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President Muhammadu Buhari on Tuesday announced a ban on federal civil service recruitments to contain soaring recurring expenditure which had, over the years, consumed almost 70 per cent of annual budgets.
In his speech, while presenting the record N8.612 trillion budget proposal to the joint session of the National Assembly in Abuja, the President warned that further recruitments by the Ministries Departments and Agencies of government must obtain requisite approvals.
Out of the over N8 trillion planned expenditure for 2018, which is a nominal increase of 16 per cent above the 2017 Budget estimate, Buhari anticipates recurrent costs to gulp N3.494 trillion while capital takes N2.652 trillion or 30.8 per cent of total planned spending.
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The proposed 8.612 trillion Naira of 2018 Aggregate Expenditure comprises; Recurrent Costs of N3.494 trillion; Debt Service of N2.014 trillion; Statutory Transfers of about N456 billion; Sinking Fund of N220 billion (to retire maturing bond to Local Contractors); as well as Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).
N456.46 billion Naira was provided in the 2018 Budget for Statutory Transfers. The government says the five per cent increase over last year’s provision is mainly due to increases in transfer to Niger Delta Development Commission (NDDC) and the Universal Basic Education Commission (UBEC), which are related directly to the size of oil revenue.
But a substantial part of the recurrent cost proposal for 2018 is for the payment of salaries and overheads in key Ministries providing critical public services, including N510.87 billion for Interior; N435.01 billion for Education; N422.43 billion for Defence; and N269.34 billion for Health.
According to Buhari, the allocation to these Ministries represent significant increases over votes in previous budgets. He said overhead costs are projected to rise by 26 billion Naira in 2018, a modest increase of about 12 per cent reflecting inflationary adjustments as he advised MDAs to adhere to government regulations regarding cost control.
According to the president, Personnel costs is projected to rise by 12 per cent in 2018.
He said although the government has made substantial savings by registering MDAs on the Integrated Personnel Payroll Information System (IPPIS) platform, the increase is mainly due to provision for staff promotion arrears, and recruitments by the Military, Police Force and para-military agencies.
“Furthermore, I have directed that agencies are not to embark on any fresh recruitment unless they have obtained all the requisite approvals. Any breach of this directive will be severely sanctioned,” the President warned.
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Meanwhile, the government the Federal Government has estimated total revenue is N6.607 trillion in 2018, which is about 30 per cent more than the 2017 target. “As we pursue our goal of revenue diversification, non-oil revenues will become a larger share of total revenues,” Buhari assured in his speech. He said government projects oil revenues of N2.442 trillion Naira, and non-oil as well as other revenues of N4.165 trillion Naira.
Non-oil and other revenue sources of N4.165 trillion, include several items including Share of Companies Income Tax (CIT) of N794.7 billion, the share of Value Added Tax (VAT) of N207.9 billion, Customs & Excise Receipts of N324.9 billion, FGN Independently Generated Revenues (IGR) of N847.9 billion, FGN’s Share of Tax Amnesty Income of 87.8 billion, and various recoveries of N512.4 billion, N710 billion as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of N678.4 billion.
The president confirmed that in keeping with government’s policy, 30.8 per cent (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget.
Fiscal operations are expected to result in a deficit of 2.005 trillion Naira or 1.77 per cent of GDP, aligning with government’s plans under the Economic Recovery and Growth Plan (ERGP) to progressively reduce deficit and borrowings. The president said the deficit would be financed partly by new borrowings estimated at N1.699 trillion. Fifty per cent of this borrowing will be sourced externally, whilst the balance will be sourced domestically. The balance of the deficit of 306 billion Naira is to be financed from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE), Buhari also announced.
Onyinye Nwachukwu, Abuja
