Experts give antidote on how the N7.298tn 2017 budget can perform better
The presentation of the 2017 national budget by President Muhammadu Buhari before the joint session of the National Assembly Wednesday has been received by many experts with mixed feelings.
Whereas many saw the budget of N7.298tn for 2017 as a budget that has a face of reality if well implemented, others are calling for review of some indicators and critical assumptions that will drive the financial year.
Business Hilights recalls that President Muhammadu Buhari presented the 2017 national budget with a proposed aggregate expenditure of N7.298 trillion which will comprise statutory transfers of N419.02 billion; Debt service of N1.66 trillion; Sinking fund of N177.46 billion to retire certain maturing bonds; Non-debt recurrent expenditure of N2.98 trillion; and Capital expenditure of N2.24 trillion (including capital in Statutory Transfers).
But looking at the entire document, Prof Uche Uwaleke said “If we can implement up to 90 per cent of the 2017 budget, Nigeria will be out of recession before the end of next year”.
He said the failure of 2016 budget had been largely blamed on shortfall in revenue, but there are indications that the revenue layout for 2017 will be much different as more safety nets are in place.
Prof Uwaleke appraised the general principles of the 2017 budget and assumptions which according to him, appeared very promising.
“On the oil benchmark, he said “I think the $42 per barrel is realistic considering the moves by OPEC to stabilize global oil prices next year”.
“Regarding the revenue projection, I think they are more realistic. Then the exchange rate; it has been moved from N290 in the MTS to N305 which is what the government is working with now at the interbank market.
Business Hilights observed that the priority areas in the budget include power, works and housing which give the indication that the 2017 budget has shifted emphasis to huge capital projects which all have the capacity to stimulate the economy.
Barring his mind on the spirit of the 2017 budget, a development economist, Mr. Odilim Enwegbara said “First and foremost, this can be said to be the first time Nigerian budget is going to drive capital expenditure to an acceptable limit which is above 30 per cent which is appreciable”.
“I think we would have moved it further, even though the National Assembly still has the chances of doing so.
“But my concern is that the capital expenditure is being financed from the deficit angle which does not promise much in real sense.
Enwegbara added that “by the presentation we saw at the floor of the national Assembly, we are going to run a deficit of N2.36tn whereas the capital expenditure is N2.24tn”.
“So we are having about N120bn deficit already and it should not have been the case.
And also, the fact that we are borrowing more domestically and less externally is very worrisome.
“Recall that Nigeria is one of the most creditworthy nations when it comes to external borrowing. The question I would have loved the government to answer for me is why should we not borrow externally where interest rate is very low than internally where interest rates are very exorbitant. The essence of this idea is to reduce the cost of debt servicing.
Continuing, Enwegbara revealed that “We are spending about N1.66tn servicing our debts. It is not acceptable in an economy like ours with heavy infrastructure deficit. So we must find a way to reverse the trend by borrowing abroad”.
“Currently, Nigeria is having a regime of difficult domestic debt and we need to find a way to write it down and one of the best ways is quntitatism which most nations do and it is very easy.
“What is means is ti find a way to pay back your debts by buying back the debts.
Let me tell you, between 2013 and 2016, Nigeria has spent N3.6tn servicing domestic debts which is not sustainable.
“But in servicing foreign debts, we have spent only N116bn. It is suppose to be the other way round and so we must do something about it.
Now looking at some of the indicators, oil benchmark is kept at $42 per barrel, for me I want it to be up to $53.
“Why, when you look at emerging international diplomacy, the CEO of ExxonMobil is going to be the Secretary of State of the US, and recall that he is a very close friend or ally of Russian President, Mr. Putin who actually supported US President-Elect, Donald trump in the just concluded elections.
He said the implication is that one of the strategies will be to increase and steady the price of oil which is already looking up to the advantage of Nigeria.
Russia has been suffering as a result of Ukraine who has been working for low oil prices. But the way the new US government is looking, it may wish for high oil price. I believe that Trump will like oil to hit $65 next year. So I would like the National Assembly to jerk up the benchmark to about $52.
He said “Apart from oil, I want our exchange rate to move from N305 to N350 which is more realistic as far as the economy is concerned. We need to tell ourselves the truth. This will allow more money going to the federal government and to the states next year”.
“But for the 2017 budget to be well tinkered and implemented, it ought to have been presented at least latest, July. This will enable the readiness of procurement process and plans waiting for the new budget year for implementation to kickoff exactly from day one; that is January 1st.
On how the trend can be reversed, Enwegbara called on the National Assembly to make a law that from 2019 going forward, anybody wishing to become the president of Nigeria must come up with a four-year plan on how he will manage the economy within the four years he will be in power.
He submitted that “The campaign master plan must contain how to raise the money and where and where to use the money so that we Nigerians will be well guided on voting”.