BREAKDOWN OF 2019 FGN APPROVED BUDGET

1. BREAKDOWN OF 2019 FGN APPROVED BUDGET PUBLIC Presentation of the 2019 Budget OF CONTINUITY Sen. Udoma udo udoma, con Hon. Minister, Ministry of Budget & National Planning Tuesday, 28th May, 2019 1

2. OUTLINE Public Presentation of the 2019 Enacted Budget

3. Background & Context • The 2019 budget proposal was presented to the National Assembly (NASS) by Mr. President on December 19, 2018; passed by the NASS and transmitted to the President on May 9, 2019. • After the usual analysis of the budget as passed by NASS, the President signed the budget into law yesterday May 27, 2019. Today, I am here to present details of the signed budget. • The 2019 budget is designed to further reposition the economy on the path of higher, inclusive, diversified and sustainable growth, and to continue to lift significant numbers of our citizens out of poverty.

4. Background & Context …/2 • The macroeconomic environment has stabilized and is recovering gradually, and thus renewed confidence in the country’s growth prospects. • The Economic Recovery and Growth Plan (ERGP), which underpins government’s economic recovery actions, is the basis for medium-term fiscal strategy to achieve sustained economic growth, diversification and social inclusion. • Some of the underlying assumptions and targets in the ERGP have been updated to reflect current realities/projections.

5. Summary of 2018 Budget Performance *Inflation rate for December, 2018; As at April 2019, inflation rate is 11.37% ** GDP growth for Q1 2019 was 2.01%. + Bonny Light price average FY 2018 SOURCE: 2018 Appropriation Act; NBS Q-Reports; OAGF.NNPC

6. Summary of 2018 Budget Performance …/2 • As at the end of the year, Federal Government’s actual aggregate revenue was N3.96 trillion, which is 55 percent of the budget, although higherthan 2017 revenue. This includes: • Oil Revenue of N2.32 trillion (77% of budget and 64% higher than 2017); • Company Income Tax (CIT) of N637.25 billion (80% of budget and 17% higher than 2017); • Value-Added Tax (VAT) of N148.92 billion (72% of budget and 15% higher than 2017); • Customs Collections of N303.91 billion (94% of budget and 16% higher than 2017); and, • Independent Revenues of N454.34 billion (54% of budget and 54% higher than 2017). • The overall revenue performance is only 55 percent of the target in the 2018 Budget partly because some one-off items such as the N710 billion from Oil Joint Venture Asset restructuring and N320 billion from revision of the Oil Production Sharing Contract legislation/termsare yet to be actualized and have thus been rolled over to 2019.

7. Summary of 2018 Budget Performance …/3 • Of the total appropriation of N9.12 trillion, N6.938 trillion was spent. This represents 79% performance. • Debt service and the implementation of non-debt recurrent expenditure, notably payment of workers’ salaries and pensions, were on track.

8. Key Initiatives to improve FGN Revenues • The Federal Government has also sustained its efforts to improve public financial management through the comprehensive implementation of the: • Treasury Single Account (TSA), • the Government Integrated Financial Management Information System (GIFMIS) and • the Integrated Payroll and Personnel Information System (IPPIS). • President has directed that immediate action be commenced to restructure the Joint Venture Oil Assets so as to reduce government shareholding to not less than 40 percent and that this exercise must be completed within the 2019 fiscal year. • The Department of Petroleum Resource are now concluding efforts on the collection of past-due oil license and royalty charges.

9. Key Initiatives to improve FGN Revenues …/2 • Following Mr. President’s directive: • The Ministry of Finance, working with all the relevant authorities, has been authorized to take action to liquidate all recovered, unencumbered assets; • Given the improved oil prices and production levels, Nigerian National Petroleum Corporation (NNPC) is to immediately commence the recovery of all outstanding obligations, including those due from Nigerian Petroleum Development Company (NPDC) (a subsidiary of NNPC), which it had agreed to pay since 2017. • Finally, amongst other revenue generating initiatives, Mr. President has directed that work should be concluded on the deployment of the National Trade Window and other technologies to enhance Customs collections efficiency.

