By Nwafor Sunday
The presidential candidate of the People’s Democratic Party, PDP, in the last general election, Alhaji Atiku Abubakar, criticized the 2021 budget presented to the National Assembly by President Muhammadu Buhari on Saturday, saying it contravenes the fiscal responsibility law.
In his post on Fcaebook, the former Vice President said: “Looking at the 2021 Budget Proposal presented to the National Assembly by President Muhammadu Buhari on Thursday, October 8, 2020, a number of questions arise, very serious and perhaps disturbing questions.
I could mention several of them, but given their seriousness and consequences for our economy, let me address a very important issue.
The budget deficit for the proposal is £ 5.21 trillion. This amount is a little over 3.5% of Nigeria’s GDP in 2019. This is contrary to the Fiscal Responsibility Act of 2007, which provides in Part II, Section 12, subsection 1 that: “Aggregate Spending and Aggregate amount assigned by the National Assembly for each financial year will not be more than the estimated aggregate income plus a deficit that does not exceed three percent of the estimated Gross Domestic Product or any sustainable percentage determined by the National Assembly for each financial year.
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 British pounds to 1 dollar, gives it a £ 5.07 trillion.
So clearly, the ₦ 5.21 trillion budget deficit, as announced by President Muhammadu, is above 3% of our GDP and therefore contravenes the 2007 Fiscal Responsibility Law.
Even more disturbing is the fact that our GDP has fallen dramatically from the 2019 figures, and the World Bank and other multilateral institutions have projected it somewhere between $ 400 billion and $ 350 billion. Which means that, in the real sense, the £ 5.21 trillion budget deficit is actually well above the 3% threshold stipulated by the FRA.
The fact that this has gone unnoticed by the Buhari administration shows a flagrant lack of rigor in the formulation of the Budget. A very disturbing development.
In addition, this deficit shows the precarious state of our national finances, which have since been burdened by excessive indebtedness by the Buhari administration.
It has not escaped my attention that the 2007 Fiscal Responsibility Law provides for the National Assembly to raise the budget deficit threshold from 3% to a higher figure.
However, if this is done, they will serve the interests of this administration, not those of Nigeria, because the law says that that threshold must be sustainable. Is it sustainable when our budget makes almost as many provisions for debt service as it does for capital expenditures?
As such, I ask the President to remember this budget and recalibrate it to reflect the provisions of the Fiscal Responsibility Act of 2007 and the nation’s current economic realities. Doing otherwise will not only be unpatriotic, it will also be catastrophic for our nation’s economy. “