FG Asks Nigerians To Prepare For Tough Austerity Measures In 2016
The federal government has asked Nigerians to prepare for tough austerity measures in 2016 as a result of some economic moves being put in place ahead of the coming new year.
Minister for Budget and National Planning, Senator Udoma Udo Udoma, who disclosed this during the consideration of the 2016, 2017 and 2018 Medium ? Term Expenditure Framework (MTEF) at the Senate today, said it was important that substantial reductions were made on the spending pattern in order for government to be able to put in the much expected change.
“In preparing the MTEF, we seek a dramatic shift from spending on recurrent to spending on capital aspect of the budget. It is going to be tighter for everybody. All non-essential expenditure would be cut out.? We will reduce the overheads by 7 percent?. ?We are beginning a journey of change and change has to start with the clarity of purpose of where we are going?,” he noted.
Explaining this position further, Minister of Finance, Kemi Adeosun, told the joint committee ? of the National Assembly during the consideration of the MTEF that all Ministries, Departments and Agencies (MDAs) would be strictly monitored to avoid wastes.
She said government would take necessary steps to ensure that whatever money was being taken from the account of any MDA? was done electronically. She added that the new measure will minimise waste and ensure transparency in government spending.
The Finance Minister equally disclosed that measures had been put in place to compel revenue generating MDAs to remit all funds they generate to the treasury. “?The era when an agency generates money and spends 99 per cent of it is over,” she added.
Speaking further on what the expenditure framework seeks to achieve, Udoma said the MTEF was prepared in such a manner as to combat the economic challenges ahead stressing that “challenging times need firm and robust response. This is what the MTEF represents.? It was also designed to create better governance and to turn things around and promote economic prosperity for the people.”
On sources of funding for the N6 trillion 2016 budget, the Budget and National Planning Minister, revealed that priority will be given to Internally Generated Revenues (IGR). “We will also look at the accounts of agencies and sweep those surpluses that might not be on essential things that we want to focus on,” he said. Udoma however told the lawmakers in very clear terms that “ultimately we must borrow N1.8 trillion to fund this budget apart from all those adjustments we are trying to make.”
Executive chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, assured that the Service “will increase revenue by over one trillion” adding that “we are targeting N2 trillion from VAT?.”
In his own submission at the meeting, Central Bank of Nigeria (CBN) governor, Godwin Emefiele, said that ?stability of prices would be guaranteed in addition to ensuring stable exchange rate. He also revealed that the apex bank was willing to further devalue the naira from N197 to N199 as recommended by the Senate committee.
“In the last 12 to 15 months, we have seen a massive drop in commodity prices especially oil that affects Nigeria, has significantly affected the country’s revenue. That has placed some pressures on the reserves and that also resulted in the speculators and rent seekers in the market. What we did at that time when naira was N155 to a dollar, precisely late 2014, was to adjust the currency and move it from N155 to N197 to a dollar.
“We have through that arrangement, depreciated the currency by about 22 percent. Depreciation or devaluation in its own impact, adverse on the country. The objective is to make export cheaper to encourage it but unfortunately we don’t have export. Our export had dropped in the last 10 years, very drastically.
“We are currently trying to grapple with the impact of the adjustment of the 22 percent devaluation. We should work with N197 and see to the performance of the exchange rate management structure that we have put in place. We are willing to engage the National Assembly in closed session on our foreign exchange management strategy.
“There are speculations and rent seeking activities in the market, but we are trying as much as possible to keep it under control and we should work with N197 because further devaluation would mean importing bigger inflation into the country. We are moderating it. However if the Senate is pushing for N199 per dollar as exchange rate, it will still within our band and I do not have any objection to it,” Emefiele stressed.