‘How 2016 budget will promote growth’
Seek beginning of implementation,end to feud
Stakeholders and financial experts have expressed optimism over the possibility of returning the economy to the path of growth, as well as raising the quality of infrastructure needed to sustain the growth with the 2016 fiscal plan.
The 2016 budget plan, with almost a third part to be financed by borrowing, is riding on the back of the promise that the debt proceeds would be directly invested in the development of critical infrastructure, which current state is affecting the country’s growth prospects, ease of doing business and standard of living.
An economist, Dr. Ayo Teriba, said since the budget processes have reached the approval stage, it is no longer necessary to criticise the document,
but to wait and see how it would be applied to solve the lingering economic challenges.
He said that as a Nigerian, he hoped the budget would be implemented effectively, as the major problem has not always been with the figures while the assessment of the feasibility of the budget would be from six months time or the end of the period when the results would have naturally shown itself.
“The country has already secured loan from China, so the work has already begun. I hope everything will work because I am a Nigerian,” he added.
From the investment and investor perspective, the Executive Director, Corporate Finance at BGL Capital Limited, Femi Ademola, said the budget proposal is audacious, especially the planned borrowing for infrastructure development.
Besides, the increment in votes for the Ministry of Power, Works and Housing, he said, is an indication of the seriousness the fiscal plan has attached to the development of critical infrastructure needed to jump-start the economy.
The ministry’s budget was raised up to N456.9 billion, perhaps in recognition of the nation’s need for power, bad road networks and the much-talked about deficit housing in the country.
“The problem with capital expenditure projections in this country is not the figure, no matter how little it has been, but implementation. Records have shown that while the recurrent expenditure plans are implemented to the letter, the capital expenditure component of the fiscal plan has lagged behind,” he said.
He pointed out that the N2.2 trillion budget deficit resulting from revenue shortfall, which would be funded by local and foreign borrowings, together with recoveries from looted public treasury is also feasible.
“The most important thing is that approximately N1.6 trillion has been earmarked for capital expenditure projects. So, the borrowings will just be directed to the capital investments and this makes economic sense, as opposed to borrowing to finance recurrent expenditure,” the investment analyst said.
A fiscal governance expert and Lead Director of Centre for Social Justice, Eze Onyekpere, said the budget is feasible although it relies heavily on borrowing.
“If the administration is committed to change as its mantra suggests, then there is no reason for the budget to fail. However, the late commencement of the budget may be a clog in the wheel of success,” he said.
To him, it is not much about the figures in the budget plan, but about implementation and transparent processes, which would deliver the expected economic outcome and inclusive growth.
The Federal Ministry of Transportation, a critical segment of the economy got N202.3 billion allocation in the 2016 plan, but currently going through controversies over rail-related projects.
The strategic positioning of this ministry is such that the latest report by the National Bureau of Statistics blamed the rising level of inflation in the country now on costs associated with transportation nationwide.
Onyekpere noted that it is high time the whole drama about projects in the ministry ended to allow for smooth implementation. “It is imperative to put the controversy about the Lagos-Calabar Rail Line and similar issues in their proper legal and normal contexts.”