• President presents N6.08tr budget, non-oil
to fetch N1.45 trillion, oil N820 billion
• Govt to fund N1.8tr capital expenditure with
loan
• Science, tech, education students to enjoy
free tuition
• Petrol pump price remains N87/litre for now
• Presidency to employ 500,000 graduate ,
NCE teachers
• ‘It’s a fraud,’ says PDP
CLAD in an all-white babanriga with a cap to match, President Muhammadu Buhari yesterday presented to a joint session of the National Assembly a first-ever national budget based on projected revenue from the non-oil sector .

But there were concerns about the possibility of the Buhari government largely funding the N6.08 trillion budget for 2016 with revenue from the non-oil sector.

Under the spending plan according to Buhari, “ oil-related revenues are expected to contribute N820 billion while non-oil revenue, comprising Company Income Tax (CIT), Value Added Tax (VAT), Customs and Excise duties, and Federation Account levies, will contribute N1.45 trillion. Finally, by enforcing strict compliance with the Fiscal Responsibility Act, 2007 and public expenditure reforms in all MDAs, we have projected up to N1.51 trillion from independent revenues.”

The budget is also relying heavily on recoveries of looted public funds and the savings from what is believed would be the benefit of the recently established Efficiency Units in Ministries, Departments and Agencies (MDAs ) by the new Minister of Finance, Mrs. Kemi Adeosun.

But it is worrisome that crude oil price at the international market at the moment is selling between $31 and  $32 well below the estimated budget oil benchmark price of $38  just only about  a week to the supposed commencement of the new budget year on January 1, 2016. There are heightened fears that the oil price rally may not be sharp thus fueling the concern about a possible widening of the deficit gap.

Buhari offered an explanation why he was risking an experiment with relying on non-oil revenue to fund his fiscal plans : “ After reviewing the trends in the global oil industry, we have set a benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day for 2016. We have focused on non-oil revenue by broadening our tax base and improving the effectiveness of our revenue collecting agencies.”

He also believed that with the full implementation of the Treasury Single Account, there would be significant improvement in the collection and remittance of independent revenue, and that it would further support the drive for increased remittances, and  ensure that all MDAs present their budgets in advance, and remit their operating surpluses in line with section 22 of the Fiscal Responsibility Act.

Buhari spoke more: “We are determined to ensure that our resources are managed prudently and utilised 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 optimise the impact of public expenditure.”
The president said that “based on the assumptions I presented earlier, we have proposed a budget of N6.08 trillion with a revenue projection of N3.86 trillion resulting in a deficit of N2.22 trillion.”

The proposal was made up of N1.8 trillion capital expenditure Vote, which he said would be funded with a loan of N1.84 trillion.

But the opposition Peoples Democratic Party (PDP) has reacted , describing the proposal as a “big fraud and executive conspiracy tailored towards mortgaging the future of the nation.”

The party described President Buhari’s decision to borrow N2 trillion, the biggest in the history of the nation, as the height of recklessness and deceit

In a budget speech that lasted 35 minutes, the president said: “We have increased the capital expenditure portion of the budget from N557 billion in the 2015 budget to N1.8 trillion, in the 2016 budget.”

The budget proposal also comprised N2.65 trillion for re-current non-debt expenditure as against the 2015 budget figure of N2.59 trillion, representing a nine per cent reduction. This figure included the sum of N300 billion earmarked for special intervention programmes.

The president informed the lawmakers that government “will devote a significant portion of our recurrent expenditure to institutions that provide critical government services.

“We will spend N369.6 billion in Education; N294.5 billion in Defence ; N221.7 billion in Health and N145.3 billion in the Ministry of Interior. This will ensure our teachers, armed forces personnel, doctors, nurses, policemen, fire fighters, prison service officers and many more critical service providers are paid competitively and on time.”

He added : “For the first time in many years, capital expenditure will represent 30 per cent of our total budget. In future years, we intend to raise the percentage allocation for capital expenditure. This increased capital expenditure comprised the sum of N433.4 billion for the Works, Power and Housing sectors;  N202.0 billion for Transport; N200 billion for Special Intervention Programmes; N134.6 billion for Defence and N53.1 billion for the Ministry of Interior.”

Worried by the pains inflicted on Nigerians by the current fuel scarcity, Buhari announced government’s decision to retain the N87 per litre pump price for petrol for the time being just as he tendered unreserved apologies.

“I have directed the Petroleum Products Pricing Regulatory Agency (PPPRA) 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 apologises to Nigerians for this prolonged hardship and misery.”