10. GLOBAL OUTLOOK: RECENT DEVELOPMENTS AND PROSPECTS Public Presentation of the 2019 Enacted Budget

11. Background to the 2019 Budget: Global Environment Sub-Saharan Africa is projected to continue to grow rising from 3.0% in 2018 to 3.5% and 3.7% in 2019 and 2020 respectively. Global economic recovery is precarious, projected to slow down from 3.6% in 2018 to 3.3% in 2019.Howevera rebound to 3.6% is projected for 2020

12. Background to the 2019 Budget: Global Environment …/2 • The global growth forecast reflects a combination of waning cyclical forces and a return to tepid potential growth in advanced economies; a precarious recovery in emerging markets and developing economies. • The tension associated with the trade dispute between the two largest world economies (USA and China) has consequential impact on global growth prospects. Importantly, tariffs on $200 billion of US imports from China will be a drag on US imports from China • Increased volatility in global market amid rising tensions between the United States and Iran in the Gulf, which threaten to disrupt supply and price.

13. Background to the 2019 Budget: Global Environment …/3 • Growth in advanced economies is expected to decline from 2.2% in 2018 to 1.8% in 2019, and 1.7% in 2020. • In the Euro area, growth is projected to slow-down from 1.8% in 2018 to 1.3% in 2019. However expected to rebound to 1.5% in 2020.

14. Background to the 2019 Budget: Global Environment …/4 • The baseline projection of about 1.2% and 1.4% growth in the United Kingdom in 2019–20 is surrounded by prolonged uncertainty about the Brexit outcome. • In the United States, growth is expected to decline to 2.3 % in 2019 and soften further to 1.9 % in 2020 with the unwinding of the fiscal stimulus. • Economic growth in China, despite fiscal stimulus and no further increase in tariffs from the United States relative to those in force as of September 2018, is projected to slow on an annualized basis in 2019 and 2020.

15. The Nigerian Economy: Implications of Global & Domestic Developments Public Presentation of the 2019 Enacted Budget

16. Background to the 2019 Budget: Domestic Environment • The macro-economy has been largely stable. Growth has increased from 0.82% in 2017 to 1.93% in 2018 and 3.01% is expected in 2019, with the continuing implementation of the ERGP. • Real GDP increased from 1.89% in Q1 of 2018 to 2.01% in the first quarter of 2019. The strongest first quarter growth since 2015. • Significant growth in the non-oil sector: 2.47% growth in Q1 2019, up from 0.76% in Q1 2018 • Diversification efforts continue; the contribution of the non-oil sector to GDP increased from 90.4% in Q1 2018 to 90.9% in Q1 2019.

17. Background to the 2019 Budget: Domestic Environment …/2 • As employment growth usually takes some time to recover after recession, National Bureau of Statistics (NBS) data shows that unemployment and underemployment remain high in Nigeria. • However, we can expect reduction in the rate of unemployment, as we continue to implement the policies and programmes of the ERGP which are directed at creating more diversified and inclusive growth. • Mr President has indicated that the focus of his second term will be employment generation.

18. Background to the 2019 Budget: Domestic Environment …/3 • Relative peace and stability have been attained in the fight against insurgency in parts of the North-East, with economic activities recovering. Government is taking steps to address issues of rising insecurity in other parts of the country. • Agricultural performance hascontinued to improve. Agriculture sector grew in real terms from 1.91% in Q3 2018 to 2.46% in Q4 2018 and to 3.17% in Q1 2019. • Headline inflation has largely declined every month since January 2019 albeit increasing slightly in April 2019 to 11.37% from 11.25% in March 2019.

19. Background to the 2019 Budget: Domestic Environment …/4 Domestic Developments .../2 • Militancy in the Niger Delta has generally abated. Production increased from an average of 1.91mbpd in Q4 2018 to an average of 1.96mbpd in Q1 2019. • Oil Production was affected by breaches of pipelines, maintenance and technical issues. • Mr. President has directed the NNPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day.

