Nigeria's Former Vice President, Atiku Abubakar, has issued a statement critiquing the 2021 Budget Proposal.
The statement which was posted on the former vice president's social media pages has since gone viral.
As at Monday, October 12, the post has been shared over 1,000 times, with almost 2,000 comments and about 7,500 likes on Facebook.
It also has over 1,000 retweets and 4,000 likes on Twitter.
Mr Abubakar in the statement made some claims regarding the budget proposal which are important to verify.
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1. The 2021 Budget Proposal contravenes the Fiscal Responsibility Act (FRA) 2007
2. Alleged contravention of the FRA escaped the notice of the Buhari administration
3. Nigeria had a GDP of approximately $447 billion in 2019
4. Nigeria’s 2020 GDP has fallen from 2019 figures
5. Nigeria's 2020 GDP projected by World Bank to be between $400 billion and $350 billion
On Thursday, October 8, President Muhammadu Buhari presented the 2021 Budget Proposal to a joint session of the National Assembly.
The proposed expenditure is put at ₦13.08 trillion. This, according to the president, includes ₦1.35 trillion spending by Government-owned Enterprises and Grants and Aid funded expenditures of ₦354.85 billion.
Other estimated expenditures in the budget proposal include:
a. Non-debt Recurrent Costs of ₦5.65 trillion;
b. Personnel Costs of ₦3.76 trillion;
c. Pensions, Gratuities and Retirees’ Benefits of ₦501.19 billion;
d. Overheads of ₦625.50 billion;
e. Debt Service of ₦3.124 trillion;
f. Statutory Transfers of ₦484.49 billion; and
g. Sinking Fund of ₦220 billion (to retire certain maturing bonds).
President Buhari stated in his speech at the National Assembly that “the 2021 Budget deficit (inclusive of Government Owned Enterprises and project-tied loans), is projected at ₦5.20 trillion.”
However, in a statement on Saturday, October 10, Nigeria’s Former Vice President, Atiku Abubakar, claimed an alleged ₦5.21 trillion budget deficit in the proposal is over 3.5% of Nigeria’s 2019 GDP.
This, according to the former vice president, contravenes the Fiscal Responsibility Act 2007. He cited the specific section of the Act which he believes the budget proposal contravenes.
The former vice president said:
“The budget deficit in the proposal is ₦5.21 trillion. This amount is just over 3.5% of Nigeria’s 2019 GDP.
“This is contrary to the Fiscal Responsibility Act of 2007, which provides in Part II, Section 12, subsection 1 that:
"Aggregate Expenditure and the Aggregate amount appropriated by the National Assembly for each financial year shall not be more than the estimated aggregate revenue plus a deficit, not exceeding three per cent of the estimated Gross Domestic Product or any sustainable percentage as may be determined by the national Assembly for each financial year.”
Mr Abubakar also made at least four other claims in the statement (which have been highlighted earlier in the introduction) while trying to justify the alleged contravention of the FRA.
Claim 1: The 2021 Budget Proposal contravenes the Fiscal Responsibility Act (FRA) 2007
Firstly, although the difference may appear not remarkable, it is important to note that the president actually stated that the deficit is ₦5.20 trillion and not ₦5.21 claimed by Mr Abubakar.
Meanwhile, since the former vice president cited the Fiscal Responsibility Act 2007 to substantiate his claim, Legit.ng obtained a copy of the Act from the portal of the Fiscal Responsibility Commission (FRC) for verification.
In line with Mr Abubakar’s claim, Part II Section 12, Subsection 1 of the Act indeed stated that the deficit should not exceed three per cent of the GDP.
However, Legit.ng notes that the second part of the same subsection quoted by Mr Abubakar indicates that the National Assembly may determine “any sustainable percentage” for “each financial year”.
Mr Abubakar also admitted this in the latter part of his statement but urged the National Assembly not to raise the percentage, alleging that it will not be in the interest of Nigeria to do so.
“It has not escaped my attention that the Fiscal Responsibility Act of 2007 makes provision for the National Assembly to raise the threshold of the budget deficit from 3% to a higher figure.
“However, if this is done, they will be serving this administration’s interests, not Nigeria’s, because the Act says that such a threshold must be sustainable.”
