Osun Budget 2022 Analytical Outlook – OsunDefenderOsunDefender
By Wale Bolorunduro
THE the name of the budget is appropriate, as sustainable development budget. An increase of around 15% from the 2021 budget is moderate and moderately ambitious to pursue and maintain, although the actual performance of Osun’s 2021 budget (for nine months) is not known and is not in the public domain. , for someone to think about how realistic the 2022 budget is. There is certainly an inherent deficit in the 2022 budget, which could be in the range of N15 billion to N20 billion, which the state government is expected to finance from capital revenues and other sources such as grants, loans, financing contracts, sales of assets, making investments, miscellaneous income, reimbursements from the federal government, surpluses from previous years. These can only be determined from the budget breakdown, which should be on the state’s website and until then these assumptions could be speculative. The deficit of N15 to 25 billion is well above the fiscal responsibility tolerance of five percent of the budget. The deficit which could result from the delay of recurrent revenue over total expenditure is however manageable and this could be the origin of the word “sustainable”. So why not call it Sustainable Budget. As of the state’s published account in 2020, total revenues were N99 billion and the IGR was N19 billion; From these figures, it is doubtful that total revenue in 2022 could exceed $ 115 billion, leaving a deficit of around N15 billion, which can be financed from capital revenue.
The ratio of capital expenditure to current expenditure of 59% to 41% is commendable, a good strategy, theoretically, to target economic growth and development. The low recurrent spending of 53.5 billion naira is too optimistic compared to the actual 2020 figure for recurrent spending of 46 billion naira. With annual inflation of 15%, recurrent spending in 2021 could be around 53 billion naira. Therefore, the low recurrent spending forecast for 2022 will certainly become a challenge in an inflationary environment with the cost of local production inputs and transport costs reassessed periodically, in line with the devaluation of the Naira. The year 2022 is also an election year for the outgoing governor with security challenges here and there, it will be difficult to rationalize or realign the various operating and governance costs. To allay the fear of workers, the government should do more to fill some of the vacancies in key public services (education and health sector) and to promote; all of this will increase recurrent spending in 2022.
In 2020, actual state expenditure as published by the government revealed that 40 billion naira was spent as capital expenditure and recurrent expenditure of 46 billion naira, so the ratio was 46 billion naira. % to 54% for capital and recurring expenses respectively. This shows, historically, that the administration does not have such a tendency that favors capital spending over recurrent spending, as it had forecast in the 2022 budget. It is going to be intimidating to change the course of the membership. spending in 2022.
The proposed capital expenditure of 76 billion naira for 2022 is very moderate with the following sector allocation; a total sum of N26.7 billion went to education; over 19 billion naira to infrastructure; about N16 billion to the health sector and about N7 billion to agriculture. Only 19 billion naira has been allocated for infrastructure with many roads to be completed, which casts doubt on the kilometers that can be traveled among the wasteland road projects that have been “handed over” to the current administration under the mantra of the continuity. Osogbo’s master plan could continue to suffer a setback along with other major road projects. The allocation of 16 billion naira to the health sector is huge and given the explanation provided by the government to renovate all general hospitals. The total number of general hospitals is approximately ten (10); it will be interesting to know the scale of the works which could attract about 1.8 billion naira per hospital. The state has spent a lot in the hospital sector lately and an additional 16 billion naira is a huge sum for a state which must also focus on its key economic sector for economic growth and sustainable development. The agricultural sector, which is expected to be a mainstay of Osun’s economy, only attracted a meager naira 7 billion in the 2022 budget. It is not clear what the trade sector is. and industry drew in the budget as another key economic sector in the state. From this point of view, it is doubtful that this budget and the fiscal tools it contains can generate enough economic activity or growth that can translate into sustainable development for the people of Osun and the state.
Hopefully, Osun 2022 budget and appropriation bill are before the State Assembly House, the chamber will make proper appropriation as the main function and quickly pass the budget.