The 2018 Budget Proposals, according to President Muhammadu Buhari, are for a consolidation. He said, while presenting the budget to the National Assembly, that the principal objective of the budget will be to reinforce and build on the recent accomplishments of the government. “Specifically, we will sustain the reflationary policies of our past two budgets. In this regard, the key parameters and assumptions for the 2018 Budget are as set out in the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP),” said Buhari.
They include:
a. Benchmark oil price benchmark of US$45 per barrel;

b. Oil production estimate of 2.3 million barrels per day, including condensates;

c. Exchange rate of N305/US$ for 2018;

d. Real GDP growth of 3.5 percent; and

e. Inflation Rate of 12.4 percent.

Federally-Collectible Revenue Estimates
55. Based on the above fiscal assumptions and parameters, total federally-collectible revenue is estimated at 11.983 trillion Naira in 2018. Thus, the three tiers of Government shall receive about 12 percent more revenues in 2018 than the 2017 estimate. Of the amount, the sum of 6.387 trillion Naira is expected to be realised from oil and gas sources. Total receipts from the non-oil sector are projected at 5.597 trillion Naira.

Federal Government Revenue Estimates
56. The Federal Government’s estimated total revenue is 6.607 trillion Naira in 2018, which is about 30 percent more than the 2017 target. As we pursue our goal of revenue diversification, non-oil revenues will become a larger share of total revenues. In 2018, we project oil revenues of 2.442 trillion Naira, and non-oil as well as other revenues of 4.165 trillion Naira.
57. Non-oil and other revenue sources of 4.165 trillion Naira, include several items including: Share of Companies Income Tax (CIT) of 794.7 billion Naira, share of Value Added Tax (VAT) of 207.9 billion Naira, Customs & Excise Receipts of 324.9 billion Naira, FGN Independently Generated Revenues (IGR) of 847.9 billion Naira, FGN’s Share of Tax Amnesty Income of 87.8 billion Naira, and various recoveries of 512.4 billion Naira, 710 billion Naira as proceeds from the restructuring of government’s equity in Joint Ventures and other sundry incomes of 678.4 billion Naira.

Proposed Expenditure for 2018
58. A total expenditure of 8.612 trillion Naira is proposed for 2018. This is a nominal increase of 16 percent above the 2017 Budget estimate. In keeping with our policy, 30.8 percent (or 2.652 trillion Naira) of aggregate expenditure (inclusive of capital in Statutory Transfers) has been allocated to the capital budget.
59. We expect our fiscal operations to result in a deficit of N2.005 trillion Naira or 1.77 percent of GDP. This reduction is in line with our plans under the ERGP to progressively reduce deficit and borrowings.
60. We plan to finance the deficit partly by new borrowings estimated at N1.699 trillion Naira. Fifty percent of this borrowing will be sourced externally, whilst the balance will be sourced domestically. The balance of the deficit of N306 billion Naira is to be financed from proceeds of privatisation of some non-oil assets by the Bureau of Public Enterprises (BPE).

The proposed 8.612 trillion Naira of 2018 Aggregate Expenditure comprises:
a. Recurrent Costs of N3.494 trillion;
b. Debt Service of N2.014 trillion;
c. Statutory Transfers of about N456 billion;
d. Sinking Fund of N220 billion (to retire maturing bond to Local Contractors);
e. Capital Expenditure of N2.428 trillion (excluding the capital component of Statutory Transfers).
Statutory Transfers
N456.46 billion Naira was provided in the 2018 Budget for Statutory Transfers. The 5 percent increase over last year’s provision is mainly due to increases in transfer to Niger Delta Development Commission (NDDC) and the Universal Basic Education Commission (UBEC), which are related directly to the size of oil revenue.

Debt Restructuring
63. We are closely monitoring our debt service to revenue ratio. We shall address this ratio through our non-oil revenue-generation drive and restructuring of the existing debt portfolio. Presently, domestic debt accounts for about 79 percent of the total debt. Our medium-term strategy is to reduce the proportion of our domestic debt to 60% by the end of 2019 and increase external debt to 40 percent. It is noteworthy that rebalancing our debt portfolio will enhance private sector access to domestic credit. In addition, annual debt service costs will reduce as external debts are serviced at lower rates and repaid over a longer period than domestic debt.

Recurrent Expenditure
64. A substantial part of the recurrent cost proposal for 2018 is for the payment of salaries and overheads in key Ministries providing critical public services such as:
a. N510.87 billion for Interior;

b. N435.01 billion for Education;

c. N422.43 billion for Defence; and

d. N269.34 billion for Health.

The allocation to these Ministries represent significant increases over votes in previous budgets.

Personnel Costs
65. Personnel costs is projected to rise by 12 percent in 2018. Although we have made substantial savings by registering MDAs on the Integrated Personnel Payroll Information System (IPPIS) platform, the increase is mainly due to provision for staff promotion arrears, and recruitments by the Military, Police Force and para-military agencies.
Overhead Costs
66. Overhead costs is projected to rise by N26 billion Naira in 2018, a modest increase of about 12 percent reflecting inflationary adjustments. MDAs are required to adhere to government regulations regarding cost control.

Capital Expenditure
30.8 percent of the 2018 Budget to capital expenditure,

Key capital spending allocations in the 2018 Budget include:

a. Power, Works and Housing: N555.88 billion;

b. Transportation: N263.10 billion;

c. Special Intervention Programmes: N150.00 billion;

d. Defence: N145.00 billion;

e. Agriculture and Rural Development N118.98 billion;

f. Water Resources: N95.11 billion;

g. Industry, Trade and Investment: N82.92 billion;

h. Interior: N63.26 billion;

i. Education N61.73 billion;

j. Universal Basic Education Commission: N109.06 billion;

k. Health: N71.11 billion;

l. Federal Capital Territory: N40.30 billion;

m. Zonal Intervention Projects N100.00 billion;

n. North East Intervention Fund N45.00 billion;

o. Niger Delta Ministry: N53.89 billion; and

p. Niger Delta Development Commission: N71.20 billion.

a. N9.8 billion for the Mambilla hydro power project, including N8.5 billion as counterpart funding;

b. N12 billion counterpart funding for earmarked transmission lines and substations;

c. N35.41 billion for the National Housing Programme;

d. N10.00 billion for the 2nd Niger Bridge; and

e. About N300 billion for the construction and rehabilitation of the strategic roads mentioned earlier.
73. N65 billion Naira for the Presidential Amnesty Programme has been retained in the 2018 Budget.
74. We will complete all critical projects, including the East-West Road, which has a provision of about N17.32 billion Naira in 2018.