The 2016 Budget

Nigerian opposition presidential candidate general Muhammadu Buhari of the All Progressives Congress (APC) party speaks during an interview in Abuja February 8, 2015. Buhari called for calm in the country and cautioned against any violence following postponement of elections. Nigeria's electoral commission has postponed elections due on Feb.14 to March 28. REUTERS/Afolabi Sotunde (NIGERIA - Tags: POLITICS ELECTIONS CIVIL UNREST HEADSHOT) - RTR4OPLS

PRESIDENT Muhammadu Buhari, recently presented a N6.08 trillion budget for 2016 to a joint session of the National Assembly. It is the first federal budget to be largely anchored on projected revenue from the non-oil sector. The budget is based on oil benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day.
Under the spending plan, oil related revenues are expected to contribute N820 billion while non-oil revenue, comprising Company Income Tax, Val­ue Added Tax(VAT),Customs and Ex­cise duties and Federation Accounts levies are projected to yield N1.45 trillion. This is to be achieved through enforcement of strict compliance with the Fiscal Responsibility Act 2007, as well as public expenditure reforms in all federal Ministries, Departments and Agencies (MDAs). Through what it calls independent revenues, govern­ment estimates to realise about N1.51 trillion. Besides, President Buhari explained that the budget would rely also on recoveries of looted public funds and savings of the recently es­tablished Efficiency Units in the MDAs.
In all of these, government says it hopes to ensure macroeconomic sta­bility by achieving a real Gross Do­mestic Product (GDP) growth rate of 4.37 percent and effectively managing inflation by aligning fiscal, monetary, trade and industrial policies.
The budget also provides for N1.8trn capital expenditure, the bulk of which is voted for social infrastructure such as works, power and housing. This is 30 percent of the budget and N557bn over that of 2015. Recurrent expendi­ture takes a hefty share of N2.65trn. This figure includes N300bn ear­marked for special intervention pro­grammes. The sum of N113bn is to be set aside for a Sinking Fund towards the retirement of maturing loans, while N1.36trn is provided for foreign and domestic debt service. All these will leave a huge deficit of N2.2trn.
Government plans to borrow N1.84trn to finance the budget. Of this amount, domestic borrowing will ac­count for N984bn while N900bn will come from foreign sources. A break­down of key recurrent sectoral alloca­tions shows a vote of N369.6 billion for Education; Defence, N294.5bn; Health N221.7bn, Transport, N202.2bn and N145.3bn to the Ministry of Interior.
On the whole, the budget as present­ed looks commendable in view of some positive changes it promises to bring to key sectors of the economy. Of par­ticular interest is the intention to em­ploy 500,000 graduate teachers as well as provide free tuition for science, technology and education students.
Of great concern about the budget is how the government can fund the N6.08trn appropriation with largely revenue from the non-oil sector. The worry is even greater in view of the unabating fall in oil price in the inter­national market. While the budget is predicated on oil benchmark price of $38 per barrel, the current price hov­ers between $32 and $33.50 per barrel and the International Monetary Fund (IMF) has said that in 2016, oil price could fall below $20 per barrel. If that happens, the budget will certainly run into a fierce storm even before 2016 gets underway.
Moving forward, government should immediately rejig the fundamental el­ements of the budget in line with pres­ent realities, in particular, with regard to the oil price benchmark, or else the budget might end up being regarded as a “fraud”, as already alleged by the opposition Peoples Democratic Party (PDP). .
In the light of dwindling revenue, it is certain that there will be many chal­lenges in 2016. Consequently, it has become expedient that revenue gen­erating agencies should ensure timely remittances to government coffers. At the same time, the National Assembly needs to slash its budget and be more transparent with its expenditure. We urge NASS to carefully scrutinise the budget, and pay close attention to the different sectoral allocations in view of present economic realities. It will not be in the best interest of the coun­try to just rubberstamp the budget.
Nigeria, undoubtedly, faces daunt­ing challenges. Therefore, to meet the objectives of the budget, its effective implementation is crucial. One of the drawbacks of previous budgets is their poor implementation. Let the 2016 budget be different.
Altogether, if Buhari’s government means to keep its promise of laying a foundation for sustainable growth, full implementation of the budget is key. Our economy needs to move away from dependence on oil, and its growth must be inclusive. For the 2016 bud­get to be adjudged successful, it must deliver on its major thrusts: security, jobs and infrastructure. It must im­prove the wellbeing of Nigerians and rekindle hope in democratic gover­nance. That is the minimum that the citizens require from the Buhari ad­ministration.