Federal Government Votes N292.7bn To Pay Contractors

Federal Government
Federal Government

The Federal Government has offered to spend N292.7 billion to retire maturing bonds to local contractors/suppliers of government. This represents 1.79 percent of total expenditure.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, revealed this in Abuja on Friday at her 2022 budget breakdown.

Settling government’s obligations to contractors and suppliers she said

is in line with the FGN’s commitment to offset accumulated arrears of contractual obligations dating back over a decade.

In the coming year, the Federal Government, she said, has offered to spend N3.61trillion on debt service which is 22 percent of total expenditure, and 35.6 percent of total revenues.

The early passage of the 2022 budget for implementation from January 1, she said

will significantly contribute towards achieving government macro-fiscal and sectoral objectives. However, revenue currently remains our main fiscal challenge she said.

To this end, the government she said has kicked off efforts aimed at addressing revenue leakages which include: concluding the service-wide implementation of IPPIS; dimensioning cost of tax waivers and promoting policy dialogue and transparency around tax waiver regimes; elimination of regressive subsidies on petrol price and electricity tariffs. Cost-to-income-ratio cap for Government Owned Enterprises with a view to improving remittances to FGN’s coffers.

The finance minister revealed that as at August, 2021, the Federal Government has “surpassed all collections for FGN independent revenues from 2017 to date. This reflects performance of our revenue growth initiatives for this revenue stream” she said.

At this current run rate, Zainab Ahmed was optimistic that the government is “now firmly in a position to surpass the 1trillion mark collection for independent revenues.” She insisted that the government has the potentials to grow independent revenues.

In 2022, education sector will receive a total of N1,290.03 billion that is 7.9 percent of FGN budget. Of this amount N875.93.85 billion had been provisioned for the Federal Ministry of Education and its agencies for recurrent and capital expenditure.

N108.10 billion had been provisioned for Universal Basic Education Commission (UBEC); N306.00 billion will be transferred to the Tertiary Education Trust Fund (TETFUND) for infrastructure projects in tertiary institutions.

N1.2billion will be for classroom/hostel rehabilitation and furnishing and N500 million allocated for provision of security infrastructure in 104 colleges; N392 million will be set aside as take -off grant for the establishment of six Federal Science and Technical Colleges (FSTCs); about N4.5 billion will be used to fund various scholarship allowances and N2 billion will be for the payment of 5,000 Federal Teachers Scheme Allowance. The health sector will receive N820.2 billion that is five percent of total FGN budget: N711.28 billion has been provisioned for Federal Ministry of Health and its agencies for recurrent and capital expenditure, including hazard allowance.

N54.87 billion will be for Gavi/Immunization funds, including counterpart funding for donor supported programmes, including Global Fund. N54.05 billion will be transferred to Basic Healthcare Provision Fund (BHCPF) representing one percent of Consolidated Revenue Fund (CRF).

N3.12 billion will be spent on Polio Eradication Initiatives; N1.5 billion will be for the procurement of RI & non-Polio Vaccine and operational cost while N2.66 billion has been earmarked for expanded midwives service scheme.

For the Defence and Security Sector, N2.41trillion or 15 percent of the budget has been provisioned for the Military, Police, Intelligence and Para-Military for their recurrent and capital expenditure.

Still on defence, N22.08 billion will be spent as balance payment for procurement of 3 X JF -17 Thunder Aircraft, support equipment and spares including targeting Pod for JF – 17, complete with aircraft arms and ammunition.

N9.69 billion will be for the procurement of 30/32/35 metre hydro survey ship and Landing ship tank; N1 billion to procure 3 X AW109 Helicopters and part payment for procurement of 1 X AW139 Helicopter; N4.4 billion will be for the Completion of Naval War College Nigeria complex and another N1.4 billion for the upgrade of Nigerian Navy Reference Hospital Ojo.

For regional interventions in 2022, N65 billion will be for the reintegration of transformed ex-militants under the Presidential Amnesty Programme; N46.2 billion for the North East Development Commission (NEDC)– Statutory Transfer and N98.7 billion for the Niger Delta Development Commission (NDDC).

For infrastructure, N1,451.trillion or 8.9 percent of the budget will be spent on the provision of Works and Housing, Power inclusive of PSRP Provisions, Transport, Water Resources and Aviation.

Under Social Development and Poverty Reduction Programmes N863billion or (5.3 percent of the budget has been provisioned for Social Investments / Poverty Reduction Programmes.

According to Zainab Ahmed, N410 billion will be for FGN Special Intervention Programme including Home Grown School Feeding Programme, Government Economic Empowerment Programme, N-Power Job Creation Programme, Conditional Cash Transfers, etc.

The NSIO is now domiciled in the Ministry of Humanitarian Affairs and Disaster Management & Social Development and President Muhammadu Buhari has approved an additional N300 billion for FGN Share of the National Poverty Reduction With Growth Strategy.

In the coming year, N1.37 million will be provisioned for capital projects for National Commission for Persons with Disability (NCPD) and another N25 billion provided for Nigeria Youth Investment Fund.

The finance minister noted that

the 2022 budget is expected to further accelerate the recovery of our economy. We are optimistic of attaining more inclusive GDP growth as we focus on achieving our objective of massive job creation and lifting millions of our citizens out of poverty.

Accountant General of the Federation (AGF) Mr Idris Ahmed, at the event said

borrowing is not the problem, it is what you do with it.

According to Idris Ahmed,

the initial 2020 budget envisaged new borrowing of N1.7trillion and then Covid-19 happened which affected the country’s revenue. The government had to come up with the N500 billion intervention fund, the amount needed to be borrowed shot up from N1.7trillion to N5.6trillion.

Our problem as a country is not that we are spending too much but spending too little, our expenditure ratio to our GDP is way too low, which is why people are not getting all the services they need, we pay very low taxes and are demanding a lot in terms of expenditure.

We insist we must pay a low price for petrol, it is costing the government a lot, if we can accept the new pricing there will be more money and we can stop borrowing.

Muhammad Nami, Chairman of the Federal Inland Revenue Service (FIRS) on his part disclosed that

what we have as at 30th September 2021 which we have not reconciled with CBN, Customs is about N4.2trillion. From this amount oil related taxes account for 22 percent which is N900.50 billion only. A non-oil tax rate in the period is N3.3trillion. People are not willing to pay their taxes.


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