More importantly, a further check by Legit.ng finds out that Part II Section 12, Subsection 2 of the same Act quoted by Mr Abubakar empowers the president to raise the percentage above three per cent if, in his opinion, “there is a clear and present threat to national security or sovereignty of the Federal Republic of Nigeria.”
The subsection reads in full:
“Aggregate expenditure for the financial tear (sic) may exceed the ceiling imposed by the provisions of subsection (1) of this section, if in the opinion of the president there is a clear and present threat to national security or sovereignty of the Federal Republic of Nigeria.”
Considering this subsection, Mr Abubakar’s claim that the 2021 budget proposal contravenes the Fiscal Responsibility Act 2007 is misleading.
Though the deficit (₦5.20 trillion) is over 3.5% of Nigeria’s 2019 GDP (above the 3% threshold stated in the FRA) as the former VP claimed, the FRA also empowers the president to raise the threshold above 3% under certain conditions.
It should, however, be noted that Legit.ng cannot determine whether or not the coronavirus pandemic can constitute what the Act refers to as a threat to national security or Nigeria’s sovereignty.
Claim 2: Alleged contravention of FRA escaped the notice of the Buhari administration
In a bid to defend his claim, Mr Abubakar stated that the alleged contravention of the Fiscal Responsibility Act 2007 escaped the notice of the Buhari administration.
“That this escaped the notice of the Buhari administration shows a glaring lack of rigour in the formulation of the Budget. A very disturbing development.”
Findings by Legit.ng indicate that Mr Abubakar’s claim that the Buhari administration did not notice the deficit is above the three per cent threshold is false.
Indeed, President Buhari noted in his speech at the National Assembly that the ₦5.20 trillion deficit “represents 3.64 per cent of estimated GDP”.
The president added that the deficit is “slightly above the 3 per cent threshold set by the Fiscal Responsibility Act, 2007”.
In what appears to be a reference to the Part II, Section 12 Subsection 2 earlier quoted in this piece, the president cited the coronavirus pandemic to justify the 3.64% deficit.
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President Buhari said:
“It is, however, to be noted that we still face the existential challenge of Coronavirus Pandemic and its aftermath; I believe that this provides a justification to exceed the threshold as provided for by this law.”
Claim 3: Nigeria had a GDP of approximately $447 billion in 2019
To arrive at the “over 3.5%” per cent deficit claim, Mr Abubakar used the 2019 GDP which he alleged to be approximately $447 billion.
The claim that Nigeria’s 2019 GDP is approximately $447 billion is mostly true. According to the World Bank, Nigeria’s 2019 GDP is $448.12 billion.
Claim 4: Nigeria’s 2020 GDP has fallen from 2019 figures
Mr Abubakar said since he based his calculation on the 2019 GDP, the “₦5.21 trillion budget deficit is actually far above the 3% threshold stipulated by the FRA”, claiming that the GDP has fallen sharply from the 2019 figures.
The claim that Nigeria’s GDP has fallen is true. The GDP, according to the 2020 second-quarter report of the National Bureau of Statistics, “decreased by –6.10%(year-on-year)”.
The decline was attributed to the damaging impact of the coronavirus pandemic.
Claim 5: 2020 GDP projected by World Bank to be between $400 billion and $350 billion
The former vice president further claimed that the World Bank and other multilateral institutions have projected the GDP “at somewhere between $400 billion and $350 billion.”
This claim is mostly incorrect.
In June 2020, the World Bank estimated in a report that Nigeria’s economy would likely contract by 3.2% in 2020. This indicates that the GDP will be about $433 billion, down from $448.12 billion it was in 2019.
Also, the IMF projected -5.4% GDP growth for Nigeria in 2020. Going by this projection, the GDP is expected to reduce to about $423 billion (also using the World Bank’s figure for Nigeria’s 2019 GDP).
None of these major forecasts puts Nigeria’s projected 2020 GDP below $N400 billion, contrary to Mr Abubakar’s claim.
The researcher produced this fact-check per the Dubawa 2020 Fellowship partnership with Legit.ng to facilitate the ethos of "truth" in journalism and enhance media literacy in the country.
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