Financial experts have hailed the National Assembly for ensuring early passage of the 2020 budget, just as they expressed concern on the oil production benchmark.
The expert spoke with newsmen in Lagos, while reacting to 2020 budget which was passed by NASS members on Dec. 5.
Nigerian Senate passed a record N10.59 trillion for the 2020 budget.
The 2020 budget had a deficit of N2.28trillion to be financed through foreign and domestic borrowing.
The benchmark price for crude oil was increased from $55 to $57.
The appropriation bill had also been passed at the House of Representatives on Thursday.
Prof. Sheriffdeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, lauded the federal lawmakers for ensuring the 2020 budget was passed in December.
“I can’t remember when that happened last. It means the members are truly honourable. Hopefully, the President will assent to it without delay.
“The delay that will come with implementation will be minimal, or else all these efforts will come to nothing,” Tella said.
He, however, expressed reservations on the huge allocations to debt servicing and recurrent expenditure.
Tella said that the oil benchmark of 57 dollars per barrel was reasonable, noting that estimated 2.1 million barrel per day was ambitious, given OPEC present stance.
“The oil price of $57 per barrel is quite reasonable but the estimated 2.1 barrel per day may be quite ambitious given OPEC present stance, unless we have made up our mind not to obey the body.
“More importantly, however, is the huge allocations for debt servicing and recurrent expenditure, while capital expenditure is just about half the recurrent.
“The budget is not growth enhancing. The allocations to education and health are, as usual, very low.
“This is probably because debt servicing has taken large proportion of what should go to these sectors,” Tella said.
He advised that the Federal Government must put a lid on debt accumulation and seek other ways of financing infrastructure.
“We have to put a lid on the debt accumulation. We must seek other ways of financing infrastructure such as concessioning and public-private partnerships.
“The country has to free money from some sectors and debt servicing to finance education and health and start preparing our youths for the future that is almost here.
“The states must reassess themselves in relation to their level of financing and try to run balanced budget, stop paying frivolous monies to past officials or godfathers and commit more funds to the same education and health,” Tella said.
Malam Garba Kurfi,the Managing Director, APT Securities and Funds Ltd., lauded the passage of the budget by the lawmakers in December for the year 2020.
Kurfi called on the National Assembly to maintain the trend in the subsequent years to come.
He said that government should ensure at least 80 per cent budget implementation once assented by the Presidency.
“We expect that most of the capital expenditure will be fully implemented in order to stimulate growth of the economy,” Kurfi said.
He said that crude oil benchmark of $57 was not realistic due to fluctuation in oil prices at the international market.
Kurfi explained that drop in oil price below the benchmark target would adversely affect budget implementation.
“Similarly, the deficit of two trillion naira is about 20 per cent of the budget which is an issue of concern because it can lead to failure in capital projects which mostly rely on borrowing,” he said.
Also speaking, Mr Ambrose Omordion, Chief Operating Officer InvestData Ltd., said that increase in the budget to N10.56 trillion against initial estimate of N10.32 trillion was good for the economy.
Omordion said that the country needed an expansionary budget to activate economic activities.
He raised some concerns on tax increment in an economy that was still recovering sluggishly, and oil benchmark pegged at $57.
Omordion said that the amount allocated for debt servicing was higher than budgeted amount for capital expenditure, which was not good for economic growth and development.
He said that government should reduce borrowing, noting that the recent downgrading of Nigeria to negative from stable rating by Moody needed a call to action.
Omordion said that monetary and fiscal policies must complement each other to drive economic growth.