A budget is an essential aspect of Individual,Organisation and Government financials. It is a planstated in monetary terms. to:The purpose of Budget is to: Provide a forecast of revenues and expenditures Enable the actual financial operation of the business to be measured against the forecast. Establish the cost constraint for a project, program, or operation budgets?Why do we produce budgets? To control resources To communicate plans to various Stakeholders To motivate and strive to achieve budget goals To evaluate the performance To provide visibility into performance Source: wikipedia
The Nigeria budget is made up of fourcomponents: Part A – Statutory Transfers Part B – Debts Service Part C – Recurrent Expenditure (non-debt) Part D – Capital Expenditure MDA Expenditure Statutory Recurrent Capital Debt Service Transfer Expenditure Expenditure Consolidated Revenue Fund of the Federation
Statutory Transfer:The Federal Government is required by law to makecertain mandatory expenditures annually in respect of: NJC The National Judicial Council The Niger Delta Development NDDC Commission The Universal Basic EducationStatutory UBEC CommissionTransfer INEC The Independent National Electoral Commission NASS The National Assembly The National Human Rights NHRC Commission
Whenever the Federal GovernmentDebt Service: spends more money than the revenues it earns, it must find the financial resources to pay for this additional spending. Domestic Moneys borrowed within Nigeria Debts Debt Service Foreign moneys borrowed from outside Nigeria Debts When the government pays interest and principal on its debts, this is referred to as Debt Service.
Statutory Transfer & Debt Services Statutory Transfer 18.73% Debts Services Statutory Transfers and Debt Service currently make up on average about 18.73% of Federal spending
Recurrent Expenditure (non-debt): (non-Spending by the Ministries, Departments and Agencies(MDA) of Government on Salaries Pensions & Overheads Salaries, The Federal Government employs people to work in the various MDAs and Salaries pays them salaries in order to maintain the administration of government and continue to provide public goods and services. In addition to the pension contributions paid on behalf of workers under the Recurrent Contributory Pension Scheme, the (non-debt) Pensions Federal Government continues to pay the pensions of existing pensioners under the old Pay-As-You-Go System. Payment for electricity, water, telecommunications, office rent, office Overheads equipment and consumables, staff training, transportation, etc.
Capital Expenditure:Capital Expenditure is used to provide infrastructure such asroads, water and power; fund educational services such asschools, colleges and universities; and provide healthcarefacilities and services among others. Infrastructure Capital Educational Expenditure Services Healthcare
Recurrent & Capital Expenditure: RecurrentExpenditure 81.27% CapitalExpenditure The balance of 81.27% is MDA Expenditure, that is, money spent by the MDAs of Government to provide public goods and services
Graphical Representation of Recurrent Expenditure (2004 – 2013) TOTAL RECURRENT (NON-DEBT)70.00% 58.72% 57.46%60.00% 52.05% 50.52% 51.22%50.00% 47.84% 46.62% 45.08% 40.96%40.00% 30.11%30.00%20.00%10.00% 0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Top Spenders of Recurrent Expenditure: MDAs Gross % EDUCATION 12.66 POLICE FORMATION AND COMMANDS 11.33 DEFENCE/MOD/ARMY/AIR FORCE/NAVY 11.00 HEALTH 7.38 INTERIOR 6.73
Graphical Representation of Capital Expenditure (2004 – 2013) TOTAL CAPITAL EXPENDITURE45.00% 40.23%40.00% 34.48% 34.29%35.00% 32.51% 27.79% 28.74%30.00% 27.76% 27.01%25.00% 23.80% 19.54%20.00%15.00%10.00%5.00%0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Top Spenders of Recurrent Expenditure: MDAs Gross % WORKS 13.58 POWER 10.64 FEDERAL CAPITAL TERRITORY ADMINISTRATION 10.18 AGRICULTURE & RURAL DEVELOPMENT 6.57 WATER RESOURCES 5.40 EDUCATION 5.21 TRANSPORT 4.81 HEALTH 4.73 DEFENCE/MOD/ARMY/AIR FORCE/NAVY 3.34
70.00% Graphical Representation of60.00% All Budget Components 58.72% 57.46% 52.05% 51.22% 50.52%50.00% 47.84% 46.62% 45.08% 40.96%40.00% 30.11%30.00%20.00%10.00%0.00% 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Statutory Transfer Recurrent Expenditure Debt Services Capital Expenditure Evidently, Recurrent Expenditure (Salaries, Pensions and Overheads) enjoys a huge share of Nigeria’s yearly budget