Due to the fall in the price of Crude Oil at the International market, Nigeria’s finance suffers a setback; in the wake of this, there will be limited funds supply to the Federal, States and Local Governments. With this development, there are fears that States would not be able to perform their budgetary functions like paying salaries, providing basic amenities and maintaining infrastructures.The Federal Government proposed a N4.35 trillion 2015 Budget-The Transition Budget, analyzed by BudgIT, shows a decrease of about 7% from the 2014 budget from N4.695 trillion. According to various analysts, this decline is mainly due to falling crude oil prices.
The 2015 spending plan shows that the Federal Government has undertaken a drastic cut on capital expenditure as the vote slumped to N633.53 billion from N1.552 trillion budgeted in the 2014 approved Budget. The Recurrent vote proposal, however, is raised to N2.616 trillion from the N2.468 trillion in the approved 2014 plan. One of the recommendations in the publication by BudgIT, Falling Oil Prices: An Opportunity for Reform was for budgets to be presented on time and with due consideration for austerity. Most State Governments have also revised their budgets downwards considering the expected shortening of revenues from the Federation Account. A glance into the proposed budgets shows that most state governments are prioritizing projects to meet basic needs. Notable decline in budgetary allocation is seen in Delta, Oyo, Osun and Akwa Ibom’s States proposed 2015 budgets with a difference of (N123bn), (N66.5bn), (N36.2bn) and (N36bn) respectively from the approved 2014 budget.
It is also noteworthy that most state governments are in a transition period and will present budgets only to close existing projects and keep government affairs running.
Despite the financial shortages, certain states still had an increased budget; Kebbi State had an increment of N15.8bn from N151bn to N166.82bn in the proposed 2015 budget and Taraba State, an increment of N14bn from N83.3bn to N97.3bn. There are also slight increments in the proposed budgets of Anambra, Imo, Enugu and Adamawa States with N5.4bn, N4.2bn, N3bn and N2.9bn respectively. While States like Jigawa, Ondo, Rivers and Yobe are yet to declare their proposed spending plans.
With declining crude oil prices by about 49 percent, Government would have to be vehemently focused on plugging leakages and carefully adhering to the austerity measures designed to cushion the effects.