2015: Year of ‘austerity budgets’ for the states

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Fashola Presenting Budget 2015

The 2015 fiscal year does not look promising for many state governments in Nigeria as a good number of them scaled down their budgets in line with the prevailing free fall of crude oil price and the dwindling revenue from the federation account

The 2015 fiscal year does not look promising for state governments based on the crash in the international price of crude oil, Nigeria’s cash cow, with its attendant dwindling revenue. To contend with the challenges of the dwindling economic fortunes of the country, many state governments have proposed what has been termed as ‘austere’ budgets for 2015. From the budget proposals presented by various state governors and the Federal Government, barring supplementary appropriations,  the total amount budgeted by the  governments at the federal and state levels is about N10.6 trillion for this year as against N12.188 trillion  budgeted in 2014.

The prevailing free fall of crude oil price, the decision of the United States (Nigeria’s major oil importer) to stop patronising the country following the discovery of shale oil and the discovery of alternative energy sources by many developed societies are already hurting Nigeria’s finances. This explains why many state governments are finding it difficult to pay workers’ salaries.

Recently, the term ‘austerity measures’ crept back into Nigeria’s lexicon on account of the brewing hardship. The last time austerity measures dominated the air waves was in the early 80s when Nigeria’s Naira lost value in quantum leaps against the US Dollar and other leading world currencies.

A common feature of the 2015 budget is that most of the governments at all levels apart from spending less than what they spent last year, have also allocated lower sums to capital expenditure. Collectively, only N3.342 trillion (47.63 per cent) is allocated to capital expenditure (provision of infrastructure and amenities among others), while N5.041 trillion or 52.37 per cent is to be spent on recurrent expenditure (salaries, emoluments of public servants and political office holders, running costs, among others).

While presenting the budgets, the governors cited dwindling collectible revenue from the Federation Account as the main reason for scaling down the budgets. They promised to improve on their Internally Generated Revenue (IGR) to augment the budgets. And they hope to boost their IGR through taxation among other sources, which will boil down to the citizenry and businesses paying more.

For Imo State 2015 budget, Governor Rochas Okorocha proposed N141.22 billion and allocated N119.70 billion (84.43 per cent) to recurrent expenditure. Capital projects got a miserly N21.5 billion (15.57 per cent).

In the same vein, Governor Theodore Orji of Abia State presented a budget of N102.4 billion to the state House of Assembly for approval. The budget is 12 per cent less than the N115.3 billion budgeted in 2014. Orji said it was targeted at completing ongoing projects within and outside the state. He explained that the budget was made up of estimated recurrent expenditure of N62.2 billion and capital expenditure of N40.18 billion.

On his part, Governor of Enugu State, Sullivan Chime presented the 2015 budget of about N96.7 billion to the state House of Assembly. The sum represents a three percent increase of the N93.7billion budgeted for the state in 2014. Out of the amount, N54.9 billion, or 56.8 percent of the budget is set aside for capital expenditure, while N41.7 billion is for recurrent expenditure. Works and infrastructure received the largest share of the budget with N14.9 billion earmarked for the completion of ongoing projects. In the same vein, N6.1 billion is allocated to the education sector, while health and agriculture received N4.9 billion and N4.3 billon, respectively. Also, a total of N2.9 billion is earmarked to the water sub-sector.

In Anambra State, Governor Willie Obiano proposed a budget of N164.496 billion for approval for fiscal year. The proposal is a slim increase of 3.17 percent compared to the N159.469 billion 2014 budget. An estimated sum of N110.979 billion would be for capital expenditure while N53.517 billion is for recurrent expenditure, approximating to 67.5 percent and 33.5 percent respectively. Road infrastructure and education got the lion share of the capital budget of 48 percent and 46 percent respectively.

Tagged, “Budget for wealth creation and social cohesion,” Obiano said in coming up with the budget, government considered the falling allocation from the Federation Account  in the past months due to declining oil prices. “Since more than 65 percent of our state’s actual total revenue receipts come from statutory allocations, this fact has been recognised in the preparation of the 2015 Draft Estimate,” he said.

The government of Ebonyi State will in the 2015 fiscal year spend N80 billion. Governor Martin Elechi tagged the budget “Transition of Fulfilment.” It is lower than the downward revised budget of N85.6 billion for 2014 fiscal year. He stated that in the 2015 fiscal year, the recurrent expenditure will gulp N39.99 billion, representing 47.48 percent while the capital expenditure is N42.025 billion, representing 52.52 percent of the total budget. According to the estimate, economic sector receives N24.022 billion taking the largest chunk of the capital provision while education sub sector receives N2.077 billion and health sector N2.147 billion.

