Overview of 2016 Budget of Change
Conflicting views have continued to trail the 2016 budget proposal, with some analysts expressing worry over the successful implementation of the N6.08trillion ’Budget of Change.’
The budget, which President Muhammad Buhari, has described as one that would stimulate the economy, with focus on infrastructural development, has come under attack by economic analysts who doubt the ability of the federal government to fund the proposed budget.
The opposition Peoples Democratic Party, PDP, had already condemned the N2.trillion lending to fund budget, describing the budget as ’a big fraud tailored towards mortgaging the future of the nation.’
In a statement signed by its National Publicity Secretary, Chief Olisa Metuh, the PDP questioned government’s decision to borrow almost N2trillion to fund part of the budget, saying the move is the “height of recklessness and a deceit from a government that trends on propaganda.”
According to the PDP, “It is obvious that this budget is an extension of the campaign promises of the APC government, presented as a manifesto filled with bogus promises which implementation will inconclusive, thereby allowing the APC to once again deny their promises.”
It said the 2016 budget is an indication of the APC’s lack of preparedness to take over the reins of leadership, “by all standards, the 2016 budget, the first major economic policy outing of this government, is unrealistic and duplicitously embellished with impractical predication, a development that confirms fears by economy watchers and investors that this administration is obviously ill-equipped for governance.”
Economic analyst, Opeyemi Agbaje, while assessing the budget, described it as ambitious, noting that the current economic situation however calls for aggressive policies that will positively impact on the country.
Prof. Pat Utomi on the other hand faulted the 2016 budget process, which he noted, has not satisfied necessary procedures.
Utomi, who spoke hours before the budget presentation, dismissed it as an elitist ’joke’ saying there is hardly ever any discipline in the implementation of past budgets.
“For more than 15 years, I don’t discuss budgets in Nigeria, because I consider the budget process a joke. 20 years ago, I was one of those who began in January by analyzing the budget and then you come to December and you see the problem of implementation.”
Buhari has however said the 2016 estimates will not just focus on infrastructural development, but also ensure inclusive growth as well as prioritize the welfare of Nigerians.
“We believe that this budget, while helping industry, commerce and investment to pick up, will as a matter of urgency, address the immediate problems of youth unemployment and the terrible living conditions of the extremely poor and vulnerable Nigerians.
“In the medium to longer term, we remain committed to economic diversification through import substitution and export promotion. This will build resilience in our economy. It will guarantee that the problems we have today, will not confront our children and their children. This shall be our legacy for generations to come,” he said.
With increased capital expenditure, government says it will commit more resources to critical sectors such as the ministry of works, power and housing with a proposed budget estimate of N433.4bn; education sector gets priority with an estimated budget proposal of N369.6bn, defence N294.5bn, while health N221.7bn, closely followed by transport N202bn and N145.3 for the ministry of interior. Special intervention will however attract N300bn.
The investments in infrastructure and security, the president said, “are meant to support our reforms in the agriculture, solid minerals and other core job creating sectors of our economy.”
The budget which comprises a recurrent expenditure of N2.65 trillion and capital expenditure of N1.86 trillion (representing 30percent of the budget) has an expected deficit of N2.22trillion. The deficit is to be financed through domestic borrowing of N984bn, and foreign borrowing of N900bn, leaving a total of N1.84trillion in loans.
The federal government based the budget on a crude oil benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day for 2016.
On funding the budget, the president said government will focus on non-oil revenues by “broadening our tax base and improving the effectiveness of our revenue collecting agencies. Also, with the full implementation of the Treasury Single Account, we expect significant improvements in the collection and remittance of independent revenues. To further support the drive for increased remittances, we will ensure that all MDAs present their budgets in advance, and remit their operating surpluses as required by section 22 of the Fiscal Responsibility Act.
“We are determined to ensure that our resources are managed prudently and utilized solely for the public good. To set the proper tone, one of our early decisions was the adoption of a zero based budgeting approach, which ensures that resources are aligned with government’s priorities and allocated efficiently. This budgeting method, a clear departure from previous budgeting activities, will optimize the impact of public expenditure.”
He said the 2016 budget, as outlined, is designed to revive the economy, deliver inclusive growth to Nigerians and create a significant number of jobs. “We aim to ensure macroeconomic stability by achieving a real GDP growth rate of 4.37% and managing inflation. To achieve this, we will ensure the aligning of fiscal, monetary, trade and industrial policies.
“As we focus on inclusive growth, we are conscious of the current rate of unemployment and underemployment. This is a challenge we are determined to meet; and this budget is the platform for putting more Nigerians to work. I can assure you that this administration will have a job creation focus in every aspect of the execution of this budget. Nigeria’s job creation drive will be private sector led. We will encourage this by a reduction in tax rates for smaller businesses as well as subsidized funding for priority sectors such as agriculture and solid minerals.
“Although we are working to diversify our economy, we will not lose sight of the need to restructure the oil and gas sector which has been marred by corruption and plagued with inefficiencies. Accordingly, I have directed the Petroleum Products Pricing Regulatory Agency to adjust its pricing template to reflect competitive and market driven components. We believe this can lower input costs and attain efficiency savings that will enable PPPRA to keep the selling price for all marketers of petrol at N87 per liter for now.
“The current fuel scarcity with long queues at petrol stations all over the country causing social dislocation is very unfortunate. Government profoundly apologizes to Nigerians for this prolonged hardship and misery. It is as a result of market speculators and resistance to change by some stakeholders. Government is working very hard to end these shortages and bring fuel to the pumps all over the country.”