The Federal Government will borrow in excess of N1.643 trillion to fund the deficit in the N9.12 trillion 2018 budget, in addition to its debt burden of over N2 trillion.
While N793 billion would be borrowed domestically at double digit interest rates, N849 billion would come from foreign sources at considerably lower interest rates.
The Minister of Budget and National Planning Mr. Udo Udoma said this while presenting the 2018 budget breakdown yesterday.
He said the projected overall budget deficit of N1.950 trillion, representing 1.74 per cent of Nigeria's Gross Domestic Product (GDP), was within the threshold stipulated in the Fiscal Responsibility Act (FRA) 2007.
President Muhammadu Buhari had while signing the N9.12 trillion 2018 budget noted that he may still return to the National Assembly for a supplementary budget due to changes made by the lawmakers to the original document he submitted.
The 2018 budget exceeds that of 2017 by 23 percent.
He also said at N2.01 trillion, debt service is 21 percent of planned spending (about same as in Fiscal Year 2017).
The minister explained further that provision to retire maturing bond to local contractors increased by 7 percent from N177 billion in 2017 to N190 billion in view of the ambitious plan to liquidate all contractor arrears of the Federal Government going back to several years.
He also noted that recurrent (non-debt) spending is expected to rise by 17 percent, from N2.99 trillion in FY2017 to N3.51 trillion.
He also said capital expenditure (excluding transfers) rose higher by 22 percent from N2.36 trillion in FY2017 to N2.87 trillion, adding that capital spending is 31.5 percent of total FGN expenditure in 2018.
The minister also indicated that N306 billion is expected from privatization and N5 billion from sale of government property to part finance the deficit.
"We have grown the size of the budget from 4.7 percent in 2015 to 5.9 percent in 2016, 6.7 percent in 2017 and 8 percent in 2018. This is very low compared with South Africa (20.7%) and Ghana (19.2%) as at 2015, Udoma said.
He noted that the ratio of capital spending in the total budget increased from 12 percent in 2015 to 30 percent in 2016, 32 percent in 2017 and 32 percent in 2018.
Giving the breakdown of N520 billion Statutory Transfers, he said the Niger Delta Development Commission (NDDC) will get N115.86 billion; National Judicial Council N110 billion, Universal Basic Education (UBEC) N109 billion, Independent National Electoral Commission (INEC) N45.5 billion, National Assembly N39.5 billion, Public Complaint Commission N7.48 billion while the National Human Rights Commission takes N3.01 billion.
The ministries that have the highest allocation both capital and current are: federal ministry of power, works and housing N715 billion, ministry of interior N577 billion, defence N576 billion, education N542 billion and health N356 billion.
He said the budget proposal seeks to continue the reflationary policies of the 2016 and 2017 budgets which helped put the economy back on the path of growth.
"Thus, we plan to continue to spend more on ongoing infrastructure projects that have potentials for job creation and inclusive growth. We will continue to leverage private capital and counterpart funding for the delivery of infrastructure projects.
"As with the 2016 and 2017 budgets, the 2018 budget has been prepared on the Zero Based Budget (ZBB) principles," he said.
Some key projects in the transportation sector listed for funding in the 2018 budget, according to the minister, are N162.28 billion counterpart funding for railway projects and this, include the Lagos-Kano (ongoing), Calabar-Lagos (ongoing); Ajaokuta-Itakpe-Aladja (Warri) (ongoing); Port Harcourt-Maiduguri (new), and Kano-Katsina-Jibiya-Maradi in Niger Republic (new).
Others are Abuja-Itakpe and Aladja (Warri)-Warri Port and Refinery including Warri New Harbour (new), N530.8 million construction of terminal building at Enugu airport and N8.32 billion construction of second runway of Nnamdi Azikiwe International Airport Abuja.
For the power sector, N9.4 billion has been set aside as counterpart fund for the Mambilla hydropower project; N9.7 billion counterpart funding for transmission lines and substations; N2.2 billion for construction of 215MW LPFO/Gas Power station Kaduna; N3.4 billion Kashimbilla transmission; and N14.2 billion Fast Power Programme Accelerated Gas and Solar Power Generation.
For housing, the Federal Government has budgeted N26.7 billion for the national housing programme.
In area of revenue, Udoma said Nigeria expects oil to account for 41.7 percent of the revenue for the budget, while Independent Revenue would make up 11.8 per cent and the Nigeria Customs Service (NCS) is expected to make up 4.5 percent.
Other sources of revenue are Value Added Tax (VAT), 2.9 percent; Company Income Tax (CIT) 9.2 percent, Tax amnesty: 1.2 percent; Signature Bonus: 1.6 percent and Joint Venture (JV) Equity Restructuring to make up 9.9 percent; grants and donor funding 2.8 percent, while other sources would make up 7.2 percent of the revenue.
He said recoveries, including 320 million dollars from Swiss, assets and fines, would make up for 7.2 percent of the revenue.