The proposed budget is predicated on crude oil price of $38 per barrel and crude oil production of 2.2 million barrel per day.
The Federal Executive Council, FEC, also approved and submitted the Medium Term Expenditure Framework, MTEF, to the National Assembly.
In the current budget, the government submitted a budget proposal of N4.38 billion to the National Assembly which raised it to N4.9 trillion. The 2015 budget was predicated on crude oil price of $65 per barrel and crude oil production of 2.28 million barrel per day.
The 2016 proposed budget is about N1.62 trillion or 27 per cent higher than what was proposed for the 2015 budget. The crude oil bench mark for next year’s budget is lower than the current crude oil price of $41 per barrel.
Briefing State House correspondents after an emergency meeting of the Federal Executive Council, FEC, presided by President Muhammadu Buhari at the Presidential Villa, Abuja, yesterday, Minister of National Planning and Budget, Udoma Udo Udoma, stated that in view of the current economic realities, FEC predicated the budget on $38 of barrel of crude oil as benchmark for the MTEF.
He also said that the budget is premised on the hope that Nigeria will produce a total of 2.2 million barrels of crude oil per day.
He said: “At today’s Federal Executive Council meeting, the council approved the Medium Term Expenditure Framework, MTEF, which sets out the policies of government over the next three years. It sets out the fundamental economic underpinning of the budget.
“The highlights are as follows: we projected and we are working with $38 crude oil price, we consider that to be very conservative but because of the uncertainty, we felt that we should start with a conservative crude oil price.
“We are also working with 2.2 million barrels a day production. We believe it is achievable, particularly because with the possible passage of the Petroleum Industry Bill (PIB) which we are working to achieve, we believe that the production figure is a modest figure that we should be able to produce something higher than that.
Expansionist budget
“And so next year, we are looking at an expansionist budget. We are looking at a budget that will be N1 trillion more than last year. So, we are looking at a budget of about N6 trillion.
“Last year’s budget, including the supplementary, was about N5 trillion. So, we are looking at a N6 trillion budget. All the increases actually will be spent on capital, because there is the need to increase the capital because of the infrastructure issues that we have to address.
“We are projecting almost 30 per cent capital project, up from the 15 per cent or so that is in the current budget. We will try and reduce overheads, but keep personnel cost in check. We are not going to adjust it by much, but we are expecting some savings from the IPPIS system which we are using. So we are not cutting anybody’s salary, everybody will get their salaries.
“Following from this, the MTEF will be submitted to the National Assembly, and we expect a feedback from them, thereafter we will be working to try and get the budget finalized, it when the budget is finalized that you really see the details of what we intend to do. This is just a medium term economic framework.”
Funding
Flanked by the Minister of Information, Alhaji Lai Mohammed and Minister of State for National Planning, Zainab Ahmed, at the briefing, Udoma said budget would be further funded by increasing efficiency in income tax and borrowing. He also assured that the workers salaries would not be cut to keep in tandem with the economic challenges.
“We will get the funding from two sources. We are looking at trying to increasing our non-oil revenue. We are looking at trying to get more money from the various government agencies, policing their collection and trying to get more money from them. We will also look at keeping down our recurrent budget that means we are looking at savings that we can make from overheads.
“We will look at the efficiencies from our revenue collecting agencies like the FIRS, in terms of company income tax, in terms of VAT, and then the difference, we will have to borrow. But the level of borrowing that we anticipate will be well within the maximum allowed, which is three per cent of the GDP, because we want a prudent budget. We want a credible budget. So, we are working on that now.
“So we are not cutting anybody’s salary everybody will get their salaries, “he said.
Speaking on the exchange rate with regards to the budget, the minister stated that government was working with the projection from the Central Bank of Nigeria, CBN.
This was even as he stated that FEC was also looking into the issue of subsidy removal in the budget. On the exchange rate, we are working on the exchange rate that the Central Bank of Nigeria has given us, that is the rate we are working on. On whether subsidy will be retained, we are looking into that”, he said.
Meanwhile, President Buhari, before the commencement of the FEC meeting, sworn in additional permanent secretaries, Akindele Bamgboshe and Mamoud Isa Dutse.
Both were among the recently appointed 18 permanent secretaries who were not sworn in alongside their colleagues as they were abroad on official assignment.
Source: Vanguard By Levinus Nwabughiogu
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