The Federal Government’s
Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) have projected a budget of N4.74 trillion for 2015.
According to a document obtained from the Ministry of Finance, the medium-term paper covers from 2014 to 2016.
The document provided the basis for annual budget planning that indicates fiscal targets, estimates, revenue and expenditure, as well as government’s financial obligation in the medium term.
The document, prepared by the Ministry of Finance also sets out the underlying assumptions for these projections, provides an evaluation and analysis of the previous budget and presents an overview of consolidated debt and potential fiscal risks.
It also provides a number of important outcomes, including the macroeconomic outlook; fiscal balance; and other key indicators.
The projection fulfills a requirement of Section 11 of the Fiscal Responsibility Act 2007 which stipulate that the minister of finance shall prepare the MTEF and FSP and get them approved by the Federal Executive Council and the National Assembly.
An analysis of the document shows that the N4.74bn projected expenditure for 2015 represents an increase of N500m over the N4.69tn signed by President Goodluck Jonathan for the current fiscal year.
The Senate had on April 9 passed the 2014 budget raising the amount in the fiscal document from the N4.642tn submitted by the President to the National Assembly on December 19, 2013 to N4.695tn.
A breakdown of the expenditure for 2015 according to the MTEF shows that the sum of N2.48tn will go for recurrent expenditure (non debt) while N1.35tn is for capital expenditure.
According to the document, the share of capital expenditure to total spending is projected at 30.98 per cent while the portion for recurrent expenditure to the total budget is put at 69.02 per cent.
The document further stated that the sum of N409.2bn had been projected for statutory transfers while debt servicing is expected to gulp N684bn.
A further breakdown of the recurrent expenditure (non debt) shows that personnel cost will gulp N1.77tn while overheads, pensions and other service wide votes are expected to gulp N240bn, N153.23bn and N316.8bn, respectively.
On expected revenue for the 2015 fiscal year, the documents are projecting an oil production of 2.5 million barrel per day with an oil benchmark price of $75 per barrel.
It is also projecting a collection of N1.06trn as company income tax and N876bn from Value Added Tax.
It said, “The 2014-2016 MTEF and FSP are underpinned by heightened global economic uncertainty.
“Added to these global challenges is the potential impact of the increasing exploitation of shale oil and gas by major oil importers, the rising oil output by hitherto oil importing countries; and the challenges of oil theft, pipeline vandalism and production shut-ins at our oil mining locations and reduced non-oil revenue.
“These are the realities that informed the crafting of the 2014-2016 Medium-Term Fiscal Framework and the Fiscal Strategy Paper, with optimism of success in tackling the challenges causing the revenue loss.”
According to the document, while government remains focused on achieving its key development agenda through spending on priority sectors, the potential drop in revenues will temporarily set back the share of capital expenditure.
“Our strategy, however, is to continue to improve on the efficiency of capital expenditures. Though the wage bill, in particular, cannot be cut overnight, government is expediting action towards the total
Nigeria’s Revenue-To-GDP Ratio Lowest, Private Sector Choking – World Bank
Nigeria’s revenue-to-Gross Domestic Product ratio, which fell to between five and six per cent last year, is the lowest in the world, the World Bank said on Monday.
The Country Director for Nigeria, World Bank, Dr Shubham Chaudhuri, said this during a panel session at a virtual public sector seminar with the theme ‘Nigeria in challenging times: imperatives for a cohesive national development agenda’ organised by the Lagos Business School.
Chaudhuri, who stressed the need for private investment for the country to realise its potential, said the private sector in the country ‘is struggling to breathe’.
“In Nigeria, I think the basic economic agenda is about diversification away from oil because oil has really been like resource curse for Nigeria on multiple dimensions,” he said.
He noted the aspiration of the President, Major General Muhammadu Buhari (retd.), to lift 100 million Nigerians out of poverty by the end of the decade.
He said, “Nigeria is a country with tremendous potential. If you look at the synopsis for this panel, it suggests that Nigeria is at a critical juncture – almost at the moment of crisis.
“Despite all of that, Nigeria is still the largest economy in Africa. So, just think about the potential that Nigeria has because of its natural resources, but more than that, because of its dynamism and all of its population. Nigerians are more entrepreneurial by nature.
