President Muhammadu Buhari
The
Federal Government has proposed a budget estimate of N6 trillion for
the 2016 fiscal year, 15 percent more than last year’s budget.
This was the outcome of a three-hour emergency Federal Executive Council (FEC) meeting held yesterday at the Presidential Villa in Abuja, presided over by President Muhammadu Buhari.
Briefing State House journalists later, Budget and National Planning Minister Udoma Udo Udoma said the government was projecting an “expansionist” budget of N6 trillion.
He said the council also approved the Medium Term Expenditure Framework (MTEF) for the 2016 budget. This, according to him, sets up the government’s policies over the next three years.
The minister disclosed that 30 percent of the budget or N1.8 trillion would go into capital projects with a view to addressing the nation’s infrastructure deficit.
In 2015, the government budgeted N4.5 trillion of which recurrent expenditure gulped N4.312 trillion. The capital vote was 12 percent, leaving about 88 percent of the budget allocated to recurrent expenditure.
The crude oil bench mark was revised from $65 to $53 per barrel.
Udoma added that the government would try to reduce overheads and keep the personnel cost at its current level.
“We are looking at an expansionist budget; we are looking at a budget that will be N1 trillion more than last year. So, we are looking at a budget of about N6 trillion. Last year’s budget, including the supplementary was about N 5 trillion.
“So, we are looking at a N6 trillion budget. All the increases actually will be spent on capital (projects). There is the need to increase the capital because of the infrastructure issues that we have to address.
“We are projecting almost 30 percent for capital projects ... We will try and reduce overheads, but keep personnel cost, we are not going to adjust it by much”, Udoma stated.
The minister further disclosed that the council was working on the projection of $38 crude oil price.
He explained that though the council considered this price to be very conservative, it had become necessary in lieu of uncertainties.
He said the council also projected 2.2 million barrels per day of oil production, which according to him, is achievable.
“At today’s (yesterday’s) council meeting, the council approved the Medium Term Expenditure Framework which sets out the policies of government over the next years; it sets out the fundamental economic underpinning of the budget. The highlights are as follows: We project and we are working with $38 crude oil price. We consider that to be very conservative, but because of the uncertainties, we felt that we should start with a conservative crude oil price.
“We are also working with 2.2 million barrels a day production. It is achievable particularly because with the passage of the Petroleum Industry Bill (PIB) which we are working to achieve, we believe that is a modest figure that we should be able to produce something higher than that.
“Following from this, the MTEF will be submitted to the National Assembly, and we expect a feedback from them. Thereafter, we will be working to try and get the budget finalized, it is when the budget is finalized that you really see the details of what we intend to do. This is just a medium term economic framework,” the minister explained.
Asked how the government intended to fund the budget, Udoma said: “We will get the funding from two sources. We are looking at trying to increase our non-oil revenue, we are looking at trying to get more money from the various government agencies, policing their collection and trying to get more money from them. We will also look at keeping down our recurrent budget; that means we are looking at savings that we can make from overheads.
“We will look at the efficiencies from our revenue collecting agencies like the Federal Inland Revenue Service in terms of company income tax, in terms of VAT, and then the difference”.
The minister also hinted that the government would borrow to fund the budget.
“We will have to borrow. But the level of borrowing that we anticipate and we are projecting will be well within the maximum that is allowed which is three percent of the GDP because we want a prudent budget, we want a credible budget”, he said.
On the exchange rate, he said the government was “working on the exchange rate that the Central Bank of Nigeria has given us. That is the rate we are working on”.
On whether fuel subsidy would be retained, the minister simply said: “We are looking into that”.
The minister also assured that while the government would continue with the Integrated Personnel and Payroll Information System (IPPIS), it would not cut workers’ salaries.
“We are expecting some savings from the Integrated Personnel and Payroll Information System (IPPIS) which we are using. So, we are not cutting anybody’s salary. Everybody will get their salaries”, he said.
A professor of economics and former economic adviser to the President Olusegun Obasanjo, Ode Ojowu said “Although the details of the budget are sketchy but the idea of sourcing fund from taxes is something that requires amendment of laws from the National Assembly”.
He said if the government needs to source for more funds from taxes, it can do that through a discriminatory VAT policy through imposing higher taxes on luxury commodities while keeping the essential commodities low to prevent unnecessary hardship for the ordinary people.
He said another way for government is to block leakages in tax collections and aggressively push for payments of tax by some group of individuals and companies that are avoiding tax.
Ojowu, who is also the acting chairman of Daily Trust Board of Economists, said the $38 crude oil price benchmark on the budget is on the high side looking at the decision of the last OPEC meeting. He said there are possibilities of increase in oil production next year and with less demand as predicted.
