An Economist, Prof. Segun Ajibola, says the allocation of N2 trillion for capital expenditure in the 2019 budget was too low to drive growth and development in the country.
Ajibola said this in an interview with the News Agency of Nigeria yesterday in Abuja, while reacting to the passage of the 2019 Appropriation Bill of N8.92 trillion by the National Assembly.
The budget was increased by the legislature by N90 billion from the N8.83 trillion presented by President Muhammadu Buhari on Dec. 18, 2018.
A breakdown of the budget indicated that the Statutory Transfer stood at N502 billion, Fiscal Deficit-N1.9 trillion, Special Intervention N500 billion, Recurrent Expenditure N4 trillion, Capital Expenditure-N2 trillion and Deficit to Gross Domestic Product (GDP) of 1.37 per cent.
According to him, the cost of governance is high and it is making the capital expenditure to drop.
The provision for capital expenditure in 2018 budget was N2.8 trillion.
“We have a lot of pressure on the budget, we have debt to service; it is the capital budget that will bear the brunt.
“I believe we will be able to moderate the allocation to capital budget by the time we generate sufficient returns from the investment from on-going projects.
“If we are able recoup the initial expenditure on the projects, then the burden on capital budget will be down,’’ he said.
Ajibola, a former President of the Chartered Institute of Bankers of Nigeria, however, said the implementation of the budget was feasible.
He said the implementation of the budget was realistic with the key assumptions and the expectations.
The senate maintained key assumptions of Medium Term Expenditure Framework and Fiscal Strategy Paper sent by the Executive.
Daily Oil Production stood at 2.3 million barrels per day, Oil Benchmark stood at 60 dollars per barrel, while the Exchange Rate stood at N305 per dollar.
Ajibola said that the 60 dollar per barrel was sufficient conservative as we pray that there would not be any change of price at global market.
“The exchange rate of N305 per dollar is also okay.
“I believe that eight months is enough for the budget to be fully implemented and to reap its fruits,’’ he said.
Meanwhile, the total debt as contained in the budget stood at N2.254 trillion, with Domestic Debt Service at N1.71 trillion, Foreign Debt Service at N433.79 trillion, while Sinking Fund stood at N110 billion.