Akwa Ibom State Internally Generated Revenue (IGR) slumped down to N10.425 billion in the end of the third quarter of this year.
The State’s IGR stood at N11.399 billion for the same period in 2016. This represents a difference of N974 million; analysis of the 2017 budget performance report presented by Governor Udom Emmanuel shows. No reason has been given for the downfall. IGR rose from N6billion in 2015 when Udom took over leadership, to all time high of N11.399 in 2016.
On Friday, 24 November, 2017, Governor Udom Emmanuel presented a proposed budget size of N651.500 billion for 2018 to the Akwa Ibom State House of Assembly. The proposal is the highest ever presented for consideration in the State. Before the 2018 proposal, 2013 revised budget which stood at N599.180 billion was the highest.
The 2018 estimate is about 25 per cent- that is N165.708 billion- more than the N485.792 billion revised budget approved for 2017.
The 2017 budget performance report shows that in the first three quarters of this year, the State spent more on recurrent expenditure than it did on capital projects.
According to the governor’s address, “actual recurrent revenue collected was N146.072 billion…a total of N78.803 billion was spent on recurrent services which include, personnel cost, overhead cost and consolidated revenue fund charges”. This implies that the balance of N67.269 billion of the recurrent revenue received for the period was spent on projects. This exposé stands contrary to the popular claim that the government spends a bigger chunk of her budget on capital expenditure than recurrent expenses.
There is something interesting to note here. That, at September ending, the State was N12.197 billion away from exceeding its revised approved recurrent expenses for 2017 which is N91billion, having spent N78.803 billion in three quarters, that is N26.27 billion per quarter. This suggests that the State might exceed its approved recurrent expenditure for 2017 before the end of the fiscal year.
More so, the 2018 fiscal proposal tagged “Budget of Consolidation and Industrial Drive”, is predicated on oil benchmark of 2.3mbpd (million barrel per day), $45 per barrel, and an exchange rate of N305/$1. Note that 2017 budget was predicated on oil bench of less than one million barrel per day and $35 per barrel. Crude oil production is expected to jump up almost by 1.3mbpd, next year. Achieving that will depend largely on security situation in the South-South.
Furthermore, the proposals show that the State hopes to spend N437.674 billion on capital projects in 2018, against N313billion in 2017, and N213.826 billion for recurrent expenditure against N91billion approved in the revised budget for 2017.
Allocation for recurrent expenditure in 2018 is approximately 34 per cent of the budget size. The recurrent estimates show that N120 billion will be used for payment of pensions, gratuities and public debts; N53.138 billion is for personnel cost; while N39.829 billion is for overhead cost. The phenomenal increase in projected recurrent estimate is not unconnected to: one, huge arrears of gratuity and pension inherited from the last administration- in 2016, Governor Udom Emmanuel paid 10 years pension arrears to local government workers. Two, recent increase in the State workforce. The State government recently recruited new teachers for primary and secondary schools, academic and non-academic staff for the Akwa Ibom State Polytechnic.
Note that the projected recurrent revenues from IGR, statutory allocation, derivation, VAT, retained revenue from parastatals and budget support for 2018 is N289 billion; while projected recurrent expenditure is N213.826 billion. This implies that almost all the recurrent revenue – which usually comes from the most assured income sources- expected in 2018 will be spent on personnel, overhead and public debt.
Consequently, capital projects for the year will depend on funding from far less guaranteed sources as: internal and external loans(N105billion), grants(N120billion), ecological funds(N26.5billion), reimbursement from federal government on road and other infrastructure (N65billion), investment income(N1billion), refunds from excess loan deduction and other exceptional income (N35billion) and an opening balance of N10 billion from 2017. The 2018 budget size is large, but the budget is not healthy, drawing from the above reasons. With this outlook, the possibility of completing all on-going road projects as the governor promised is very slim.
Projected IGR for 2018 is N35.496 billion. The budget breakdown prepared in accordance to International Public Sector Accounting Standards(IPSAS) accrual template shows that 81.3 per cent of the proposed capital expenditure representing N355.851 billion is allocated to the Economic sector. Administration has N48.342, representing 11 per cent. Social Sector, comprising – education, health, information, sports, youths and women, and traditional institution – is allocated N28.139billion, representing 6.4 per cent. Law and Justice has N3.813 billion, while Regional sector is allocated N1.529billion.
Further breakdown of sectoral allocations shows that Works (N211.423b); Lands, Housing and Urban Development(54.631b); as well as Culture and Tourism (N14.604b) have higher allocations than Education (N10.526billion) and Health (N8.210billion).
Agriculture is allocated N17.91 billion against the revised N16.381 billion approved in 2017. Rural development has the least allocation, N1.53billion in 2018.
Allocation to the Ministry of Culture and Tourism in 2018 is the highest in 30 years. Last year, the Ministry was allocated N700million. The governor said, “culture and tourism remains one of the most improved ministries [in 2017]…it made so much impacts during the 30th anniversary of the State”.
On the whole, all sectors got a leap in the 2018 proposals. However, capital allocation to Education remains low. In 2017, despite the House of Assembly’s critical intervention which made allocations to the education sector to be up-changed by about N3billion from the initial N8.62billion allocated to it; only very few out of a long list of competing capital needs were met in the sector. In some schools, indigenes and host communities had to assist government renovate school blocks and provide desks. The governor said 57 school blocks were renovated, five were constructed in 2017. Some of the renovation works which have been on-going for months now are yet to be completed.
Note that some of the key projects earmarked for the 2018 fiscal year include: construction of a 21-storey office at former Uyo main market, a-10000 capacity worship centre, cross and pilgrims park, high court complex; save city project to help in crime detection, completion of Ibom Tropicana centre and on-going road projects.
Others are, commercial cattle development project, cocoyam and avocado pear production, rice rehabilitation project, bamboo development programme, vegetable and cocoa green house project, among others.
However, there are marked difference in the 2018 budget proposals. One, for a period, policy thrust and objectives, and implementation strategies of the budget of the State have been one and the same, copied from previous budget and pasted on the new. For 2018, one would see a few marks of difference in the thrust, objectives and strategies.
Two, it’s about the first time the budget is presented in November. Previous budgets came sometimes in the middle of December or early January.
Three, it’s the first time the press and the public had unhindered access to the budget proposal even as the governor was presenting it. The abridged budget proposal was published online as the governor was reading it. This is a significant departure from previous years’ own.
Nevertheless, two things stood out in the budget. One, the budget address of the governor did not state the actual performance/implementation of the 2017 budget for the period ending September. In 2016, percentage of performance in the end of third quarter was 34 per cent.
Two, the governor’s review of the 2017 budget was silent on refunds on excess loan deductions and other exceptional income received by the State within the period. The 2018 estimates indicate that N35billion is expected from such refunds next year.
It would be recalled that the State received a total of N24.5billion on refunds from Paris Club debt this year. The State is said to have also received N9.4 billion compensation on derivation allocation for environmental degradation, and N1.6 billion balance of refunds of 13 per cent derivation for July 2003- April 2011, in respect to Ekanga Oil Field.
By Abasifreke Effiong
@ 1521 Media Team (08068970779)
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