“No country has become prosperous and realised its potential, eliminated poverty without doing two simple things: investing in its people, and unleashing the power of the private sector in creating jobs by investing and growing business. And then, of course, the basic function of the state is to provide security and law and order.”
According to Chaudhuri, to invest in people entails basic services, basic education, primary healthcare and nutrition, among others.
He said, “On this, Nigeria at the moment ranks sixth from the bottom in terms of the human capital index that we produce every year.
“So, obviously, there is a huge agenda in terms of investing in human capital. Nigeria spends more on PMS (premium motor spirit) subsidy than it does on primary healthcare in a year, and we know who the PMS subsidy is benefitting.”
He indicated that despite the country’s huge potential to attract private capital, the non-oil part of the economy ‘is not growing that robustly and certainly not generating revenues that the government needs’.
Chaudhuri said, “So, we see as priorities investments in human capital. But for that, one needs revenues. And there again, Nigeria unfortunately has the distinction of having about the lowest revenue-to-GDP ratio in the world.
”The standard rule of thumb is that for government to provide the basic services and law and order, it needs between 15 to 20 per cent of GDP as being revenue, and this will be both at the federal and state levels combined.
“In Nigeria, it was eight per cent in 2019. In 2020, in the middle of the Covid-19 crisis and with the fall in oil prices, that went down to about between five and six per cent.
“So, domestic revenue mobilisation is huge. And then the third is enabling the space for private investment. You have to fix the power problem. Power is like the oxygen of an economy. In Nigeria, the private sector is struggling to breathe.”
CBN Stops Sale Of Forex To BDCs
The Central Bank of Nigeria (CBN) as announced immediate discontinuation of sale of Foreign Exchange (forex) to Bureau de Change (BDC) operators in the country.
Mr Godwin Emefiele, the CBN Governor , made this announcement yesterday, while presenting a communique from the apex bank’s Monetary Policy Committee (MPC) meeting in Abuja.
Emefiele said that the decision was informed by the unwholesome business practices of the BDCs, which he said had continued to put enormous pressure on the Naira.
He said , henceforth, the apex bank would sell forex to deserving Nigerians through the commercial banks.
“ The BDCs were regulated to sell a maximum of 5000 dollars per day, but CBN observed that they have since been flouting that regulation and selling millions of dollars per day.
“The CBN also observed that the BDCs aid illicit financial flows and other financial crimes. The bank has thus, decided to discontinue the sale of forex to the BDCs with immediate effect.
“We shall, henceforth, channel all forex allocation through the commercial banks,” he said.
He urged the commercial banks to ensure that every deserving customer got their forex demand, adding that any bank found circumventing the new system would be sanctioned.
“Once a customer presents all required documentation to purchase forex, the commercial banks should ensure they get the forex.
“Any customer that is denied should contact the CBN on 0700385526 or through the email- email@example.com “ he said.
The Tide source reports that stakeholders have been calling on the CBN and its MPC to take urgent steps to halt unending depreciation of the Naira.
Recently, a past President of the Chartered Institute of Bankers of Nigeria (CIBN), Mr Okechukwu Unegbu, urged the MPC to focus on policy decisions that would curb rising inflation and stabilise the Naira.
RSG To Privatise Songhai, Fish Farms
There are strong indications that the Rivers State Government has concluded plans to privatise the moribund Songhai Farm in Tai and Fish Farm in Buguma.
The State Chairman of the Peoples Democratic Party (PDP), Amb. Desmond Akawor, gave this indication while appearing in a phone-in radio programme organised by Silverbird Communications in Port Harcourt at the weekend.
He explained that the previous administration in the state failed to put in place a sustainability programme for these farms, hence they went moribund.
In order to reverse the situation, he said that the present administration was now contemplating a rehabilitation scheme to be driven by a privatisation policy to enable those investments come on stream.
He said the scheme had reached an advanced stage and is to executed by the State Ministry of Agriculture.
On the issue of job creation, Akawor said the administration of Chief Nyesom Wike was using the various construction projects around the state to empower the youths.
He explained that the government had floated a special scholarship scheme in Law and Medical Sciences to create opportunities for young people in various professions.
He called on the opposition to desist from de-marketing the state through propaganda as it’s capable of scaring investors away from the state.
Akawor insisted that the Wike led administration has provided an enabling environment for businesses to thrive through infrastructure and improved security.
By: Kevin Nengia
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