No budgetary provision for COVID-19 vaccines – Finance minister

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has said that there is no provision in the 2021 budget to procure COVID-19 vaccines.

She stated this during a virtual presentation of the 2021 budget in Abuja, adding however that the government was working on the type and quantity of COVID-19 vaccines to procure.

Nigeria is expected to receive about 100,000 doses of the Pfizer and BioNTech approved COVID-19 vaccines by the end of January.

But the minister said her ministry and the Ministry of Health would meet to finalise the amount to be allocated to vaccine procurement in the next two weeks.

The country, under phase two of its COVID-19 vaccination scheme, will also get 42 million extra doses of vaccines through the COVAX facility.

The government is targeting to vaccinate about 40 per cent of Nigeria’s population in 2021.

Ahmed expressed the hope that the National Assembly would provide a supplementary budget for additional spending on COVID-19 vaccines, when needed.

She said, “We agreed that the effort needed to be done so that we have clarity as to whether the provisions in the budget will be adequate or we have to make additional provisions by way of a special supplementary budget to make more provisions for COVID-19 vaccinations.”

On whether there was a provision for fuel subsidy in the 2021 budget, Ahmed stated that no such provision was made for it.

She also foreclosed subsidy on electricity due to the recent suspension of the hike in electricity tariff.

The minister, however, added that the Finance Act, among others, exempted workers within the N30,000 minimum wage bracket and below from personal income tax deductions.

According to her, another key provision in the Act is the exemption of all micro and small companies earning N25 million or less as annual turnover from paying the Tertiary Education Tax.

The Act also excluded commercial airline tickets, commercial aircraft spare parts and components; interests in land and buildings; animal feed and hire, rental or lease of agriculture equipment for agricultural purposes from 7.5 per cent Value Added Tax (VAT) charge.

She said, “The key guiding principle of the Finance Act 2020 is to ensure that there is a balance between broader macroeconomic strategies to attract investment, grow the economy, create jobs as well as provide immediate fiscal strategies for accelerated domestic revenue mobilisation, in response to the COVID-19 pandemic and the domestic / global economic downturn.

“Specifically, the Finance Act 2020 adopts counter-cyclical fiscal policies in response to the COVID-19 pandemic by providing fiscal relief for taxpayers; reforms fiscal incentive policies to prioritise job creation and accelerate economic recovery and growth; and fosters closer coordination of monetary, trade and fiscal policies.”

Ahmed added that the 2020 Finance Act also provided for the establishment of a N500 billion crisis Intervention Fund as well as other sources approved by the National Assembly to fund the Federal Government’s expenditures.

Proceeds from unclaimed dividends of listed companies and unutilised amounts in dormant bank accounts outstanding for six years or more would be channelled to the fund, she stated,

The unclaimed dividends and bank balances are subject to a perpetual trust to be managed by the Debt Management Office (DMO), with governing council to be chaired by the finance minister and co-chaired by a nominee from the organised private sector who is of impeccable integrity and reputation.

Ahmed, however, added that genuine beneficiaries would be able to claim their funds back from the Federal Government at any time.

The minister also spoke on the performance of the revised 2020 budget, noting that the Federal Government expended a total of N1.8 trillion on capital projects.

According to her, the N1.8 trillion represents about 89 per cent of the total provision for capital projects.

She explained that out of the amount spent, N118.37 billion was released for COVID-19-related capital expenditure.

Ahmed said while the Federal Government projected N9.97 trillion for expenditure in 2020, it spent about N10.08 trillion, representing 101 per cent performance.

Debt service, she also stated, gulped N3.27 trillion while personnel cost, including salaries and pensions, accounted for N3.19 trillion.

She noted that the crude oil price benchmark was retained at $40 per barrel although the World Bank forecast $44 per barrel average crude oil price in 2021.

She added that crude oil production was projected to increase from 1.80 million barrels per day (mbpd) in 2020 to 1.86mbpd in 2021, as economies recover from recession, and moderated by the Organisation of Petroleum Exporting Countries (OPEC) quota agreements.

Ahmed stated that the aggregate revenue available to fund the N13.5 trillion 2021 budget was projected at N7.99 trillion (36.9 per cent higher than the 2020 projection of N5.84 trillion).

To promote fiscal transparency, accountability and comprehensiveness, she said the budgets of 60 Government-owned Enterprises (GOEs) were integrated in the Federal Government’s 2021 budget.

“In aggregate, 30 per cent of projected revenues is to come from oil-related sources while 70 per cent is to be earned from non-oil sources. Overall, the size of the budget has been constrained by our relatively low revenues,” she added.

The minister also explained that the deficit of N5.6 trillion will be funded via domestic and external borrowings of N2.34 trillion apiece.

She said N2.5 billion was expected as privatisation proceeds.

The budget also has an aggregate capital expenditure of N4.37 trillion or 32.2 per cent of total expenditure, which is 62.9 per cent higher than the 2020 Revised Budget, inclusive of capital component of statutory transfers and GOEs.

At N3.32 trillion, the provision for debt service for 2021 is 24.5 per cent of total expenditure and 12.6 per cent higher than 2020 revised budget, according to her.

The minister also put the provision to retire maturing bonds to local contractors / suppliers at N200 billion.

Director-General, Budget Office of the Federation (BoF), Mr Ben Akabueze, said the country was expecting donations of COVID-19 vaccines to cover 20 per cent of its population while 50 per cent would be acquired to achieve herd immunity.

Akabueze said, “To have herd immunity, 70 per cent of the population has to be vaccinated. Already, vaccine for 20 per cent of the population will be donated while the balance of 50 per cent will be paid for by the government.”