President Muhammadu Buhari , Tuesday, presented a budget of N6.08 trillion for the 2016 fiscal year to the joint session of the National Assembly. While presenting the budget, the President said the 2016 budget proposal, which is the first of this administration is aimed at stimulating the economy, making it more vibrant by concentrating on infrastructural development, delivering inclusive growth, and prioritizing the welfare of Nigerians.
His words, “We believe that this budget, while helping industry, commerce and investment to pick up, will as a matter of urgency, address the immediate problems of youth unemployment and the terrible living conditions of the extremely poor and vulnerable Nigerians,” the president said.
Buhari added that his government aims at ensuring macroeconomic stability by achieving a real Gross Domestic Product (GDP) growth rate of 4.37 per cent and managing inflation.
This will be achieved by ensuring that fiscal, monetary, trade and industrial policies are properly aligned to that effect.
“In the medium to longer term, we remain committed to economic diversification through import substitution and export promotion. This will build resilience in our economy. It will guarantee that the problems we have today, will not confront our children and their children. This shall be our legacy for generations to come,” he said.
Buhari added: “As we focus on inclusive growth, we are conscious of the current rate of unemployment and underemployment.
“This is a challenge we are determined to meet, and this budget is the platform for putting more Nigerians to work. I can assure you that this administration will have a job creation focus in every aspect of the execution of this budget.
“Nigeria’s job creation drive will be private sector led. We will encourage this by a reduction in tax rates for smaller businesses as well as subsidized funding for priority sectors such as agriculture and solid minerals.
“As an emergency measure, to address the chronic shortage of teachers in public schools across the country, we also will partner with state and local governments to recruit, train and deploy 500,000 unemployed graduates and NCE holders.
“These graduate teachers will be deployed to primary schools, thereby, enhancing the provision of basic education especially in our rural areas.”
The President revealed his intention to work with state and local governments to provide financial training and loans to market women, traders and artisans, through their cooperative societies.
To this end, he said that they believe that “this segment of our society is not only critical to our plan for growing small businesses, but it is also an important platform to create jobs and provide opportunities for entrepreneurs.”
On the main 2016 budget he said: “Distinguished members of the National Assembly, I now present, the 2016 Budget proposals of the Federal Government. Based on the assumptions I presented earlier, we have proposed a budget of N6.08 trillion with a revenue projection of N3.86 trillion resulting in a deficit of N2.22 trillion.
“The deficit, which is equivalent to 2.16% of Nigeria’s GDP, will take our overall debt profile to 14% of our GDP. This remains well within acceptable fiscal limits. Our deficit will be financed by a combination of domestic borrowing of N984 billion, and foreign borrowing of N900 billion totaling N1.84 trillion. Over the medium term, we expect to increase revenues and reduce overheads, to bring the fiscal deficit down to 1.3% of GDP by 2018.”
He projected that in 2016, oil related revenues are expected to contribute N820 billion, while non-oil revenues, comprising Company Income Tax (CIT), Value Added Tax (VAT), Customs and Excise duties, and Federation Account levies, will contribute N1.45 trillion.
“Finally, by enforcing strict compliance with the Fiscal Responsibility Act, 2007 and public expenditure reforms in all MDAs, we have projected up to N1.51 trillion from independent revenues,” he said.
“Although we are working to diversify our economy, we will not lose sight of the need to restructure the oil and gas sector which has been marred by corruption and plagued with inefficiencies. Accordingly, I have directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to adjust its pricing template to reflect competitive and market driven components. We believe this can lower input costs and attain efficiency savings that will enable PPPRA to keep the selling price for all marketers of petrol at N87 per liter for now.”
He described the current fuel scarcity with long queues at petrol stations all over the country causing social dislocation as very unfortunate.
“Government profoundly apologizes to Nigerians for this prolonged hardship and misery. It is as a result of market speculators and resistance to change by some stakeholders. Government is working very hard to end these shortages and bring fuel to the pumps all over the country,” he said
“I have also directed the NNPC to explore alternate funding models that will enable us to honour our obligations in Joint Ventures (JVs) and deep offshore fields. We are confident that these measures can be achieved and will lower the burden that the traditional cash calls have imposed on our budget and cash flows as well as contribute towards shoring up our national reserves.
“To deliver our development objectives, we have increased the capital expenditure portion of the budget from N557 billion in the 2015 budget to N1.8 trillion, in the 2016 budget. Distinguished and honourable members of the National Assembly, for the first time in many years, capital expenditure will represent 30% of our total budget. In future years we intend to raise the percentage allocation for capital expenditure.
“This is a fulfillment of our promise to align expenditure to our long-term objectives, and a sign of government’s commitment to sustainable development. This increased capital expenditure commits significant resources to critical sectors such as Works, Power and Housing – N433.4 billion; Transport – N202.0 billion; Special Intervention Programs – N200.0 billion; Defence – N134.6 billion; and Interior – N53.1 billion. These investments in infrastructure and security are meant to support our reforms in the Agriculture, Solid Minerals and other core job creating sectors of our economy.”
