Buhari admits 2019 budget failure, More items made VAT exempt

by on October 9, 2019

President Buhari has presented his proposal for Nigeria’s 2020 budget to a joint session of the National Assembly in Abuja, and blamed the poor performance of the 2019 budget on the underperformance of oil and non-oil sources and dwindling revenue from VAT. Buhari added that the projected revenue fell short of the actual receipts. “The 2019 Budget of Continuity was based on a benchmark oil price of $60 per barrel, oil production of 2.3 mbpd and an exchange rate of ₦305 to the US dollar. Based on these parameters, we projected a deficit of ₦1.918 trillion or 1.37 per cent of GDP. As at June 2019, the FG’s actual aggregate revenue (excluding government-owned enterprises) was ₦2.04 trillion. This revenue performance is only 58 percent of the 2019 budget’s target due to the underperformance of both oil and non-oil revenue sources. Specifically, oil revenues were below target by 49 per cent as at June 2019.” The result is that only recurrent expenditure items have been implemented substantially. The expenditure he proposed for the FG in 2020 is ₦10.33 trillion. The proposal shows that about a quarter of the sum (₦2.45 trillion) will be used for debt servicing, while capital expenditure is expected to consume ₦2.14 trillion which excludes the capital component of statutory transfers. A further breakdown presented by the President shows the expenditure estimate includes statutory transfers of ₦556.7 billion, non-debt recurrent expenditure of ₦4.88 trillion and provision for Sinking Fund to retire maturing bonds issued to local contractors is ₦296 billion. The budget was prepared on the assumption of $57 per barrel with crude oil production of 2.18 million barrels per day and the exchange rate assumed at ₦305 to $1. Other assumptions include real GDP growth of 2.93 per cent while “inflation is expected to remain slightly above single digits in 2020.”

During the presentation of the 2020 budget, President Buhari announced new items that would be exempted from the value-added tax. The items include pharmaceuticals, educational items and basic food commodities. The FG had presented an executive bill to the National Assembly seeking to raise VAT by 50 per cent to 7.5 per cent. Presenting the 2020 budget to the joint session of the National Assembly in Abuja, the President said the 2020 Appropriation Bill is based on the new VAT rate. However, the president said the list of items exempted from the VAT would be expanded to cover items covered under Section 46 of the Finance Bill, 2019. The new exempted items include brown and white bread; cereals, including maize, rice, wheat, millet, barley and sorghum; fish of all kinds; flour and starch meals; fruits, nuts, pulses and vegetables of various kinds. Others are roots, such as yams, cocoyams, sweet and Irish potatoes; meat and poultry products, including eggs; milk; salt and herbs of various kinds and natural water and table water. Buhari said the government is also proposing an increase of the threshold for VAT registration to ₦25 million in turnover per year.

Nine persons, including a 12-year-old boy, have been kidnapped in Pegi, a community in Kuje area council, Abuja. Gunmen, wearing military fatigues, raided the community on Monday night. Anjuguri Manzah, FCT police spokesman, said the police are making effort to rescue the kidnap victims whose identities have not been announced. Meanwhile, in Rivers state, gunmen abducted two policemen in Ngo, Andoni LGA. The identities of the policemen have also not been announced, but Nnamdi Omoni, spokesman of the Rivers police command, confirmed the report and promised to give details of the circumstances surrounding the abduction later. On Sunday, armed men had engaged policemen in a gun battle in Khana LGA also in Rivers State. The police were on the trail of a suspected kidnapper known as Lebari when the incident happened. Omoni said Lebari’s gang had killed at least 30 people in Khana and Gokana LGAs after collecting ransoms, and claimed that the police killed the suspect in a forest on Sunday night but two officers sustained gunshot injuries.

The Royal Court of Justice on Tuesday unanimously dismissed banking giant JP Morgan’s appeal against the Nigerian government over its role in the controversial Malabu scandal. According to civic campaigner, Barnaby Pace of Global Witness, who was at the court on Tuesday, the court took no view on the underlying cause but ruled that the contractual terms did not rule out Nigeria bringing the claim. This implies that the banking giant lost its appeal to stop the Nigerian government from proceeding with its suit. Tuesday’s verdict was devoid of speeches and arguments as it was just a hand down of the judgement. Last July, JP Morgan told an appeal court that it acted in line with its legal mandate when it allowed the transfer of $875 million from an account held by Nigeria to a shell company run by a former Nigerian oil minister, Dan Etete. Rosalind Phelps of Fountain Court Chambers, representing the bank, told the Court of Appeal that a lower court judge was wrong to reject JP Morgan Chase & Co’s bid to toss the Federal Republic of Nigeria’s suit. The bank moved to appeal a judgement that dismissed its motion to halt its prosecution by the Nigerian government last February. A skeletal argument presented by the Nigerian government through its lawyers during a case management hearing at a London High Court showed details of the appeal. Last February, a High Court in London had dismissed a motion filed by the U.S. firm to halt its prosecution by the Nigerian government over the Malabu oil scandal.

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