UK-based accountant and finance professional, Feyi Faweyinmi, says the 2020 budget proposal recently presented to the National Assembly by President Muhammadu Buhari, has no connection with the present realities in the country.
Speaking at the weekend, Faweyinmi who described the budget proposals as a fiction, said it is not different from the previous budgets which was just a mechanism by which salaries are paid.
“Maybe we can say the Capex is now more ‘realistic’ as the numbers have come down compared to the 2019 budget. The Capex budget for last year was meaningless as the actual implementation was so far from what was budgeted. So reducing it makes some sense.”
He however commended the decision of the federal government to increase VAT, noting that public finances in the country are so bad that there are no good options.
“However, the government then increased the threshold to pay the VAT to N25m and exempted new industries that were not previously exempted. To me, this defeats the whole purpose of raising revenues as I don’t think the increase will bring in much money with exemptions added. If the government wanted to do it like that, then it was pointless to waste political capital on a tax increase that doesn’t bring in much revenue. It could simply have left it at 5% and then widened the net maybe by removing some exemptions.”
On the issue of a possible devaluation of the Naira, Faweyinmi said it is incredible that the FX rate has remained fixed for almost 3yrs now.
“But the key trigger is that the CBN is effectively borrowing money from foreign investors at 14% and lending it to the FG at 0% and then “chesting” the difference. The CBN’s balance sheet is now ‘full’ and there is no room to hide anything again.”
“To focus on policies that take the responsibility of investing in the economy away from government to the private sector. They seem to think they can do everything. The Nigerian economy badly needs investments right now so policies that attract investment should be the focus.
Also reacting to the new Economic Advisory Council, Faweyinmi said for political reasons, President Buhari might be forced to take the advice of the council members since they will want to prove a point about being better than the EMT which they effectively replaced.