We will devote a significant portion of our recurrent expenditure to institutions that provide critical government services. We will spend N369.6 billion in Education; N294.5 billion in Defence; N221.7 billion in Health and N145.3 billion in the Ministry of Interior. This will ensure our teachers, armed forces personnel, doctors, nurses, police men, fire fighters, prison service officers and many more critical service providers are paid competitively and on time.
He noted that 2016 borrowings will be principally directed to fund our capital projects.
He said the sum of N113 billion will be set aside for a Sinking Fund towards the retirement of maturing loans; while N1.36 trillion has been provided for foreign and domestic debt service. This calls for prudent management on our part, both of the debt portfolio and the deployment of our hard earned foreign exchange earnings.
Buhari said: “I am aware of the problems many Nigerians currently have in accessing foreign exchange for their various purposes – from our traders and business operators who rely on imported inputs; to manufacturers needing to import sophisticated equipment and spare parts; to our airlines operators who need foreign exchange to meet their international regulatory obligations; to the financial services sector and capital markets who are key actors in the global arena.
“These are clearly due to the current inadequacies in the supply of foreign exchange to Nigerians who need it. I am however assured by the Governor of Central Bank that the Bank is currently fine-tuning its foreign exchange management to introduce some flexibility and encourage additional inflow of foreign currency to help ease the pressure.”
He assured that the country is currently carefully assessing its exchange rate regime keeping in mind the willingness to attract foreign investors but at the same time, managing and controlling inflation to level that will not harm the average Nigerians.
“Nigeria is open for business. But the interest of all Nigerians must be protected. Indeed, tough decisions will have to be made. But this does not necessarily mean increasing the level of pain already being experienced by most Nigerians,” he explained.
He pleaded with all civil servants, the organized labour, industry groups, the press and religious and traditional institutions to support all the efforts of the government in order to make sure the dividends of democracy, reaped from the adequate planning that will be afforded by the proposed budget reaches every one.
Buhari`s Budget A Big Fraud – PDP
The Peoples Democratic Party has described the N6.8 trillion 2016 federal budget presented by President Muhammadu Buhari on Tuesday as a big fraud and executive conspiracy tailored towards mortgaging the future of the nation.
The party queried Mr. Buhari’s decision to borrow N2 trillion, the biggest in the history of the nation as the “height of recklessness and deceit from a government that trends on propaganda”.
The PDP in a statement by its National Publicity Secretary, Olisa Metuh, on Tuesday berated the Federal Government for trying to use their “bogus” welfare programme and “phantom” capital projects as cover and conduit to syphon the funds to satisfy partisan interests, particularly to settle huge campaign debts.
“It is obvious that this budget is an extension of the campaign promises of the APC government, presented as a manifesto filled with bogus promises which implementation will be inconclusive, thereby allowing the APC to once again deny their promises.
“There has never been any known economy in the world where government deliberately mortgage the future of its nation by borrowing excessively to finance partisan interests while hiding under bogus welfare programmes. This is moreso important as the APC in reeling out their bogus campaign promises never informed Nigerians that they would mortgage their future through excessive borrowing.
“We have it on good authority that this is the first in the series of APC borrowings which would leave the future generation of Nigerians under the burden of huge debts after four years,” PDP said.
The PDP also said the budget clearly showed that after seven months in power, Mr. Buhari and his party, the All Progressives Congress were yet to differentiate between governance and campaign propaganda.
“By all standards, the 2016 budget, the first major economic policy outing of this government, is completely unrealistic and duplicitously embellished with impractical predications, a development that confirms fears by economy watchers and investors that this administration is obviously ill-equipped for governance.
“We are indeed shocked that President Buhari and his minister of information have come up with two different reasons for the current fuel crisis in the country. While we appreciate the President’s apology, we think it is high time he called this minister to order as his excessive propaganda and blame game are ridiculing this administration and the image of the nation.
“Furthermore, it is instructive to note the official endorsement of Mr. President to the devaluation of the naira as against his campaign promise of firming up the value of our currency even to the much vaunted one naira to one dollar.
‘Does it mean that Mr. President lied his way to power, or that he did not understand the complexities of governance when he was making his false promises to Nigerians?
“In future, there is need to regulate campaign promises so that we will not end up with a government that promises to climb Mount Everest with bare hands and end up mortgaging our future with orchestrated borrowings.
“Finally, we want to request Mr. President to once again to involve experienced and well-tested hands in the management of the economy and budgeting processes. This economy is not for Mr. President, neither is it for the APC. The progress of the economy is for all Nigerians and as such, due care should taken to save ourselves from unrealistic and deceptive programmes,” the party said.