Financial experts on Friday expressed mixed reactions to the N10.07 trillion 2020 budget proposal approved by the Federal Executive Council (FEC) ahead of its presentation to the National Assembly.
The experts expressed their views in separate interviews with the News Agency of Nigeria (NAN) in Lagos.
The Minister of Finance, Budget and National Planning, Hajiya Zainab Ahmed, had on Wednesday revealed that the Federal Executive Council approved the Medium Term Expenditure Framework (MTEF) 2020 to 2022, which would guide the 2020 Budget.
The Minister said the next step was to present the document to the National Assembly for consideration.
“The expenditure for the year 2020 is in the total sum of N10.07 trillion.
This is three per cent less than the approved expenditure in the 2019 budget that has been passed into law.
“The total expenditure includes statutory transfers, non-debt recurrent expenditure such as salaries and pensions and also the social intervention Programme,’’ she said.
Commenting on the projections, Prof. Tella Sheriffdeen, Professor of Economics, Olabisi Onabanjo University Ago-Iwoye, Ogun said that 2020 budget proposal was conservative and realistic.
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He said this was so, given the baseline crude oil output of approximately 2.18 million barrels per day (mbpd) at price of 55 dollars per barrel.
Tella said that the growth rate was also moderate, given the uncertainty in world economic situation now.
“However, there should be concern for rising debt service by over one trillion naira.
“This will affect allocation for capital expenditure and consequently economic growth.
“Debt servicing is a withdrawal from the economy, except for the proportion that is meant for local creditors.
“So, caution must be observed in securing additional foreign loans from private sources in particular,” he said.
Tella stressed the need to grow the economy without borrowing, noting that this could be done by reducing some intervention subsidy.
“For instance, the electricity companies should be advised to go to the capital market to raise funds by selling shares or private placement.
“They are private businesses and should be so treated,” he added.
Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., the proposed current expenditure of N4.7 trillion compared with N4.3 trillion was on the high side.
Kurfi said that reduction in capital expenditure from 32 per cent to 21 per cent was a matter of concern in view of huge deficit of the infrastructure.
