A News Analysis by Naomi Sharang and Cecilia Ijuo
On Nov. 7, the country recorded a fundamental achievement in Nigeria’s economic environment with the presentation of the 2018 budget proposal by President Muhammadu Buhari to a Joint Session of the National Assembly.
Economists observe that the presentation was a fulfilment of Federal Government’s promise to Nigerians earlier in the year that government was working assiduously to ensure that the country returns to the annual budget cycle of January to December.
President Muhammadu Buhari presented an appropriation bill of N8.612 trillion for 2018 which has a 16 per cent increase compared to the 2017 appropriation of N7.298 trillion.
Buhari said the budget was meant to consolidate the achievements of previous budgets and called it ”Budget of Consolidation.”
He said the budget would also deliver Nigeria’s economic recovery growth.
According to him, 30.8 per cent of the budget proposal has been dedicated to capital expenditure, N3.494 trillion set aside for recurrent expenditure, while N2.014 trillion is set aside for debt servicing.
He further stated that the 2018 appropriation was under-pined by an oil bench mark of 45 dollars per barrel, oil production level of 2.3 million barrel per day and exchange rate of N305 to the dollar.
He said the size of the 2018 budget was a reflection of his administration’s determination to consolidate and sustain the nation’s economic growth.
While reviewing the performance of his administration, Buhari noted that N1.2 trillion had so far been expended on execution of capital projects through 2016 budget.
He said the Federal Government had also invested 500 million dollars in the nation’s Sovereign Wealth Fund as part of deliberate measures to support government’s diversification drives.
The president announced that the nation’s external reserve stood at 34 billion dollars as of Sept. 2017, while the country recorded trade surplus of N56.5 billion as of second quarter of 2017.
He also announced that a committee headed by Vice-President Yemi Osinbajo had been inaugurated to check smuggling of food items across the country’s border towns.
He said with a benchmark of 45 dollars per barrel at an exchange rate of N305 to a dollar in 2018, the budget would consolidate on the achievements of previous budgets to aggressively steer the economy to the path of steady growth.
“With the economic recovery made so far, it is clear that we made the right decisions.
“I urge you all to support the Federal Government’s policies towards economic recovery,’’ he said.
Buhari said that the government would continue to develop infrastructure and increase investments in agriculture to attain food security and reduce importation.
He noted that the Federal Government was committed to identifying alternative means of funding new projects and continued public private partnership to provide more infrastructure.
According to him, the Federal Government has been able to construct or rehabilitate about 776-kilometre roads in 2017.
The president said that the construction of Abuja Metro Line had attained 98 per cent completion, adding that work had begun the abandoned Ajaokuta-Itakpe rail line.
He said that the project would be delivered in September 2018, adding that the country’s power sector would also witness a turn around.
“The power sector reform is still work in progress as we have increased power generation but we still have some challenges in transmission and distribution network,’’ Buhari said.
He added that the Federal Government was committed to green alternative energy.
In his remark at the budget presentation, the President of the Senate, Dr Bukola Saraki, emphasised the need for government to increase non-oil revenue generation.
Saraki said as the country gradually recovered from recession, it was important to reset the fundamentals that drove the economy so that it would not slide back into recession.
“We must reassess the relationship between oil and our economy. Oil prices are gradually inching up, but that is no reason for complacency in our diversification drive.
“We must grow our economy away from oil and increase attention to other sources of revenue generation,” he said.
He also stressed the need for emphasis on tax collection, saying other independent revenues from state-owned enterprises must be taken seriously.
“If the budget is to be funded, we cannot afford to turn blind eye to revenue under-performance.
“While there is need to review extant laws guiding the operation of some government enterprises, I would call for more determined effort on the part of the executive, to block leakages.
“This sector alone accounts for over N40 trillion in valuation, of which less than N400 billion is remitted as revenue to Consolidated Federation Account. This is not acceptable. We need to vigorously address this area,” Saraki said.
The president of the senate commended Buhari, the Economic Management Team, and lawmakers, as well as Nigerians, for working together to make the necessary sacrifices to get the economy out of recession.
He said ” without doubt, this recovery benefitted from greater policy coordination, prioritisation and passage of economic reform bills, but more importantly, the resilience of the Nigerian people.”
He further said the implementation of the 2018 budget and how it was implemented would be a defining element of the present administration.
“Further to the area of increasing independent revenue, there is need to review agreements that government signed with some private sector service providers.
“Many of these agreements are biased, and clearly not in the interest of the country.
“We appreciate the need to spend, but we must ensure that our borrowing is targeted at productive projects that will stimulate the economy.
“We must also ensure real value-for-money in projects funded by borrowing and ensure that the projects are not overpriced.
“This bill, which should clearly detail the imposition, alteration or regulation of taxes such as the proposed tax on luxury items and excise taxes, among others, will put the financial proposals of government into effect,” he said.
Presenting an overview of the 2018 budget proposal, Minister for Budget and National Planning, Sen. Udoma Udoma observed that the Federal Government would fund the 2018 budget using key reform initiatives contained in the Economic Recovery and Growth Plan.
He said the budget was expected to reinforce and build on recent accomplishments of the government.
Udoma said Federal Government would deploy new technology to improve revenue collection, enhance tighter performance management framework for state owned enterprises and stronger enforcement action against tax defaulters.
He added that the 2018 revenue projections reflected new funding mechanism for Joint Venture (JVC) operations, allowing for cost recovery in lieu of previous cash call arrangements.
The minister noted that “there will be restructuring of government’s equity in JV oil assets, reduction in equity holding with proceeds to be reinvested in other assets.
“This will improve efficiencies in the operations of the JVs and position them for better revenue performance in future, increase in excise duty rates on alcohol and tobacco.”
Furthermore, as part of its constitutional duties, the Senate will begin debate on the 2018 appropriation bill between Nov. 22 and Nov. 23.
Chairman, Senate Committee on Media and Public Affairs, Sen. Sabi Abdullahi, said the session would involve starting the debate for the second reading of the bill.
He noted that the laying of the budget by President Buhari on Nov. 7 was the first reading of the bill.
“It is important we take up the debate of the basic principles of the bill and refer it to the appropriate committee,” he said.
Nigerians expect that the Federal Government will ensure that measures are put in place to consolidate on the 2017 Budget of Recovery.(NAN)