FG To Spend N6tr For 2016 Budget, Approves Medium Term Expenditure Framework
THE Federal Government has announced that it will spend N6 trillion in 2016, if the budget estimates to be presented to the National Assembly is approved as sent.
The planned spending is the first for the administration of Mr. Buhari, who took office in May 2015.
The minister of Budget and National Planning, Udoma Udoma, stated this while addressing State House Press Corps after an emergency Federal Executive Council meeting presided over by President Muhammadu Buhari.
The minister said the proposal was contained in the Medium Term Expenditure Framework, MTEF, approved by the council.
The three-hour FEC meeting approved the three-year MTEF, which pegs the oil benchmark at $38 per barrel with a 2.2 million crude oil per day production.
“At today’s council, the council approved the MTEF, which sets out the policies of government over the next three years; it sets out the fundamental economic underpinning the budget.
“The highlights are as follows: we project 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, saying it is achievable, particularly because with the passage of the Petroleum Industry Bill (PIB) which we are working to achieve, we believe that, that is a modest figure that we should be able to produce something higher than that.
“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, was about N5 trillion. So, we are looking at a N6 trillion budget.”
He explained that the increase in the budget over last year would be spent on capital expenditure to address infrastructure issues.
With the dwindling prices of oil in the international market, he said the government would increase its drive for non-oil revenue, keep down recurrent expenditure, increase efficiency in Value Added Tax (VAT) and company income taxes and resort to borrowing to fill up any remaining gap.
His words: “We will get the funding from two sources: we are looking at trying to increase 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 Federal Inland Revenue Service (FIRS), in terms of company income tax and VAT. And then the difference, we will have to borrow.
“But the level of borrowing that we anticipate and we are projecting will be well within the maximum that we allow, which is three per cent of the GDP. Because we want a prudent and credible budget, so we are working on them now.
“We are projecting almost 30 per cent capital project, up from the 15 per cent or so that it is currently. We will try and reduce overheads, but keep personnel cost. 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.”
He said government is working with the exchange rate approved by the Central Bank of Nigeria (CBN).
Asked whether oil subsidy would be provided for in the budget, he said: “We are looking into that.”
The approved MTEF, he said, would be forwarded to the National Assembly.
He said: “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 finalised.
“It is when the budget is finalised that you really see the details of what we intend to do. This is just a MTEF.”