…Can it salvage the economy?
The government said the budget reflects fiscal plan to restore the economy to the path of sustainable and inclusive growth, the specific goals and targets of which are set out in the 2017 – 2020 Economic Recovery and Growth Plan (ERGP) and assured that In the months ahead, it will work with the National Assembly to ensure that Nigeria returns to a predictable January – December fiscal year, with the budget signed into law ahead of commencement of the fiscal year in the near future.
By Eze Johnson
The Minister of Finance, Kemi Adeosun said that the federal government was ready to release N350 billion, being the first tranche for implementation of the 2017 budget.
Mrs. Adeosun said this in Abuja at the public presentation of 2017 Appropriation Act. She said that the Federal Government had enough cash available to immediately commence the execution of key projects and initiatives scheduled for the 2017 fiscal year.
“We are ready, we are having a cash-plan meeting very soon and after that, N350 billion will be released as first tranche of capital releases for the 2017 budget,’’ she said.
Also speaking, the Minister of Budget and National Planning, Udoma Udoma, said funding of projects would now be on Project-Based Release System to curb waste of public funds by Ministries, Departments and Agencies (MDAs).
He said also that part of the requirement for capital releases was evidence of compliance with the Bureau of Public Procurement Act.
Mr. Udoma said that henceforth, no MDA was authorized to enter into a foreign denominated contract without the approval of the Ministers of Budget and National Planning, and Finance.
He also said the federal government would strengthen its monitoring and evaluation framework to improve physical inspection and impact assessment of projects and programmes implemented by MDAs.
According to him, “ In designing the 2017 Budget, we considered certain critical international factors that affect us as a country, these include: Protracted period of lower oil prices; Major macroeconomic realignments in China to a new growth model; Increasing divergence in monetary policy in major economies; Uncertain economic, political and institutional implications of BREXIT; Weak demand in advanced economies and its spillover effects; and, Geopolitical tensions in several countries.
He informed that the key assumptions and macro-framework for the 2017 Budget are: Oil production – 2.2mbpd, benchmark oil price – US$44.5/b, exchange rate – N305/US$, Inflation rate – 15.74%, GDP Growth Rate – 2.19%, nominal Consumption – N87.95trn and nominal GDP -N107.96trn.
Based on the key assumptions, the 2017 Budget envisages a total FGN revenue of N5.08 trillion, exceeding Executive proposal by 2.9% and FY 2016 projection by 31.9%. The Projected revenue receipt from oil is N2.122 trillion and Non-oil is N2.96trillion. The contribution of oil revenues is 41.7% compared to 19% for year 2016, driven mainly by JVC cost reduction, higher production and price,
exchange rate and additional oil-related revenues. 11% of projected revenue expected from recoveries of looted/misappropriated funds and fines.
The 2017 Budget has an expenditure outlay of N7.44 trillion. This represents an increase of 22.8% over the 2016 budget provision of N6.06 trillion.
The details are: Statutory transfers of N434.41 billion, debt service of N1.66 trillion; Sinking fund of N177.46 billion to retire certain maturing bonds; Non-debt recurrent expenditure of N2.99trillion; and Capital expenditure of N2.36 trillion inclusive of statutory transfers.
The overall projected budget fiscal deficit remains as proposed – N2.36 trillion, which is about 2.18% of GDP. This is within the 3% threshold stipulated in FRA. The budget deficit is to be financed mainly by borrowings which have been projected at N2.32 trillion. Of this amount, N1.07 trillion (46% of this borrowing) is intended to be sourced externally, while N1.25 trillion will be sourced domestically.
The debt service to revenue ratio is projected to be about 32.7% in FY2017.
The Recurrent non-debt expenditure of N2.99 trillion is made up of: Personnel costs – N1.88 trillion (63%) Overhead – N219.84 billion (7%), Service-Wide Vote pensions – N89.98 billion (3%), Consolidated Revenue Fund Pensions – N191.63 billion (6%), Other Service-Wide Votes – N138.70 billion (5%), Presidential Amnesty Programme – N76.7 billion (3%), Refund to Special Accounts – N40 billion, and (1%), Special Intervention Programme (recurrent) – N350 billion(12%), Capital allocation is N2.36 trillion (inclusive of capital in statutory transfers).
