October 5, 2016

Buhari pegs 2017 Budget at N6.866trn

Buhari pegs 2017 Budget at N6.866trn

President Muhammadu Buhari

By Henry Umoru, Emman Ovuakporie, Johnbosco Agbakwuru & Joseph Erunke
ABUJA—PRESIDENT Muhammadu Buhari, yesterday,  forwarded  the 2017, 2018 and 2019 Medium Term Expenditure Framework and Fiscal Strategy Paper, MTEF & FSP to the National Assembly for approval as he projected a total budget of N6,866,335,052,740 for 2017.

In a letter dated Friday, September 30, 2016, personally signed by the President and addressed separately to both the Senate President, Bukola Saraki, and House of Representatives Speaker, Yakubu Dogara, Buhari said with the submission of the fiscal documents, the preparation for next year’s budget was in progress.

Of the N6.866 trillion proposed 2017 budget, the government would spend N1.765 trillion as capital expenditure, N2.563 recurrent (non-debt expenditure) and N1.639 trillion for debt service, even as N350 billion had been budgeted for recurrent social intervention programme in 2017.

The figure for 2017 is N805 billion more than the 2016 budget. The Federal Government projected a revenue of N4,169,172,496.951, which, is N314 billion above that of 2016.

Planned aggregate expenditure is  estimated to exceed the provision of N6.06 trillion in the 2016 budget by 13.3 percent (or about N806 billion).

President Muhammadu Buhari

President Muhammadu Buhari

In the document sent to both chambers of the National Assembly, yesterday, the president put the oil benchmark at $42.50 per barrel, against $38 for 2016, and Average Exchange Rate of N290 to the US Dollar as against proposed N197 in 2016.

The documents also indicated that the Federal Government has projected oil production  at 2.2 million barrels per day, just as it said that of the projected N3.855.74 trillion revenue target in 2016, only N951.52 billion had been retained as of June.

It attributed the shortfall to under-performance of non-oil sources independent revenues and Federal Government’s share in company income tax (CIT) collections which were less than N646.32 billion and N271.76 billion projected, respectively.

To achieve the proposed 2017 budget, the government said it would improve revenue mobilisation from non-oil sectors, promote transparency and accountability, pursue sustainable debt management, intensify economic diversification, enhance infrastructure for increased productivity and development, improve governance as well as pursue social development programme.

The government plans to raise the revenue from the following sources: shared oil revenue of N1.3 trillion; N14.111 billion share of dividend from Nigeria Liquefied and Natural Gas (NLNG); N1.064 trillion from mineral and mining; non-oil revenue of N1.508 trillion; N902.8 billion company income tax; N282.2 billion value added tax; N277.5 billion from customs and N45.9 billion as government share from federation account.

Other projected sources of funding the budget are N1.207 trillion independent revenue; N6.549 billion as government share of actual balance in special accounts; N9.086 billion as Federal Government’s balances in special levies accounts and N50 billion unspent balance of previous fiscal year.

Also, the MTEF retained 2.2 million barrel per day production of crude oil, and Statutory Transfer is pegged at N370,697,683,756, while N1,639,171,596,716 was projected for debt service.

Improved funding for Amnesty Programme

According to the document, the Presidential Amnesty Programme has been projected to increase from its N20 billion in 2016 to N65 billion.

The government noted that Provisions in the MTEF were drawn from government’s development priorities over the medium term and more specifically driven by its fiscal strategy and reflect the broad aggregates of the government’s annual budget over the period, adding that the aggregate revenue to fund the 2017 budget was projected to increase over the 2016 estimate of N3,855 trillion by about 8 per cent (or about N313 billion).

It said that 33 per cent of this would come from oil sources while the balance would come from non oil sources-in consonance with the government’s renewed focus on diversification of its revenue base.

The government said that it will continue to provide for social intervention programmes in order to cater for the poor and vulnerable Nigerians.

Accordingly, it said that the recurrent (Non Debt) expenditure and capital payments are projected to increase in nominal terms by N217.42 billion and N177.6billion especially in 2017 over the 2016 estimates.

