THE Federal Goverment has warned Ministries, Departments and Agencies of government not to include fresh capital projects in the 2021 budget.
The warning is contained in the 2021 Budget Call Circular, issued by the Minister of Finance, Zainab Ahmed, and personally signed by her.
The 2021 Call Circular sets out the requirements and instructions that must be satisfied and followed in the preparation of the 2021 Federal Government Budget Proposal.
The preparation of the budget estimates for MDAs is to take into consideration the 2023 Medium Term policies/strategies contained in the 2021 Expenditure Framework and Fiscal Strategy Paper, which is the Federal Government’s pre-budget statement.
The MTEF/FSP outlines the development priorities of the FGN for the period covered.
Further to this, the Federal Government’s annual budget is being prepared using the Zero-Based Budgeting approach and in line with the government’s policy thrust, as articulated in the Nigeria Economic Sustainability Plan as well as other relevant circulars.
The minister, in the document, said that, in allocating capital budget resources, MDAs were to accord priority to ongoing projects, especially those nearing completion that fit into government’s current priorities.
In preparing the budget, the document stated that these priorities must be linked to the Nigerian Economic Sustainability Plan’s core objectives.
The objectives are to stimulate the economy by preventing business collapse and ensuring liquidity; retain or create jobs, using labour intensive methods in key areas like agriculture, facility maintenance, housing and direct labour interventions; and undertake growth enhancing and job creating infrastructural investments in roads, bridges, solar power, and communications technologies.
Also, the plan is to promote manufacturing and local production at all levels and advocate the use of Made-in-Nigeria goods and services, as a way of creating job opportunities.
It also aims at achieving self-sufficiency in critical sectors of the Nigerian economy and curbing unnecessary demand for foreign exchange, which might put pressure on the exchange rate, while extending protection to the very poor and other vulnerable groups, including women and persons living with disabilities, through pro-poor spending.
The minister said, “As a general rule, MDAs may not be allowed to initiate new projects/programmes unless they can demonstrate that adequate provisions have been made for ongoing projects. In addition to alignment with the objectives of the NESP, the likelihood of completion within the medium-term, not later than 2023, should be considered in prioritising capital projects.
“Only expenditures on programmes/projects that are truly of a capital-nature will be admitted into MDAS capital budget proposals. Except where absolutely critical to the functioning of respective MDAs, proposals such as expenditure on vehicles, furnishing, construction/purchase of office or residential buildings and equipping of non-critical offices will not be accommodated in the 2021 budget.”
She added, “For avoidance of doubt, MDAs are reminded not to provide for recurrent expenditure in their Capital budget as a way of subverting the recurrent expenditure ceilings.
“The Budget Office shall reallocate any such provisions to Capital Projects within/outside the MDA as it deems appropriate.”
Details of the capital allocation, as contained in the budget call circular, showed that the Ministry of Works and Housing was to get the highest allocation of N272.06bn.
This is an increase of N6.2bn when compared to the N256.73bn, which the sector got in the revised budget of 2020.
The Ministries of Power, Transportation, and Defence followed with the sums of N178.38bn, N120.04bn and N120.04bn, respectively, as against N128bn, N109.34bn and N115.87bn, which they got in the 2020 budget in that order.