The State of Osun proposed N198 billion for the 2015 fiscal year. Governor Rauf Aregbesola tagged it “Budget of Renewed Hope.” The budget is less than that of 2014 fiscal year which is N234billion. The Capital Expenditure is N110 billion while the total recurrent expenditure is N87 billion, with the economic sector, covering agriculture and rural development, rural/urban electrification, commerce, industry, finance and transportation taking the largest chunk of N41.6 billion. The total recurrent revenue is N132 billion, while the capital revenue is N65 billion.

The governor said the budget would consolidate the various achievements made in the last four years to transform the state. He explained that the budget would also ensure the completion of ongoing projects and commencement of new ones that will have positive impact on the socio-economic life of citizens of the state.

Ogun State government proposed the sum of N210.354 billion for this year budget, which is slightly above the current 2014 appropriation of N210.28 billion. Governor Ibikunle Amosun, said that the budget tagged ‘Budget of Continuity’, would be geared towards completion of ongoing capital projects across the state, while new ones are being proposed.

Under the budget, recurrent expenditure is expected to gulp N92.09 billion,  representing 43.78 percent of the total budget, while capital expenditure is N118.26 billion, representing 56.22 percent of the appropriation bill. The governor said that the budget proposal was informed by macro economic outlook driven by global oil prices which has placed financial burden on governments at all levels. The budget is expected to focus on the five cardinal programmes of the administration in the areas of agriculture, health care delivery, education, rural and urban development. It is expected to be greatly financed by Internally Generated Revenue put at N99.35 billion, representing 47.23 percent of the total budget.

While presenting his N141.778 billion 2015 budget proposal tagged ‘Budget of Repositioning’ in Oyo State, Governor Abiola Ajimobi pledged that no new taxes would be imposed on the people, notwithstanding the poor financial situation of the state occasioned by sharp drop in oil revenue. Out of the N141.8 billion budget, the sum of N86.72 billion (61.17 per cent) is allocated to recurrent expenditure while N55.05 billion (38.83 per cent) will be for capital expenditure. The state budget for 2014 was about N190 billion.

In Ekiti State’s N80.78 billion “Budget of Reality”, which represents 77.7 per cent of the 2014 budget of N103.8 billion, Governor Ayodele Fayose said N48,717 billion was allocated to recurrent expenditure, while capital expenditure would gulp N31. 956 billion. According to him, the size of the budget was informed by his government’s desire to live within its means and go with an achievable estimate rather than “decorate the budget with unrealistic figures.”  He also explained that his government would access N5billion internal loan contrary to his earlier stance that he would not borrow to run his government.

Among the states, only Lagos has proposed to spend N489.69 billion, the exact sum it  budgeted last year. The breakdown of the budget presented by Governor Babatunde Fashola shows that education got N82.11 billion or 16.6 per cent as against N77.42 billion or 15. 81 per cent recorded in 2014. Environmental protection got a vote of N34.95 billion or 7.1 per cent instead of N39.72 billion or 8.11 per cent it was allocated in 2014. Recreation, culture and religion got N3.12 billion or 0.6 per cent as against N3.48 billion or 0.71 per cent in 2014. Housing and community amenities got N49.03 billion or 10 per cent as against N50.54 billion  or 10.32 per cent in 2014, while health was allocated N44.62 billion or 9.1 per cent instead of N37.81 billion or 7.72 per cent it was voted in 2014.

Public order and safety got N15.55 billion or 3.2 per cent instead of N17.98 billion or 3.67 per cent it got in 2014, while social protection recorded N1.59 billion or 0.3 per cent as against N2.47 billion or 0.50 per cent in 2014.

Fashola said that the budget size was retained in order to maintain zero deficit for the incoming government. He will be leaving office in May 2015 after completing two terms of eight years. “We have retained the same budget size of 2014 to keep zero deficit. This will give the administration the room to start up very quickly,’’ he said. He added that the 2015 budget would focus on payment of contractors’ liabilities to enable the government to complete as many projects as possible before handing over to the next administration.

The Rivers State government proposed a budget of N355 billion for the 2015 fiscal year. Governor Chibuike Amaechi said that it was tagged “The Budget of Completion”, He said this is because priority would be accorded to the completion of strategic projects in the state. According to Amaechi, this year’s budget was 31 percent lower than the 2014 budget of N481 billion. In the highlight of the sector allocation, the governor explained that the sum of N216 billion was set aside for capital expenditure while N118 billion was for recurrent expenditure.

Akwa Ibom State presented a budgetary allocation of N462 billion for 2015 financial year. This is against N498.54 billion approved for the 2014 fiscal year made up of N74.24 billion for recurrent expenditure, N333 billion for capital expenditure while  Consolidated Revenue Fund Charges was N91.30 billion.

