2016 Budget and Public Expectation
On January 1, 2016, a new fiscal year will commence with a historic N6.08 trillion appropriation aimed at breathing new lease of life into Nigeria’s ailing economy.
Evidently, 2015 represented an awful mix of watershed political achievements and drawn-out economic slide, which left a painful effect on the purchasing power of most Nigerians.
The hallmarks of the outgoing year was declining consumption rate, unemployment, job losses, inadequate power supply, delayed payment of salaries, worsening living conditions, security challenges among others, have also heightened expectations amongst Nigerians for government to do more in 2016.
In clear recognition of these predicaments, President Muhammadu Buhari has assured that the 2016 appropriation “seeks to stimulate the economy, making it more competitive by focusing on infrastructural development; delivering inclusive growth; and prioritizing the welfare of Nigerians.”
However, while the N6.08 trillion appropriation represents a bold step to develop the economy, it has a revenue projection of only N3.86 trillion resulting in a deficit of N2.22 trillion which will be financed by a combination of domestic borrowing of N984 billion, and foreign borrowing of N900 billion totalling N1.84 trillion.
Whereas this impressive financial plan provides a clue to government’s economic direction in the coming year, it raises Nigeria’s debt profile which has become a source of worry to many citizens, who should not be taken for granted.
As oil prices continue to slide at the international market, it is imperative for government to move quickly towards diversifying the economy in 2016 by effectively funding the agric sector, exploring mineral resources and utilising its revenue base to fund annual budgets without recourse to debt arrangements, which are technically mortgaging Nigeria’s future.
In addition, the recent fiscal policy by the Central Bank, which barred banks in the country from accepting foreign currency cash deposits into customers’ domiciliary accounts, has rather spurred volatility of the Naira at the foreign exchange market and increased the hardship of Nigerians who engage in international transactions, resulting in marginal increase of foreign goods and services.
In 2016, government should critically evaluate its fiscal activities and adopt more naira-friendly policies to boost the confidence of domestic and foreign investors, while maintaining a stable and stronger visibility at the market.
Furthermore, the revival of existing industries, job creation, as well as creating an enabling environment for Foreign Direct Investments, FDI, and growth of small businesses by granting them tax holidays is an imperative to accelerate growth and development.
Government should also adopt interim measures at critical times to assuage the biting reality of hardship and poverty ravaging the land, by providing palliatives such as deployment of more high capacity buses to convey workers to and from work as well as reducing the pump price of petrol.
While the removal of fuel subsidy remains a task that must be done, government must wait for an opportune time when the economy to picks up before it is fully implemented.
Another area of high expectation is the return of construction activities and provision of critical infrastructures such as roads, water and electricity, some of which were suspended in mid-2015, resulting in the loss of over 65000 jobs.