The 2021 Budget Proposal Contravenes The Fiscal Responsibility Act

Former Vice President Atiku Abubakar on Thursday stated that looking at the 2021 Budget Proposal placed before the National Assembly by President Muhammadu Buhari on Thursday, October 8, 2020, a number of issues, very grave and perhaps disturbing issues arise.

He was cautious in bringing up several of the issues for the sake of its direness and consequence to the Nigerian economy; he, therefore, restricted himself to addressing one important issue.

Atimu pointed out that the budget deficit in the proposal is ₦5.21 trillion. “This amount is just over 3.5% of Nigeria’s 2019 GDP. This is contrary to the Fiscal Responsibility Act of 2007, which provides in Part II, Section 12, subsection 1 that: “Aggregate Expenditure and the Aggregate amount appropriated by the National Assembly for each financial year shall not be more than the estimated aggregate revenue plus a deficit, not exceeding three per cent of the estimated Gross Domestic Product or any sustainable percentage as may be determined by the national Assembly for each financial year,” Atiku declared.

The former Vice President emphasized that Nigeria had a GDP of approximately $447 billion in 2019. Three percent (3%) of this amount is $13. 3 billion, which at the current official exchange rate of ₦379 to $1, gives you a figure of ₦5.07 trillion, he stated.

“So clearly, the budget deficit of ₦5.21 trillion, as announced by President Muhammadu Buhari, is above 3% of our GDP and is, therefore, in contravention of the Fiscal Responsibility Act of 2007.

“Even more disturbing is the fact that our GDP has fallen sharply from its 2019 figures and has been projected by the World Bank and other multilateral institutions at somewhere between $400 billion and $350 billion. Meaning that in actual sense, the ₦5.21 trillion budget deficit is actually far above the 3% threshold stipulated by the FRA.

“That this escaped the notice of the Buhari administration shows a glaring lack of rigour in the formulation of the Budget. A very disturbing development,” Atiku declared.

He maintained that the deficit shows the precarious state of the national finances, which have since been overburdened by excessive borrowing on the part of the Buhari administration.

“It has not escaped my attention that the Fiscal Responsibility Act of 2007 makes provision for the National Assembly to raise the threshold of the budget deficit from 3% to a higher figure. However, if this is done, they will be serving this administration’s interests, not Nigeria’s, because the Act says that such a threshold must be sustainable. Is it sustainable when our budget makes almost as much provision for debt servicing, as it does for capital expenditure?

“As such, I call on the President, to recall this budget, and recalibrate it to reflect the provisions of the Fiscal Responsibility Act of 2007, and the current economic realities of the nation. To do otherwise will not only be unpatriotic, but it will also be catastrophic for our nation’s economy,” Atiku declared.