20. Background to the 2019 Budget: Domestic Environment …/5 Inflation (%) GDP Growth (%) Exchange rates Foreign Reserves ($ billion) Domestic Developments .../3 Naira/USD

21. Underlying Assumptions driving the Macroeconomic Parameters &Targets for the 2019 BUDGET Public Presentation of the 2019 Enacted Budget

22. $ Oil Production 2.3 mbpd Key Assumptions & Macro-Framework of 2019 Budget Oil Price $60/b ERGP 2.4mbpd 305/ Exchange Rate Key Assumptions ERGP $50/b ERGP N305/$ N119.28 trn Nominal Consumption ERGP 13.39% 9.98% Inflation Rate ERGP N106.03 trn 3.01% GDP Growth Rate ERGP N126.86 trn N139.65 trn Nominal GDP ERGP 4.5%

23. Key Assumptions & Macro-Framework of 2019 Budget …/2 • Crude oil prices declined early in the year from an average of US$71.3 per barrel in 2018 to US$60.5 per barrel in January 2019. • Prices have risen steadily recently to about US$69 per barrel currently for Nigeria. • The consecutive rise is explained by continuing strengthening oil market fundamentals, improved market sentiment, and commitments to restore global oil market stability. • The World Bank projects crude oil prices to moderate slightly from their current levels and average $66 per barrel in 2019.

24. Approach to the 2019 Budget ERGP, MTEF/FSP, MTSS • The 2019 Budget seeks to continue the reflationary & consolidation policies of the 2017 and 2018 Budgets respectively, which helped put the economy back on the path of growth • On the expenditure side, allocations to Ministries, Departments and Agencies (MDAs) of Government were guided by the 3 core objectives of the ERGP, which are, (i) Restoring and Sustaining Growth; (ii) Investing in our People and (iii) Building a Globally Competitive Economy. • As with 2016, 2017 and 2018 Budgets, the 2019 Budget has been prepared on the Zero Based Budget (ZBB) Principles. • The 2019-2021 Medium Term Fiscal Framework (MTFF), Medium Term Sector Strategies and approved 2019 Budget reflect many of the reforms and initiatives in the ERGP, our roadmap to economic recovery and a more sustainable growth. • Projects are linked to government policies and overarching strategic priorities.

25. Overview of the 2019 Budget as Passed by NASS and signed into Law by Mr. President yesterday, Monday, 27th May, 2019. Public Presentation of the 2019 Enacted Budget

26. Adjustments Made by the National Assembly • Executive revenue assumptions were generally approved and adopted by NASS, except for unexplained increases totalling N31.5 billion on some non-oil revenue lines. • NASS increased the budget size from N8.83 trillion to N8.92 trillion, translating to an increase of N90.33 billion • This has resulted in an overall increase of N58.83 billion in deficit. Inexplicably, NASS reduced the proposed borrowing from N1.649 trillion to N1.605 trillion, thus creating an overall unfunded deficit of N102.83 billion. To fully fund the budget, the level of borrowing may therefore have to increase. • Allocations for some executive projects based on critical appraisal and linked to the ERGP were reduced and a large number of new projects, mainly constituency type projects, were introduced. 3.2 2.8 3

27. Adjustments Made by the National Assembly …/2 • Mr. President intends to engage the leadership of the ninth National Assembly, as soon as it emerges, to effect any amendments necessary to ensure he delivers on his electoral promises. • Mr. President also intends to seek the support of the leadership of the NASS for a smoother, faster budget process going forward and their collaboration to return to a January-December fiscal year. 3.2 2.8 3

28. 2019 Budget Revenue Projection – Where the Money is coming from? An Overview of the Revenue Framework 3.2 2.8 3 Source: BOF, NNPC, NCS, MBNP, NBS, FIRS, DPR

29. Highlights • Distribution of expected FGN revenue are as follows: • Oil Revenue – 52.7% • CIT – 11.6% • VAT – 3.3% • Customs – 4.4% • Independent Revenue – 9.0% • Signature Bonus – 1.2% • JV Equity Restructuring – 10.1% • Grants & Donor Funding – 3.0% • Domestic Recoveries & Fines – 2.9% • Others* - 1.8% 2019 Budget Revenue Proposals – Where the Money is coming from …/2 Note: • We have again, reflected projected proceeds from oil assets ownership restructuring as revenues for transparency & monitoring. • Expected funds have been earmarked to fund critical capital projects as this was not achieved in 2018. * Balances in Special Accounts, FGN Share of NLNG Dividend, Share of Minerals & Mining