Debt rises to N16.3 trillion

According to the government, Nigeria’s total debt profile stood at N16.3 trillion as at June 2016 and N3.19 trillion of the figure is external debt while the N13.11 trillion balance is domestic debt. It further explained that the federal government owes 74.6per cent of the debt stock while the 25.4 per cent balance was owed by the 36 states of the federation.

In the document, the government noted that the inflation rate stood at 16.5 per cent in June 2016, adding that the trend was caused by movement in price levels, which led to persistent rise in prices of commodities by 15.3 per cent and 16.2 per cent increase in food and “core sub-index” respectively.

Rising unemployment levels

According to the government, unemployment rate increased from 10.4 per cent in the last quarter of 2015 to 12.1 per cent in the first quarter of 2016, even as it stressed that the level of under-employment rose from 18.7 per cent in the last quarter of 2015 to 19.1 per cent in the first quarter of 2016, adding that it has projected the Gross Domestic Product, GDP to grow at 3.02 per cent in 2017 and inflation rate to be moderate at the rate of 12.9 per cent during the fiscal year.

“Also, the consumption is projected to increase to N8.05 trillion. This growth will be supported by the envisaged improvement in the implementation of the capital budget and efficiency of funds utilisation to support domestic demand during the period.”

Furthermore, the document said the nominal gross document product (GDP) rate is projected to rise from N108.7 billion in 2017 to N129. 773 billion in 2019 adding, “similarly, private consumption expenditure is projected to grow from N80.048 billion for 2017 for N91.995 billion in 2019. These are important for future revenue projections in addition to enhancing the capacity of the government to increase spending on core social and economic programmes during the MTEF period.”

From the MTEF document , the the budgeting process in 2017 would “be automated to minimise human interface and address other glitches experienced in the first implementation of the ZBB.”

It also said that of the total N6.060 trillion budget approved by the National Assembly for 2016, only N2.419.38 trillion was spent as at June as both the recurrent and capital expenditure “with the shortfall in revenue inflow being made up by additional financing from borrowing and other sources.”

It also disclosed that N1.479.56 trillion had been released from the budget for recurrent expenditure for the payment of salaries, pensions, overheads which it said was a little bit higher than prorated N1.323.19 trillion for January to June, adding that as at July 18, 2016, only N331.58 billion had been released for the execution of critical infrastructure projects.

It also disclosed that of the projected N3.855.74 trillion revenue target in 2016, only N951.52 billion was retained by the government as at June and this was less than 50.6 per cent prorated projection.

“Pursuant to provisions of the Fiscal Responsibility Act of 2007, the preparation towards the submission of the 2017 Budget to the National Assembly is progressing well,” Buhari said.

The President in the correspondences added that the MTEF and FSP, which provide the framework for the development of the 2017 Budget, was designed against the backdrop of a “generally adverse” global economic environment as well as fiscal challenges in the domestic economy.

He noted that the 2017 – 2019 MTEF and FSP articulates the Federal Government’s economic, social and developmental objectives, as well as the strategies for achieving the defined objectives and priorities.

Buhari’s letter

President Buhari’s letter which was read at plenary by Senate President, Bukola Saraki and Dogara read thus: “I am pleased to submit the 2017-2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the National Assembly. Let me use this medium to express my gratitude for the enduring partnership between the legislative and the executive arms of government.

“In particular, I note with appreciation the commitment and support that distinguished senators have continued to demonstrate with respect to the preparation passage and implementation of the federal budget.

“Pursuant to provisions of the Fiscal Responsibility Act of 2007, the preparation towards the submission of the 2017 budget to the National Assembly is progressing well.

“The MTEF and FSP which provides the framework for the development of the 2017 budget was designed against the backdrop of a generally advanced global economic environment as well as fiscal challenges in domestic economy.

“In this regard the 2017-2019 MTEF and FSP articulates the Federal Government economic, socio and developmental objectives as well as the strategies for achieving this divine objectives and priorities.

“I hereby forward the 2017-2019 MTEF and FSP to the distinguished senate and trust that it will be kindly considered, expeditiously approved so as to move the 2017 Federal Budget process forward.

“Please accept the distinguished senate president the assurances of my highest consideration.”