He said the price which is around $43 to $42 per barrel may likely come down below the benchmark within the period.
This was the outcome of a three-hour emergency Federal Executive Council (FEC) meeting held yesterday at the Presidential Villa in Abuja, presided over by President Muhammadu Buhari.
Briefing State House journalists later, Budget and National Planning Minister Udoma Udo Udoma said the government was projecting an “expansionist” budget of N6 trillion.
He said the council also approved the Medium Term Expenditure Framework (MTEF) for the 2016 budget. This, according to him, sets up the government’s policies over the next three years.
The minister disclosed that 30 percent of the budget or N1.8 trillion would go into capital projects with a view to addressing the nation’s infrastructure deficit.
In 2015, the government budgeted N4.5 trillion of which recurrent expenditure gulped N4.312 trillion. The capital vote was 12 percent, leaving about 88 percent of the budget allocated to recurrent expenditure.
The crude oil bench mark was revised from $65 to $53 per barrel.
Udoma added that the government would try to reduce overheads and keep the personnel cost at its current level.
“We are looking at an expansionist budget; we are looking at a budget that will be N1 trillion more than last year. So, we are looking at a budget of about N6 trillion. Last year’s budget, including the supplementary was about N 5 trillion.
“So, we are looking at a N6 trillion budget. All the increases actually will be spent on capital (projects). There is the need to increase the capital because of the infrastructure issues that we have to address.
“We are projecting almost 30 percent for capital projects ... We will try and reduce overheads, but keep personnel cost, we are not going to adjust it by much”, Udoma stated.
The minister further disclosed that the council was working on the projection of $38 crude oil price.
He explained that though the council considered this price to be very conservative, it had become necessary in lieu of uncertainties.
He said the council also projected 2.2 million barrels per day of oil production, which according to him, is achievable.
“At today’s (yesterday’s) council meeting, the council approved the Medium Term Expenditure Framework which sets out the policies of government over the next years; it sets out the fundamental economic underpinning of the budget. The highlights are as follows: We project and we are working with $38 crude oil price. We consider that to be very conservative, but because of the uncertainties, we felt that we should start with a conservative crude oil price.
“We are also working with 2.2 million barrels a day production. It is achievable particularly because with the passage of the Petroleum Industry Bill (PIB) which we are working to achieve, we believe that is a modest figure that we should be able to produce something higher than that.
“Following from this, the MTEF will be submitted to the National Assembly, and we expect a feedback from them. Thereafter, we will be working to try and get the budget finalized, it is when the budget is finalized that you really see the details of what we intend to do. This is just a medium term economic framework,” the minister explained.
Asked how the government intended to fund the budget, Udoma said: “We will get the funding from two sources. We are looking at trying to increase our non-oil revenue, we are looking at trying to get more money from the various government agencies, policing their collection and trying to get more money from them. We will also look at keeping down our recurrent budget; that means we are looking at savings that we can make from overheads.
“We will look at the efficiencies from our revenue collecting agencies like the Federal Inland Revenue Service in terms of company income tax, in terms of VAT, and then the difference”.
The minister also hinted that the government would borrow to fund the budget.
“We will have to borrow. But the level of borrowing that we anticipate and we are projecting will be well within the maximum that is allowed which is three percent of the GDP because we want a prudent budget, we want a credible budget”, he said.
On the exchange rate, he said the government was “working on the exchange rate that the Central Bank of Nigeria has given us. That is the rate we are working on”.
On whether fuel subsidy would be retained, the minister simply said: “We are looking into that”.
The minister also assured that while the government would continue with the Integrated Personnel and Payroll Information System (IPPIS), it would not cut workers’ salaries.
“We are expecting some savings from the Integrated Personnel and Payroll Information System (IPPIS) which we are using. So, we are not cutting anybody’s salary. Everybody will get their salaries”, he said.
A professor of economics and former economic adviser to the President Olusegun Obasanjo, Ode Ojowu said “Although the details of the budget are sketchy but the idea of sourcing fund from taxes is something that requires amendment of laws from the National Assembly”.
He said if the government needs to source for more funds from taxes, it can do that through a discriminatory VAT policy through imposing higher taxes on luxury commodities while keeping the essential commodities low to prevent unnecessary hardship for the ordinary people.
He said another way for government is to block leakages in tax collections and aggressively push for payments of tax by some group of individuals and companies that are avoiding tax.
Ojowu, who is also the acting chairman of Daily Trust Board of Economists, said the $38 crude oil price benchmark on the budget is on the high side looking at the decision of the last OPEC meeting. He said there are possibilities of increase in oil production next year and with less demand as predicted.
He said the price which is around $43 to $42 per barrel may likely come down below the benchmark within the period.