30. Highlights • 2019 FGN spending (exclusive of GOEs/BT Loans) is projected to be N8.92 trillion, which is N90.3 billionmore than the proposal. • Recurrent (non-debt) spending N17.38 billionmore than the Executive proposal • Out of the Capital Expenditure of N2.93 trillion, MDAs capital and Capital supplementation is N2.09 trillion • Capital Expenditure (Inclusive of Transfers, GOEs Capital & Project-tied loans) as % of FGN Expenditure is 31% . • At N2.14 trillion, debt service is 27% of revenue • The proposal for the provision to retire maturing bond to local contractors was reducedby N10 billion 2019 Budget Expenditure Estimates – Where the Money is going to? An Overview of the Expenditure Framework 3.2 2.8 3 Source: BOF, NNPC, NCS, MBNP, NBS, FIRS, DPR

31. Highlights Financing the Deficit An Overview of Deficit, Financing & Critical Ratios • Overall budget deficit is N1.918 trillion, against N1.859 trillion in the Executive Proposal. This represents 1.37% of GDP. • Budget deficit is to be financed mainly by borrowing N1.605 trillion split equally between domestic and foreign borrowing. This is a reduction from the Executive planned borrowing of N1.649 trillion. • Financing gap of N102.84 billion 3.2 2.8 3 Source: BOF, NNPC, NCS, MBNP, NBS, FIRS, DPR

32. Recurrent Expenditure (N billions) Top 12 MDA Recurrent Expenditure Allocations in the 2019 Budget Allocation underscores our commitment to increase investment in national security and human capital development. 3.2 2.8 3 • Note: Personnel costs including Overhead & pensions account for about 72% of recurrent non-debt expenditure. Source: Appropriation Bill

33. Minimum Wage • Mr. President has signed the new Minimum Wage Act. Some Provision was made for its implementation in the 2019 Budget. Provisions retained by NASS. • A Presidential Technical Advisory Committee (PTAC) was set up to advise on ways to: • ensure that the new minimum wage, and attendant wage adjustments for those already over the Minimum Wage, can be funded without increasing the level of borrowing • implement these wage adjustments in such a manner as to minimize their inflationary impact • A Committee headed by the Vice President is currently reviewing the PTAC’s recommendations, while the joint negotiations committee has also been constituted for the consequential adjustments.

34. Capital Expenditure (N billions) Top 12 MDA Capital Expenditure Allocations in the 2019 Budget 3.2 2.8 3 Source: Appropriation Bill

35. Some Projects in the 2019 Budget • Transport • N78.22 billion Counterpart funding for Railway projects including: • Lagos-Kano (Ongoing) • Calabar-Lagos (Ongoing) • Ajaokuta-Itakpe-Aladja (Warri ) (Ongoing) • Port Harcourt- Maiduguri (New) • Kano-Katsina-Jibiya-Maradi In Niger Republic (New) • Abuja-Itakpe and Aladja (Warri)-Warri Port And Refinery Including Warri New Harbour (New) • Bonny Deep Sea Port & Port Harcourt and other Rail Projects • N941.14 million for construction of Terminal Building at Enugu Airport • N12 billion for construction of Second Run-Way at Nnamdi Azikiwe International Airport Abuja

36. Some Projects in the 2019 Budget …/2 • Transport …cont’d • N23.10 billion for various rehabilitation of railway tracks including • Rehabilitation of track from Port-Harcourt to Makurdi • Maintenance of track (including emergency recovery, bridge and culverts repair) • Procurement of spare parts (including lubricants) for the locomotives, coaches and wagons. • Kuru to Maiduguri narrow gauge track rehabilitation project • Track rehabilitation from Makurdi to Jos to Kafanchan to Kaduna junction • Procurement and rehabilitation of locomotives and rolling stock • Procurement of workshop equipment and rolling stocks • Design, manufacture, supply, installation, testing and commissioning of electric overhead travelling cranes for carriage and wagons workshop • Upgrading of signaling & telecom system on Eastern Line (Port Harcourt, Maiduguri, etc.) including revised estimated total cost for extension to Western Line

