ABUJA (Sundiata Post) – The Minister of Finance, Mrs Kemi Adeosun on Thursday said the Federal Government has disbursed a sum of N247.98 billon as capital release so far this year.
The minister, who made the disclosure in her presentation to the Senate on Thursday, explained that the disbursements were being made in line with strategic priorities to address infrastructure deficit and drive domestic growth.
The latest figure of N247.98 bn, she noted, compares to a sum of N387 bn capital spend for full year 2015. She stated that:
· N 21.6bn released for agriculture in 2016 is 4.9x of N4.5bn spent in 2015.
· N118.0bn released so far to the power, works and housing in 2016 is4.0x amount spent for full year 2015 which was N29.3bn.
· N24.0bn was disbursed to Transport ministry so far and that this is 3.6x of N6.5bn spent for full year 2015.
· N9.5bn released in 2016 to Interior Ministry is 6.2x amount spent for full year 2015, which was N1.5bn.
· N32.7bn for Defence Ministry has been disbursed in 2016 and this is 1.3x of N26.1bn total release for 2015.
Adeosun, who noted that debt owed to contractors has slowed the pace of implementation, however explained that contractors and cash call arrears totalling N5bn Joint Venture funding arrears were being addressed.
The minister stated that in order to achieve the objectives of capital spending, the Ministry of Industry, Trade & Investment was also working on government’s soft infrastructure (N465.12m in capital spend released to date). She listed one of the objectives to include improvement in Ease of Doing Business ranking to 100th position from current position of 169th.
The minister said the current stability in oil price has raised hope for Nigeria, noting that oil prices are up 75% per barrel since hitting a 12-year low of around $27 per barrel.
Adeosun, who stated that oil production volumes are expected to rebound in the near term, explained that ongoing fiscal reforms are bearing fruit.
She disclosed that for instance, the Federal Government was making a N8bn savings on payroll to date, while a N14bn in estimated savings on overhead is expected by year end.
“While production volumes have increased, the damage to oil facilities are concentrated on onshore oil fields from which we get our greatest volumes and revenues. The gap in production volume is being plugged by production in off-shorefields (Production Sharing Contracts) from which we incur higher costs. This, therefore, minimises the effect of increasing production in revenue terms,” the minister stated.
She stressed that Investment in critical infrastructure was key to unlocking economic growth, while cost reductions being achieved through fiscal reforms create headroom for capital investment.
The Federal Government, she said was effectively managing debt overhang; forming strategic alliances with private sector to implement key projects with limited budgetary provision; restructuring of outstanding PPPs to address legacy issues and initiate New PPPs to ensure efficient delivery of infrastructure and value for money efficiency gains.
The minister explained that current FAAC disbursements are low due to the three-month lag in sharing of oil revenues. “Crude oil proceeds in April are being sharedin June and therefore, do not reflect recent increases in production volumes,” she stated. “Our revenues are looking well; FIRS and Customs are doing well in terms of this”, Mrs Adeosun also stated.
She stated that “Our spending is being targeted to stimulate the economy and achieve positive GDP growth. There is a trade-off between growth and inflation. The objective is to target growth while keeping a close eye on inflation. We will invest in key infrastructural upgrades to stimulate the economy.”
In answering questions about ensuring that the agencies under the Ministry of Finance are properly scrutinised, the minister acknowledged that work was on-going to ensure improved efficiency and fiscal discipline.
When asked about the states’ inability to pay staff salaries, the minister stated that the “previous administration has been borrowing to pay salaries and the previous administrations have been playing a photo trick on Nigerians. This administration will state the facts as they are, will be honest with Nigerians so that we can work collectively to fix all the problems rather than pretend there are no problems.”
In answering other questions raised, the minister confirmed that the Nigerian Customs would be reformed, adding that steps were already in place to do so.
“A new policy on waivers will be published shortly. Loopholes and leakages will be closed and a clear strategic approach will be applied to import waivers. This policy will ensure that any waiver will be tied directly to economic growth and diversification”, the minister said.