For the second year in a row, Mr. President Muhammadu Buhari signed the Appropriation Bill for the new year before the end of the current year. He signed the budget on the last day of 2020, 31st of December 2020 alongside the 2020 Finance Bill which complements the budget.
Mr. President had submitted the bill to the National Assembly on the 8th of October 2020 and the National Assembly had on the 21st of December 2020 passed the 2021 Appropriation Bill with an aggregate expenditure of N13,588,027,886,175 trillion which was an increase of N505.61 billion from the initially proposed bill of N13.08 trillion.
In his words, “In designing the 2021 budget, we deliberately chose to pursue an expansionary fiscal policy. As you are all aware, our economy recently lapsed into its second recession in four years. I mentioned during the presentation of the 2021 Appropriation Bill that we intend to use the budget to accelerate our economic recovery process, promote social inclusion, and strengthen the resilience of the economy.”
Worrying though was the announcement of Nigeria’s total public debt stock as of the 3rd quarter of 2020 which hit a total of N32.223 trillion equivalents to $84.574 billion a rise from the N31.009 trillion as of 30th of June 2020.
The statistics released on Thursday by the Debt Management Office showed an increase of 3.91% which is N1.214 trillion and equivalent to $52, 589.01 billion in the dollar.
The debt stock comprises of Domestic and External debt stocks of the Federal Government (FGN), the 36 states, and the Federal Capital Territory (FCT). A further breakdown of the public debt stock showed that 37.82% of the debt was external while 62.18% of the debt was domestic.
A lot of the debt accrued would be put down to the coronavirus pandemic that ravaged the country and severely crippled the economy of the nation as well as inherited liabilities.
In a press release by the Debt Management Office, “The Federal Government (FGN), state governments and the FCT all recorded increases in their debt stock due to borrowings to enable them to respond appropriately to the COVID-19 pandemic and to meet revenue shortfalls. Issuance of Promissory Notes by the FGN to settle inherited liabilities also contributed to the growth in the Public debt stock since the year 2018 when they were first issued.
The Minister of Finance, Budget and National Planning, Zainab Ahmed had also mentioned that Nigeria’s total public debt based on existing approvals were protected to hit N38.68 trillion by December 2021, and looking at the breakdown of the approved budget, N3,324,380 000 trillion has been set aside for debt servicing.
Here lies the problem though, 2021 represents greater uncertainty than ever before. With the threat of a second wave of the coronavirus pandemic, the economy threatens to be hit harder than it has been in recent times if greater care is not taken. On Thursday 31st of December 2020, 1031 new cases of coronavirus were recorded showing that the worst is not behind us yet.
The implication of this is that businesses may struggle to be able to hit their revenue targets resulting in shortfalls. Nigeria, unfortunately, cannot afford to be grossly affected by shortfalls especially after going into its second recession in four years.
The year 2020 largely witnessed a downturn in the economy as characterized by loss of jobs for many with the unemployment rate climbing and 13.9 million of the unemployed being youths, crashing of several small-scale businesses, inflation, owing of salaries and even the folding up of companies.
Our reliance on oil to fund a good chunk of the budget is equally worrying as we have come to see with the low oil prices recorded. Unfortunately, agriculture that seemed to be an alternative source has slowly been affected due to insecurity, shortage of foreign exchange coupled with the ever-fluctuating exchange rate.
Diversification of the economy has always been a resounding theme of the government without evidence. Sadly, we do not manufacture enough to sustain the country and therefore have no other source of bailing ourselves out than taking loans and borrowing.
On the evidence of these, can we well and truly say the country is on the road to economic recovery?