37. Some Projects in the 2019 Budget …/3 • Power • N869.38 million set aside as fund for the Mambilla Hydro Power project • N250 million for construction of 215MW LPFO/ Gas Power station Kaduna • N208.5 million for Kashimbilla transmission • N203.85 million for Fast Power Programme Accelerated Gas and Solar Power Generation • Housing • N24.97 billion for Federal Government National Housing Programme

38. Some Projects in the 2019 Budget …/4 • Works • About N258.41 billion for the construction and rehabilitation of roads in every geo-political zone of the country, such as: • Counterpart Funding for the Dualization of Makurdi - Enugu Road • Counterpart Funding for the Dualization of Akwanga – Jos - Bauchi - Gombe Road • Reconstruction of the Outstanding Sections of Benin – Ofosu – Ore – Ajebandele - Shagamu Expressway • Construction of Bodo - Bonny Road • Pavement Strengthening and Asphalt Overlay of Ajebandele - Ijebu Ode - Shagamu Road • Construction of Oju/Loko - Oweto Bridge to link Loko and Oweto • Dualization of Ilorin – Jebba - Mokwa/Bokani Junction Road • Kano - Maiduguri Road (Various Sections) • Abuja - Lokoja Road (Various Sections) • Dualization of Obajana Junction to Benin (Various Sections) • Lagos – Shagamu - Ibadan Dual Carriageway • Early Works for the Construction of 2nd Niger Bridge in Anambra/Delta States • Construction of Kaduna Eastern By-pass • Abuja – Kano Dual Carriageway • Dualization of Odukpani – Itu – Ikot Ekpene Road

39. Some Projects in the 2019 Budget …/5 • Works Cont’d • About N258.41 billion for the construction and rehabilitation of several roads nationwide including: • Construction of Kano Western Bye Pass • Abuja – Abaji • Suleja – Minna Road • Rehabilitation & Expansion of Lagos - Badagry Expressway • Rehabilitation of Vandeikya – Obudu - Obudu Cattle Ranch Road • Rehabilitation of Ilorin – Kabba - Obajana Road In Kwara/Kogi • Reconstruction of Nasarawa - Loko Road • Dualisation of Sapele - Ewu Road (various sections) • Reconstruction of Bida - Lambata Road in Niger State • Rehabilitation of Ikorodu - Shagamu Road • Rehabilitation of 9th Mile - Orokam Road In Enugu State • Re-construction of Sokoto - Tambuwal – Jega – Kontagora - Makera • Design and Construction of Bridge Across the Cross River at Uwana (Ebony State) to Nkomoro (Cross River State) • Construction of Road Falali, Birni, Bako to Furoja Town (Ningilga), Bauchi State

40. Some Projects in the 2019 Budget …/6 • Health • N51.22 billion Provisioned for the implementation of the National Health Act • N21.25billion provided for GAVI/Immunization • N1.26 billion for the procurement Of Non Polio SIA Vaccine • N523 million for the procurement Of Kits And Commodities For Community Health Influencers • N300 million for the establishment Of Chemotherapy centres in UBTH, UITH, ABUTH, UMTH, OAUTH, UNTH, UPTH, FMC Owerri, FMC Abeokuta • N7.63 billion for procurement of RI vaccines and devices • N3.5 billion for counterpart funding including global fund/health • Water Resources • N548 billion provisioned for the Zobe Water Supply Project - Phase I & II • N618 million for Partnership for Expanded Water, Sanitation and Hygiene (PEWASH) • N648 million for Special Intervention for North East and IDPs - Potable of Portable Water • Over N57 billion for water supply, rehabilitation of dams, and irrigation projects nationwide

41. Some Projects in the 2019 Budget …/7 • Agriculture & Rural Development • N2 billion Support For Infrastructure, Projects and Coordination Services • Over N15.66 billion for Promotion and Development of Value Chain across in more than 30 different commodities • N2.01 billion for Veterinary and Pest Control Services • N6.90 Billion for Rural Roads And Water Sanitation • N2.27 billion for National Grazing Reserve Development • N1.09billion for Mechanization • N1.27 billion for Livelihood Improvement Family Enterprise (Life) Programme • N2.01 billion for Food and Strategic Reserves • N2.49 Billion for Agribusiness and Market Development • N2.09 billion for Extension Services • N1.72 billion for Land and Climate Management • N1.03 billion for GES - Delivery Platform, Roll-out and Management