Providing further details on the management of the country’s debt profile, Buhari disclosed that the 2016 borrowings will be principally directed to fund our capital projects.

“Furthermore, the sum of N113 billion will be set aside for a Sinking Fund towards the retirement of maturing loans; while N1.36 trillion has been provided for foreign and domestic debt service. This calls for prudent management on our part, both of the debt portfolio and the deployment of our hard-earned foreign exchange earnings”.

He blamed the problems being faced by “traders and business operators who rely on imported inputs; to manufacturers needing to import sophisticated equipment and spare parts; to airlines operators who need foreign exchange to meet their international regulatory obligations and others to the current inadequacies in the supply of foreign exchange to Nigerians who need it.

I am, however, assured by the Governor of Central Bank that the bank is currently fine-tuning its foreign exchange management to introduce some flexibility and encourage additional inflow of foreign currency to help ease the pressure.”    He announced the introduction of a policy aimed at restructuring the oil and gas sectors, which he noted had been marred by corruption and inefficiencies.

His words:  “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.”

Still on 2016 budget assumptions, Buhari noted that after reviewing the trends in the global oil industry, a benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day for 2016 were adopted.

The National Assembly had approved an exchange rate of N197 to a dollar during the consideration of Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

The budget proposal, according to the president, is aimed at ensuring macroeconomic stability by achieving a real GDP growth rate of 4.37 per cent and managing inflation. ‘‘To achieve this, we will ensure the aligning of fiscal, monetary, trade and industrial policies,” he added.

To mitigate the unemployment situation in the country, the president also announced that the budget proposal will focus on inclusive growth, adding that “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.

‘‘As an emergency measure, to address the chronic shortage of teachers in public schools across the country, we also will partner state and local governments to recruit, train and deploy 500,000 unemployed graduates and National Certificate of Education (NCE) holders.

“These graduate teachers will be deployed in primary schools, thereby, enhancing the provision of basic education especially in our rural areas.”

But the PDP, in a statement by its National Publicity Secretary, Chief Olisa Metuh yesterday berated the Federal Government for trying to use its ‘‘bogus welfare programme’’ and phantom capital projects as cover and conduit to syphon the funds to satisfy partisan interests, particularly to settle huge campaign debts.

The statement siad: “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 the implantation of which will be inconclusive, thereby allowing the party to once again deny their promises.

“There has never been any known economy in the world where government deliberately mortgages the future of its nation by borrowing excessively to finance partisan interests while hiding under bogus welfare programmes. This is more so as the APC in reeling out their bogus campaign promises never informed Nigerians that they would mortgage their future through excessive borrowing.”

The PDP further alleged that “this is the first in the series of APC borrowings which would leave the future generation of Nigerians under the burden of huge debts after four years.”

The PDP said the budget clearly showed that after seven months in power, President Buhari and his party, the APC yet to differentiate between governance and campaign propaganda.

‘‘By all standards, the 2016 budget, the first major economic policy outing of this government, is completely unrealistic and duplicitously embellished with impractical predications, a development that confirms fears by economy watchers and investors that this administration is obviously ill-equipped for governance.

‘‘We are indeed shocked that President Buhari and his minister of information have come up with two different reasons for the current fuel crisis in the country.

‘‘While we appreciate the president’s apology, we think it is high time he called this minister to order as his excessive propaganda and blame game are ridiculing this administration and the image of the nation.”

One of the commentators who expressed fears over the budget,  Mr. Eze Onykpere, the Lead Director at the Centre for Social Justice (CSJ) also picked a quarrel with the N6.08 trillion plan which he described as ambitious .He said that it was necessary for the government to  plan tight and enforce implementation to avoid making a mockery of itself.

Speaking on a radio programme monitored in Abuja, yesterday Onyekpere also tasked the National Assembly in the light of the dwindling revenue from oil to voluntarily cut down heavily its budget and to be more transparent with its  own expenditures.

His words: “As we can see, the revenue side would have some challenges. Even the president said it today. The benchmark is $38 while crude oil is selling at $32 as at today.  That is $6 difference.  That may look like a joke, but $6 multiplied by 2.2 million barrels multiplied by 365 or 366 days is in billions. What I expected was something that would be more realistic. If we earn more money at the end of the day, we can do a supplementary appropriation. Generally, in terms of budget policy, it is the same analysis. The important thing would be about implementation at the end of the day. It is about the actual.”