National Assembly may okay N6.07tr budget today

• Senate receives 2016, 2017, 2018 MTEF, FSP
• Government to reflate economy with N350b
• Delayed passage of budget drives inflation to 12%, says CBN

The National Assembly may today adopt N6, 077,680,000,000 as budget for 2016. This came to light yesterday following the successful presentation by the Appropriation Committees of the Senate and House of Representatives of reports on the 2016 budget which they have been working on since December, 2015 when President Muhammadu Buhari laid the budget proposal before the joint session of the National Assembly.

Ahead of the passage of the budget, the Senate yesterday received the report of the National Assembly Conference Committee on 2016, 2017 and 2018 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper. The MTEF/FSP conference report was presented by John Enoh.

In another development, the Federal Government yesterday announced its plan to inject about N350 billion into the economy, once the 2016 budget before the National Assembly is passed.

This is one of the outcomes of the two- day National Economic Council (NEC) retreat which ended yesterday at the Conference Hall of State House, Abuja, attended by the Vice President as the chairman with state governors, ministers and invited experts

Meanwhile, the Central Bank of Nigeria (CBN) has adjusted the lending rate by100 basis point from 11 per cent to 12 per cent even as the apex bank yesterday identified some of the drivers of the inflationary pressures to include the delay in the passage of the 2016 spending plan.

The two NASS committees which have been working together to produce a harmonised report each laid the report separately in both chambers yesterday morning.

Chairman of the Senate Committee on Appropriation, Senator Danjuma Goje (APC Gombe Central) laid the report of the 2016 budget without mentioning any details.

But the more detailed report presented to the House of Representatives showed that N6, 077,680,000,000 has been approved by the committees.

It comprised N351, 370, 000,000 vote for Statutory Transfers, N1,475,320,000,000 for debt service, and N2,648,600,000,000 for Recurrent (Non-Debt) Expenditure.

The report also stated that N1,845,540,000,000 inclusive of N157,150,000,000 for borrowing and N86,000,000,000 as Interest on Capitalised Loans, is for Contribution to the Development Fund for Capital Expenditure for the year ending on the 31st of December, 2016.

The Upper Chamber later adjourned plenary to honour a member of the House of Representatives, Musa Baba Onwana representing Nasarawa/Toto Federal Constituency of Nasarawa State who died last week but without a word on the fate of the report.

The House of Representatives, however, was categorical about passing the budget document today.According to law, the adoption and approval of the MTEF and FSP should be done to give way for the passage of the appropriation bill.

Last month, the National Bureau of Statistics (NBS) reported the increase in year-on-year headline inflation to 11.38 per cent in February 2016, from 9.62 per cent in January and 9.55 per cent in December, 2015.

The NBS explained that the February headline inflation increase reflected in both food and core components, adding that core inflation rose sharply for the first time to 11.00 per cent from 8.80 per cent in January after a lull of three consecutive months at 8.70 per cent through December, 2015, while food inflation also inched up to 11.35 per cent from 10.64 per cent in January and 10.59 per cent in December, 2015.

The apex bank yesterday added that the rising inflationary pressure was traced to the lingering scarcity of refined petroleum products, exchange rate, seasonal factors and increase in electricity tariff, noting that the factors responsible for rising inflation were more structural in nature than monetary.

Accordingly, to check the continuing spiraling of the inflationary pressure, the apex bank introduced tightening measures to mop up excess liquidity in the economy which it also pointed out was equally responsible for the spike.

The measures included: raising of Monetary Policy Rate (MPR) by 100 basis points from 11.00 per cent to 12.00 per cent; raising of Cash Reserve Requirement (CRR) by 250 basis points from 20.00 to 22.50 per cent; retention of Liquidity Ratio (LR) at 30 per cent; and finally the narrowing of the asymmetric corridor from +200 and -700 basis points to +200 and -500 basis points.

Shedding more light on the reasons for the adoption of the tightening measures, CBN governor who is also the Chairman of the MPC, Mr. Godwin Emefiele, expressed regret that the committee had to take the action this time around after it had adopted accommodative monetary policy since July 2015 in the hope of addressing growth concerns in the economy, effectively freeing up more funds for Deposit Money Banks ( DMBs) by lowering both CRR and MPR, with excess liquidity now arising from the lower CRR warehoused at the CBN.

He gave insight into how the accommodative stance induced excess liquidity: “DMBs were to access these funds by submitting verifiable investment proposals in the real sector of the economy. The funds have not impacted the market yet because the CBN was still processing some of the proposals submitted by the DMBs. In the first episode of easing which resulted in injecting liquidity into the banking system, DMBs did not grant credit as envisaged.”

He continued: “In the light of these developments, domestic output growth in 2015 remained subdued as reported by the National Bureau of Statistics (NBS). Consequently, real GDP grew by 2.11 per cent in the last quarter of 2015, more than half a percentage point lower than the 2.84 per cent recorded in the third quarter and 3.83 percentage points in the corresponding period of 2014. Overall, growth in 2015 was estimated at 2.79 per cent, compared with 6.22 per cent in 2014.

The major impetus for growth continued to come from the non-oil sector which grew by 3.14 per cent in Q4, 2015 compared with 3.05 per cent in the preceding quarter. The key drivers of growth in the non-oil sector were Services, Agriculture and Trade; contributing 1.23, 0.83 and 0.76 percentage points, respectively.

“The committee also enjoined the relevant agencies to speed up passage of the 2016 Budget in order to halt the depressing effect of the uncertainty that engulfs the waiting period, hoping that the implementation of the budget would go a long way in boosting business confidence, and reinvigorating the financial markets.”

At a joint briefing of State House correspondents by the Chairman of Nigerian Governors’ Forum(NGF) and Zamfara State governor, Abdulaziz Abubakar Yari, his Anambra State counterpart, Willie Obiano, Ministers of Financ, Kemi Adeosun and Budget and National Planning, Udoma, Udo Udoma , the participants also announced the resolution of the government to collaborate with the state governments to boost the economy.

According to Adeosun, the decision of the government to allocate the N 350 billion, which she said would be made available once the budget is passed would be paid to contractors handling various Federal Government projects across the country, especially those that have laid off their staff on account of the non-release of money to continue their projects.

His words: “From the Federal Ministry of Finance, in anticipation of the approval of the budget, we have actually lined up N350 billion which will be pumped into the Nigerian economy in the forthcoming months.
We explained our rationale and the processes that we put in place as safe guards to ensure that the money actually achieves the desired objective which is to stimulate the economy.”