Revenue drop causing overhead cuts, says Budget Office

The Director-General, Budget office of the Federation, Mr Ben Akabueze said the federal government has been forced to cut overhead allocation to its Ministries, Departments and Agencies due to dwindling revenue.

Akabueze said this in Abuja when the Management of the News Agency of Nigeria (NAN), led by its Managing Director, Mr Bayo Onanuga paid him a visit.

“The picture you’ve painted about declining overhead allocation cuts across all agencies of government. And the primary reason is that government has grown excessively. It’s not like the aggregate overhead budget has reduced. No it hasn’t,  it is  increasing.

“Last year, for instance, the aggregate overhead budget was N163 billion and 2017, we sent N226 billion.

It may not necessarily  translate to any significant change in what you get, because government have got too many agencies that didn’t exist at that time when you were getting N40 million per month, now exists,’’ he said.

Akabueze said the 2016 budget had under-performed its revenue projections as government recorded total revenue of N2.9 trillion only.

“In 2016, we required N1.3 trillion to pay interest on loans and N2.2 trillion to pay personnel, so by the time, you pay personnel, pay interest on debt, you are already at  N2.5 trillion and your total revenue is N2.9 trillion.

“So your total revenue is taken up by personnel and interest on loans and that is why overheads are not released on time because it takes least priority.

“Right now we are in May and overheads have only been released for January and February, yet everyone has collected salaries up to April and are warming up to collect for May,’’ he said.

Akabueze said in the 2017 budget, personnel cost and pension eat up 30 per cent of the budget while debt servicing plus interest takes up another 25 per cent.

“In the decade up to 2015, the country spent an average of 10 per cent on capital expenditure. That is part of why the economy is at the state it is today with very poor infrastructure.

The present administration has set a policy to spend at least 30 per cent on capital infrastructure.

So  personnel, pensions debt servicing  and capital expenditure, eats up 85 per cent, leaving 15 per cent for statutory transfers to National Assembly, Judiciary, service wide charges and overhead cost of running all of government.

By the time you finish all of this, you’ll find that the overhead cost is the last to be paid. So overhead costs have been taking the brunt of this situation,’’ he said.

The budget boss said that to address this, the government may have to look at implementing the Oronsaye’s report, which proposes the scrapping and merging of several agencies with similar functions.

 

NAN/UO