Economists and finance experts have expressed divergent opinions on the proposal by the Federal Government to borrow N2.2tn to finance the deficit envisaged in the 2016 Appropriation Bill tabled before the National Assembly by President Muhammadu Buhari last week.
For the total budget proposal of N6.08tn, the Federal Government expects N3.86tn as revenue, while the balance of N2.22tn will come from borrowing. Out of the N2.22tn to be borrowed, N1.84tn is expected to be spent on capital projects, while the rest will go into recurrent expenditure.
In a statement made available to our correspondent in Abuja by its Head of Abuja Operations, Vivian Bellonwu-Okafor, the Social Integrated Development Centre (Social Action) asked the National Assembly to do Nigerians a favour by stopping the accumulation of such a huge debt.
However, a former President of the Nigerian Economic Society and Executive Director, African Centre for Shared Development Capacity Building, Prof. Olu Ajakaiye, said it was good enough that the Federal Government proposed to spend much of the debt to finance infrastructure.
Bellonwu-Okafor described loans as Greek gifts and a deathtrap for economies, especially weak and developing ones such as Nigeria’s, adding that the terms were usually steep and their conditions mostly stifling, while compromising the growth and well-being of the nation’s economy.
She called for a probe of what previous loans that had been obtained by Nigeria had been used for.
She said, “To continue in the tradition of approving loans for governments in Nigeria without first seeking and establishing an account of the huge loans acquired in the past years on behalf of the country and which have all been frittered away under very shady circumstances would be a great disservice to Nigerians by the National Assembly.
“We reiterate for the umpteenth time that if corruption and capital flight are eliminated, the innumerable leakages existing in the system blocked, tax administration made effective, the economy diversified away from burdensome dependence on oil and strict fiscal discipline established, enough resources will be garnered to fund the nation’s budget.
“The proposition by the Federal Government to borrow a staggering sum of N2.2tn to finance the nation’s 2016 fiscal budget is a glaring demonstration of insensitivity to the travails of Nigeria’s economy and citizens. Already, this is sequel to its plan to devote a colossal sum of N1.36tn to debt servicing alone in the budget.”
Bellonwu-Okafor added, “Fiscal projections as expounded in the proposed budget has revealed that the administration has no genuine intention of running a truly cost-effective government as it committed to doing in its pre-election pledges and which it superficially appeared to do with the merging of ministries, an action that has clearly translated into no concrete change in the fiscal parameters of governance in the country.
“If allowed to pass as it is, this will shoot Nigeria’s debt profile to over N15tn, with debt servicing amounting to 72 per cent of the 2016 capital budget. This sinks Nigeria further into the debt trap, while compromising the nation’s human and capital development.”
Ajakaiye, however, said there was nothing that the Federal Government could do about the N1.36tn for servicing debt that had fallen due.
He said, “It is already an obligation. Government cannot default, otherwise there will be a crisis. The fact that N1.84tn is for capital projects is good. The only thing we need to look at is the type of capital projects to be funded.”
He opined that if the right projects were funded, they would be able to generate funds that could be used to service the debt
Despite COVID-19, FG Realised N1.53 Trillion from Value Added Tax in 2020
The Federal Government of Nigeria has started seeing the positive effect of series of policy adjustments made to up the nation’s revenue and gradually move away from unstable oil revenue.
Nigeria generated N1.53 trillion from Value Added Tax (VAT) in 2020, an increase of 29.3 percent when compared to the N1.18 trillion posted in 2019, the National Bureau of Statistics (NBS) stated in its latest report.
According to NBS, VAT rose by 38.2 percent when compared to N1.11 trillion filed in 2018.
Breaking down the report, professional services contributed N162.32 billion during the period under review, This was followed by the manufacturing sectors with N154.15 billion.
Accordingly, non-import VAT realised expanded by 30.5 percent to N763.01 billion in 2020, against N584.6 billion in 2019.
Non-import foreign VAT grew by 17 percent from N359.5 billion in 2019 to N420.4 billion in 2020.
As expected, import VAT jumped by 44,6 percent from N240.5 billion filed in 2019 to N347.7 billion in 2020.
Despite lockdown and weak economic activities, the Federal Government through a 50 percent increment in VAT from 5 percent to 7.5 percent was able to up VAT revenue by 29.3 percent.
Julius Berger Plc Pre-tax Profit Decline by 30.7 Percent in Q4, 2020
Julius Berger Plc posted a 30.65 percent decline in pre-tax profit to N5.12 billion for the final quarter of 2020.
In the financial statements released on Tuesday, the leading construction company, reported N74.04 billion in revenue in the fourth quarter, an increase of 2.43 percent when compared to N72.29 billion posted in the same period of 2019.
Julius Berger Key Financial Highlights Q4, 2020
- Nigeria’s revenue expanded by 4.21 percent year-on-year to N72.30 billion.
- While Europe & Asia revenue dipped by 40.07 percent year-on-year to N1.74 billion.
- Similarly, revenue from building works depreciated by 56.37 percent to N10.72 billion.
- However, revenue from civil works rose by 35.38 percent from the corresponding period to N55.8 billion.
- Services added N7.54 billion revenue, representing an increase of 15.84 percent year-on-year.
- Cost of sales grew by 13.19 percent year on year to N60.1 billion.
- Julius Berger recorded other gains/losses of N83.89 million.
- The construction company grew investment income to N142.79 million.
- Finance costs jumped by a whopping 388.99 percent year-on-year to N1.79 billion.
- Earnings Per Share rose by 19.76 percent year on year to N3.94.
Board of UBA Approves Financial Statements, Dividend Payment for 2020
The Board of United Bank for Africa Plc has approved the Group Audited Consolidated and Separate Financial Statements and final dividend for the year ended December 31, 2020.
The bank stated in a statement signed by Bili A. Odum, Group Company Secretary.
It said “Please refer to the announcement dated January 12, 2021 which notified the Nigerian Stock Exchange and the investing public of the Board Meeting of United Bank for Africa Plc.
“Please be informed that the Board of United Bank for Africa Plc at its meeting which held on Tuesday, January 26, 2021 considered and approved the Group Audited Consolidated & Separate Financial Statements for the year ended December 31, 2020 and payment of a final dividend, subject to the approval of the Central Bank of Nigeria.
“Further to the above, kindly be advised that the Nigerian Stock Exchange and the investing public would be immediately notified upon approval of the Group Audited Consolidated & Separate Financial Statements for the year ended December 31, 2020 by the Central Bank of Nigeria.”
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