This represents 31.7% of the total budget. Much of the capital provision is directed at projects that are aligned with the core execution priorities of the ERGP. Thus, allocations have been targeted at critical economic sectors that have quick transformative potentials such as infrastructure, agriculture, manufacturing, solid minerals, services, and social development.
Some major capital expenditure allocations include: N553.71 billion for Power, Works and Housing; N241.71 billion for Transportation; N150 billion for Special Intervention Programmes; N139.29 billion for Defence; N104.24 billion for Water Resources; N81.73 billion for Industry, Trade and Investment; N63.76 billion for Interior; N151.91 billion for Education (including Universal Basic Education Commission); N55.61 billion for Health; and, N103.79 billion for Agriculture.
Some major initiatives in the 2017 Budget include: N100 billion provisioned for a new Social Housing Programme; N46 billion for Special Economic Zone Projects to be set up in each of the geo-political zones to drive manufacturing /exports; N16 billion voted for the revival of the Export Expansion Grant (EEG) in the form of tax credits; N15 billion to recapitalize Bank of Industry (BOI) and Bank of Agriculture (BOA) to strength their capacities to support Micro, Small and Medium Scale Enterprises (MSMEs).
Other major initiatives include: FGN Special Intervention Programme (including Home Grown School Feeding Programme, Government Economic Empowerment Programme, N-Power Job Creation Programme, Conditional Cash Transfers and Social Housing Fund) – N400 billion. Rail Modernization Programme N148bn mostly for counterpart funds on projects to be financed by China for various railway projects (Lagos-Kano, Calabar-Lagos, Kano-Kaduna, Ajaokuta-Itakpe-Warri, Kaduna-Idu) and other rail projects. Settlement of MDAs Electricity Bills N40 billion service-wide provision to settle reconciled outstanding electricity bills of FGN institutions as part of strategy to revamp the ailing power sector. Programme to reverse outbound medical tourism N9 billion for joint venture investments in tertiary institutions with Nigeria Sovereign Investment Authority.
Highlight of some of the projects in the 2017 Budget are as follows: Power N9.5bn Rural Electrification projects in Federal Universities N10bn for the construction of 3,050mw Mambilla hydropower project N10.02bn for the completion of power evacuation facility for 400mw Kashimbila hydropower plant Housing: N28 bn Federal Government National Housing Programme nationwide. Works: Over 65 roads & bridges construction and rehabilitation projects across the 6 geopolitical zones of the country. N10bn for the rehabilitation/reconstruction and expansion of Lagos – Shagamu – Ibadan dual carriageway sections I & II in Lagos and Oyo states. N13.19bn Dualization of Kano-Maiduguri Road, Sections I-V N10.63bn Rehabilitation of Enugu-Port Harcourt Dual Carriageway, Sections I – IV. N7bn for the Construction of 2nd Niger Bridge including access roads phases 2A & 2B. N7.12bn for the Dualization of Abuja-Abaji-Lokoja Road. N9.25bn for the Dualization of Obajana Junction to Benin Road Phase Sections I – IV. N7.5bn for the Rehabilitation of Onitsha-Enugu Dual Carriageway.
N7bn for the Construction of Bodo-Bonny Road with a Bridge Across the Opobo Channel.
N3.3bn for the Rehabilitation of Ilorin-Jebba-Mokwa-Bokani road. N3.5bn for the Dualization of Odukpani-Itu-(SPUR IDIDEP – ITAM) – Ikot Ekpene Federal Highway Lot 1: Odukpani – Itu Bridgehead. N1.5bn for the Dualization of Kano-Katsina Road Phase 1. N2.24bn for the Dualization of Suleja-Minna Road, Sections I & II.
N2.3bn for Gombe-Numan-Yola Phase II (Gombe – Kaltungo). N2.7bn for Construction of Kano Western Bypass.