The National Assembly Joint Committees on Appropriations and the Presidential Economic Team have agreed that the economic team must urgently release more funds for capital projects, as this is a major way for citizens to feel the impact of governance beyond recurrent expenditure, which affects only a negligible part of the population in the 2024 budget.
The National Assembly also expressed serious concern over the significant discrepancies between recurrent and capital expenditure and the low level of fund releases for capital projects for Ministries, Departments, and Agencies, MDAs, in the ongoing 2024 budget.
Chairmen of the Senate and House of Representatives Committees on Appropriations, Senator Solomon Adeola and Hon Abubakar Birchi, according to a statement signed by Senator Adeola’s media adviser, Chief Kayode Odunaro, reached an agreement with the economic team during a joint sitting on Wednesday in Abuja to consider the 2025 Appropriation Bill.
The National Assembly’s position followed a report from the economic team led by Mr Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, showing that overall 2024 budget performance was at 43 per cent, with recurrent expenditure achieving 100 per cent, while the capital budget managed only 25 per cent.
Senator Adeola advocated for a significant reduction in the ratio of recurrent expenditure to capital expenditure in the budget. He proposed moving from the current 80 per cent recurrent and 20 per cent capital allocation to at least 60 per cent recurrent and 40 per cent capital. He stressed that capital projects drive economic growth and have a direct impact on citizens.
“Capital releases to MDAs are the major drivers of economic activities within the nation. The non-release of funds for capital projects is a significant issue affecting the 2024 budget performance so far. It is critical that funds are released to prevent abandoned projects and ensure the success of the Renewed Hope Agenda of the president,” Adeola stated.
He further noted that MDAs would face scrutiny during their 2025 budget defence if they record poor performance on their core mandates, emphasising that efforts should be made within the remaining period of the 2024 budget to release funds for capital projects.
Concurring with his Senate counterpart, Hon. Birchi called for increased releases for MDAs’ capital projects, such as schools, roads, dams, hospitals, and other social infrastructure, rather than focusing on items like debt repayment, which he suggested could be restructured in the interim.
“Most items under recurrent expenditure, which take up a significant part of our budget and are implemented 100 per cent, only directly affect about 10 per cent of our population. In contrast, capital projects of MDAs directly benefit the majority of over 200 million Nigerians through provisions like hospitals, schools, roads, and energy,” Birchi stated.
The Minister of Finance confirmed outstanding capital releases awaiting funding but cautioned against returning to the old ways of spending without available funds, which could lead to economic instability, citing recent examples in France and Germany. He added that warrants for capital projects are awaiting payment.
The Minister of Budget and Planning, Alhaji Abubakar Bagudu, explained that the large recurrent expenditure in the budget reflects the country’s developmental stage and societal challenges. He noted that some recurrent expenditures fund military campaigns against insecurity, which have improved agricultural production and economic activities.
The Director General of the Budget Office, Dr Tanimu Yakubu, attributed the high recurrent expenditure to inherited liabilities, such as unpaid pensions and gratuities, which the current administration has successfully addressed. He suggested that legislation may be needed in the future to limit recurrent expenditure in the budget.
The meeting, which included the Minister of State for Finance, Dr Doris Uzoka-Anite, and the permanent secretaries of the ministries of Finance and Budget and National Planning, also discussed the impact of waivers and tax holidays on government revenue.
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