42. Some Projects in the 2019 Budget …/8 • Industry, Trade & Investment • Special Economic Zone Projects • N38.25 billion for ongoing and planned Special Economic Zone Projects across the geopolitical zones to drive manufacturing/exports. • Construction/Provision of Road for Ikpokri Energy City Project • Completion of Lekki Model Textile and Garment Industrial Park • Provision of Infrastructure at Brass Free Zone, Bayelsa State • Construction of Textile & Garment Park, Lekki • Construction of Special Economic Zone (SEZ) Sokoto • Construction of Special Economic Zone (SEZ), Makurdi • Completion of Consultancy Works On Ebonyi, Edo, Adamawa, Rivers, Bauchi, Enugu, Gombe, Nnewi, Abuja • FGN investment in Enyimba Industrial Park, and Ibom Deep Sea Port and City • N1 billion for Industrial Policy Reforms and Enabling Business Environment • Export-Expansion Grant (EEG) • N3.03 billion in the form of tax credit to support export via the Export Expansion Grant • Recapitalisation of Bank of Industry (BOI) and Bank of Agriculture (BoA) • N15 billion provisioned to support these development finance institutions to support Micro, Small and Medium Scale Enterprises (MSMEs) • N7 billion provided as a grant to BOI to subsidize interest rate charged on loans to SMEs. This is intended to make it possible for the Bank to give them single digit interest loans

43. Some Projects in the 2019 Budget …/9 • Education • N3 billion Provision of Security Infrastructure in 104 Colleges • N1.8 billion for Payment of 5000 Federal Teachers Scheme Allowance • N4.64 billion for various Scholarship allowances • Niger Delta • N400 million for the construction and surpervision of Gberegolor - Ogriagbene Road, Delta State • N800 million for the Construction of Agadagba – Akotogbo – Iyasan - Ovia River bridge Irele LGA Ondo State • N5.14 billion for various sections of the East-West Road • N500 million for the construction of skills acquisition centres with resident supervision and furnishing/equipping in nine states of the Niger Delta Region

44. Some Projects in the 2019 Budget …/10 • Regional Interventions • N65 billion for reintegration of transformed ex-militants under the Presidential Amnesty Programme. • N45 billion for Federal Initiative for North-East (Pilot Counterpart funding contribution) • N10 billion as take off grant for the North East Commission • SDGs • N38 billion for SDGs Intervention Programmes/Conditional Grants • N11.3 billion for other SDGs Projects • Special Intervention Programme • N500 billion for FGN Special Intervention Programme (including Social Housing, Home Grown School Feeding Programme, Government Economic Empowerment Programme, N-Power Job Creation Programme, Conditional Cash Transfers, etc)

45. Conclusion Public Presentation of the 2019 Enacted Budget

46. Conclusion • The 2019 Budget of Continuity will further reposition the economy on the path of higher, inclusive, diversified and sustainable growth, and contribute to lifting significant numbers of our citizens out of poverty. • The Budget is another step in the achievement of the objectives the ERGP, namely Restoring Macroeconomic Stability; Agriculture and Food Security; Energy Sufficiency (in Power and Petroleum Products); Transportation Infrastructure; and Industrialization (focusing on SMEs). • The President will engage with the new leadership of NASS to address the funding of projects whose allocations were reduced. • Government will continue to create the enabling environment for the private sector to increaseinvestment so as to increase productivity, create jobs and stimulate further growth.

47. Conclusion …/2 • Already, diversification efforts are yielding positive results; the contribution of the non-oil sector to GDP increased from 90.4% in Q1 2018 to 90.9% in Q1 2019. • However, Nigeria faces significant challenges with respect to revenue generation and this is being tackled vigorously. Key reforms will be implemented with increased vigour to improve revenue collection and expenditure management. • Mr. President is committed, and has directed that all measures necessary be taken to ensure that we grow rapidly while maintaining fiscal sustainability. • To ensure that this happens, the President set up a Projects and Programmes Committee which has concluded its work. The initiatives developed by this committee will be rolled out as the President enters his second term

48. Thank You! . www.budgetoffice.gov.ng