A breakdown of 2015 budget tagged: ‘Budget of Actualization and Continuity’ shows that recurrent expenditure is given N94.74 billion, capital expenditure has N253 billion while Consolidated Revenue Fund Charges is allocated N114.26 billion. According to Governor Godswill Akpabio, “The 2015 proposed budget seeks to build on the successes and achievements recorded so far.  We intend to complete on-going projects and use the budget proposals to build a strong bridge between my administration and the incoming administration such that the uncommon transformation, which we have so energetically pursued, will be sustained, so that our past labours will not be in vain.”

Ogun State Governor, Senator Ibikunle Amosun (right) presenting the 2015 Budget

Ogun State Governor, Senator Ibikunle Amosun (right) presenting the 2015 Budget

In Edo State, Governor Adams Oshiomhole proposed N156.551 billion for the 2015 fiscal year. Christened “Budget of Developmental Consolidation”, it is aimed at taking the state to the next level. Made up of N87.5 billion as capital expenditure, representing 55.77 percent  and N68.99 billion, representing 44.23 percent, the budget is N4 billion lower than the 2014 budget which stood at N160.1 billion.  Oshiomhole said the budget is designed to achieve the consolidation of this administration’s developmental agenda and focus on key priority sector of government namely; infrastructure, education and health.

In the case of Gombe State, Governor Ibrahim Hassan Dankwambo proposed N87.77 billion for year 2015.  The 2015 appropriation tagged “Budget of Accomplishment” is made up of a recurrent expenditure estimate of N46.7 billion and a capital expenditure of N42. 8 billion. According to the governor, the 2015 budget was prepared in the face of the fall in the international price of crude oil. He explained that “considering the current volatility of international commodity prices and their consequences for Nigeria, where crude oil is the mainstay of its economy, 2015 will be a year of moderated growth and my administration is determined to present a budget it can implement.”

In Kaduna State, Governor Mukhtar Ramalan Yero presented a budget of N203.7 billion for the 2015 fiscal year. The 2015 appropriation tagged “Budget of Consolidation and Continuity” is based on his administration’s determination to ensure the completion of all ongoing projects. The recurrent expenditure is N72.7 billion — 35.7 percent of the total budget while capital expenditure estimate is put at a total sum of N130.9 billion which translates to 64.3 per cent of the budget. According to the governor, the capital expenditure for 2015 is categorised into four broad sectors including the economic sector which is allocated N42.7billion, the social sector is allocated N37.5billion, N23billion is allocated to the regional sector, and General Administration has allocation of N27.5billion which brings the total to about N130.9billion.

Kwara State Governor Abdulfatah Ahmed proposed N119.8 billion for 2015. The budget, tagged: “Budget of retrospection and job creation,” is N4.6 billion higher than that of 2014. It marks a 3.7 per cent increase in the total budget size of 2014 compared to 2015. According to Ahmed, the capital expenditure would gulp N62.1 billion or 52 per cent of the budget, while N46.4 billion was earmarked for recurrent expenditure or an increase of 39 per cent. Ahmed also said the budget has a debt profile of N11.2 billion, which is nine per cent of the total budget. Ahmed projected that N16.4 billion would be contributed from internally generated revenue, while the foreign and local aids for capital development amounted to N29.7 billion.

Governor Adams Oshiomhole signing Edo State 2015 Appropriation Bill into law watched

Governor Adams Oshiomhole signing Edo State 2015 Appropriation Bill into law

He said that the state would earn N33.6 billion from the Federation Account, N7.5 billion from Value Added Tax and N2.5 billion from Non Oil/Excess Crude account. He added: “The other anticipated source of revenue for funding the 2015 budget is from a bond of N23 billion to be sourced from the capital market and to be repaid back by 2022. We are also anticipating a term loan facility of N7 billion from financial institutions in case the bond accessibility might delay, in order to ensure that we continue with our developmental projects.” The governor said N2.3 billion from recurrent revenue surplus would be transferred to capital development in case of any shortfall in the budget.

Governor Idris Wada of Kogi proposed N110.2 billion for the 2015 fiscal year. The estimate, tagged “Budget of Stability“, provided N60 billion, representing 54.49 per cent for capital expenditure and N50.1 billion, representing 45.51 per cent, for recurrent. The governor said the budget would focus on the completion of on-going projects, expansion of the state revenue base, provision of coded classifications for enhanced transparency and proper accounting in public expenditure. Other areas of focus, he said, include reduction of domestic debt, provision of environment conducive for investment and the integration of proper accounting and budgeting control mechanism at state and local government levels.

By Pita Ochai

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