PRESIDENT Muhammadu Buhari last Wednesday presented the 2017 budget proposal of N7.289 trillion to the National Assembly. The fiscal estimates entitled: “Budget of Recovery and Growth,” is 20.4 percent higher in nominal terms over that of 2016. It seeks, among other things, to boost agriculture output and productivity, domestic manufacturing, eliminate costly Joint Venture Cash (JVC) calls for the Nigerian National Petroleum Corporation(NNPC).
The budget is based on the benchmark crude oil price of $42.5 per barrel, 2.2 million oil production estimate per day and a foreign exchange rate of N305 to the United States dollar. Based on these assumptions, aggregate revenue available to fund the budget is put at N4.94trn. This is 28 percent higher than the 2016 projections.
Oil revenues are projected to contribute N1.985trn of the total budget outlay, while non-oil revenues will largely come from company income tax, Value Added Tax (VAT), Customs and Excise duties, and Federation Account levies, contributing N1.373trn. Also, independent revenues are projected at N807.57 billion, while N565bn is projected to come from recoveries of stolen funds.
The President also explained that other revenue sources to fund the budget will come from the mining sector estimated at N210.9bn. According to him, the 2017 budget provides the “road map of policy actions and steps designed to bring the economy out of recession and to a path of steady growth and prosperity.” He admitted that the country and the citizens have had to face what he called the most challenging economic period in the history of our nation.
Highlights of the budget show that 30.7 percent of the budget, which represents N2.24trn, is for capital expenditure while recurrent expenditure takes N2.98trn. The highest recurrent expenditure allocation of N482.37bn goes to the Ministry of Interior; the Education Ministry got N325.87bn. The President said the capital expenditure vote is in line with his administration’s determination to reflate and pull the economy out of recession as quickly as possible.
Analysis of the budget also reveals that the Federal Government plans to spend N1.837 trn, (representing 25.2 percent of the total budget estimate) for debt servicing and about 66 percent(N4.81trn) as total recurrent expenditure. This is N600 bn above the 2016 figures Government also intends to borrow N2.231trn. Out of this, N1.253trn will be sourced locally, while N1.067trn will come from foreign sources. In the 2016 budget, N1.182trn was reportedly borrowed from the domestic market and N635.8bn from foreign sources.
On the capital aspect of the budget, Works, Housing and Power Ministry got the lion share of N433.4 bn, Ministry of Transportation N262 bn, while Defence got N140bn.
On paper, the budget raises a glimmer of hope. This is so because a significant amount of the recurrent expenditure has been voted for payment of salaries and overheads in institutions that provide critical public services. But, the crucial question is: will the budget end the current economic recession and stimulate growth as promised by President Buhari?
Our country and the citizens have been on this road many times before with budgets premised on harvest of promises but far too short on delivering on these promises. With high expenditure on debt servicing, 2017 could yet be another tough year as government has made its intention known to borrow additional $30bn and perhaps struggle more to meet infrastructure needs and provide jobs to stave off recession.
It is sad that the expectations often associated with budgets are waning due to the combination of frivolous and fictitious overheads, duplication of items, and most importantly, lack of adequate implementation of the budget. This is why Nigeria’s N53trn budget since the present democratic dispensation had not produced better deal for the citizens.
We, therefore, urge that the 2017 budget be a happy departure from the previous ones. Nigerians are going through one of the most challenging moments of their lives. Currently, inflation has reached an all time high of 18.4 percent year-on -year, according to figures released last week by the National Bureau of Statistics(NBS).
This has pushed up consumer prices of essential food items all over the country. The citizens have been struggling with this trend all year round, with attendant increases in housing rents, electricity tariffs, water, petroleum products and other essentials.
Overall, government should show a clear roadmap to reset the economy. Nigerians and investors expect full implementation of the 2017 budget. A combination of appropriate fiscal and monetary policies are needed. In that regard, expectation is that Central Bank of Nigeria (CBN) should retool some of its monetary policies to bolster the economy. We also advise an early passage of the budget in the National Assembly so that implementation will begin in time before the current one runs its full course by May next year.