personnel.
In her words, “in aggregate, 31% of projected revenues is to come from oil related sources while 69% is to be earned from non-oil sources.
“Overall, the size of the budget has been constrained by our relatively low revenues”.
The federal government has been in a tug of war with the Academic Staff Union of Universities (ASUU) over implementation of IPPIS for payment of lecturers.
ASUU has stuck to its guns that implementation of IPPIS for tertiary institution was unworkable. The government has, however, gone ahead to capture some staff of federal government owned tertiary institutions. And just recently, the lecturers said they had made presentations to the Senate on the peculiar payment system for them. The academic union says it would continue it’s strike until the federal government acceded to it’s demand.
Ahmed said, there was no going back on IPPIS implementation for everyone under the federal government’s payroll.
According to her, the aim of IPPIS is to have a centralised payroll system that meets the needs of FGN employees and helps the Government to plan and manage payroll budget by ensuring proper control of personnel cost.
The minister pointed out that with the continuous increase in government wage bill, it was left with no choice than to bring in every federal government staff under the payroll system.
“The IPPIS has helped us to block leakages and I would like to just ask citizens to try to understand why only a few segment of the working population is fighting this policy (IPPIS). We have been having a running battle with ASUU, and ASUU has claimed that deductions are being made for other public servants. So, if you are off IPPIS and you are paying the right level of taxes then if you are on IPPIS, the system will calculate the tax, deduct it automatically and remit to the Federal Inland Revenue Service.(FIRS) We have a segment of the society that is fighting that reform.
“What is special about those people? If we can capture some tertiary institutions, if we can capture hospitals who have peculiarities also of consultants that visit several hospitals, what is different about the university system that they cannot also capture?
“The bottom line for us is that there has to be a biometric capture of any person that is being paid by the funds of government. Universities say they are independent, yes they are, but the salaries are paid by government. You can only claim that level of independence when you generate your salary,” she added.
Zainab disclosed that the government would be increasing its revenue generation drive as it seeks to address the large deficit in the 2021 budget. According to the minister, the aggregate revenue available to fund the 2021 budget is projected at N7.89 trillion 35 per cent more than the 2020 Revised Budget of N5.84 trillion.
The minister revealed that to promote fiscal transparency, accountability & comprehensiveness, the budgets of 60 government owned enterprises (GOEs) have been integrated in the 2021 Budget proposal.
The federal government has projected N13.08 per cent for the 2021 budget, which is 21 per cent higher than revised-2020 budget.
Recurrent (non-debt) spending, estimated to amount to N5.93 trillion is 43.19 per cent of total expenditure, and 14.32 per cent higher than 2020 revised estimates (reflecting an increases in salaries & pensions). While the Aggregate Capital Expenditure of N3.85 trillion is 29.43 per cent of total expenditure; and 43.4 per cent higher than the 2020 Revised Budget (inclusive of Capital component of Statutory Transfers, GOEs Capital & Project-tied loans expenditures).
The federal government is allocating N3.12 trillion to debt service which is 23.88 per cent of total expenditure, and is 16.63 per cent higher than 2020 revised Budget.
Overall budget deficit is N5.196 trillion for 2021. This represents 3.64 per cent of GDP
The budget deficit is expected to be financed mainly by borrowings while N2.14 trillion will be sourced domestically, another N2.14 trillion will be from foreign sources, with Multi-lateral /bi-lateral loan draw-downs and Privatisation Proceeds accounting for N709.69 billion and N205.15 billion
Also, reflected in the budget is provision of N220 billion or 1.68 per cent of total expenditure to retire maturing bonds to local contractors/suppliers.
This, the minister said is a reflection of government’s commitment to offset accumulated arrears of contractual obligations dating back over 10 years.
Allocations underscore our commitment to increase investment in national security and human capital development.
Key assumption of the budget are: oil benchmark of $40 per barrel; 1.86 daily oil production; N379/Dollar; inflation rate of 11.95 per cent, and GDP growth rate of 3 per cent.
Speaking earlier, Director General, Budget Office of the Federation (BoF), Ben Akabueze said revenue will be a critical component of the 2021 budget as the federal government seeks to shore up it’s earnings.
Akabueze noted that with dwindling revenue occasioned by covid-19 pandemic and oil market volatility, there was need for the government to plough all existing revenue leakages.
Only recently, the Office of the Accountant General of the Federation (OAGF) posted revenue directors to a about 10 of its revenue generating agencies.
The DG budget explained that out of the N1.35 trillion they generate they can only spend N825 billion while 80 per cent of the amount goes to the federation account.
He further explained that allocation to Defense “is a reflection of prevailing security situation in the country.”
“It on the concurrent lists, which should be part funded by States and Local Governments,” he added.