The 2016 ‘Budget of Change’ passed into law in May, was the first full year budget of the President Muhammadu Buhari’s administration. It was prepared against the background of general slowdown in global economic growth and massive decline in crude oil prices.
The implementation of the Budget was, however, hampered by the combination of relatively low oil prices and disruptions in crude oil production which led to significant shortfalls in projected revenue. This contributed to the economic slow-down that negatively affected revenue collections by the Federal Inland Revenue Service and the Nigerian Customs Service.
It was against the backdrop of slow economic growth that the Federal Government prepared the proposed 2017 Budget of N7.30 trillion. The budget, tagged “Budget of Recovery and Growth”, was higher than the N6.08 trillion appropriated in 2016 by about 19.95 per cent.
Buhari, while presenting the budget to the National Assembly, said that government’s priorities in 2017 would be the continuation of 2016 plans. The President said that the budget would be the continuation of 2016 plans but adjusted to reflect new additions made in the Economic Recovery and Growth Plan.
“In order to restore growth, a key objective of the Federal Government will be to bring about stability and greater coherence between monetary, fiscal and trade policies while guaranteeing security for all.
“The effort to diversify the economy and create jobs will continue with emphasis on agriculture, manufacturing, solid minerals and services. Mid- and down-stream oil and gas sectors are also key priority areas.
“We will prioritise investments in human capital development, especially in education and health, as well as wider social inclusion through job creation, public works and social investments,” the President said.
President Buhari also said that the plans also recognised that success in building a dynamic, competitive economy depended on construction of high quality national infrastructure.
The Minister of Budget and National Planning, Sen. Udoma Udo Udoma at the breakdown of the budget, said the government had developed a Medium Term Plan to implement the budget.
Udoma said that a Medium Term Nigerian Economic Recovery and Growth Plan (NERGP 2017 – 2019) was being finalised, which addressed the current economic challenges and was aimed at restoring growth.
“The plan builds on the existing Strategic Implementation Plan (SIP), and contains objectives and enablers required to revive the economy.
“The objectives of the NERGP are pulling the economy out of recession, investing in the people, laying the foundation of diversified, inclusive and sustainable growth.
“The 2017 Budget Proposal reflects many of the reforms and initiatives in the SIP and NERGP and in the 2017-2019 Medium Term Fiscal Framework,’’ he said.
Giving the estimates of the budget, Udoma said that the government expected N4.94 trillion as revenue in 2017 with N1.98 trillion coming from oil sector and N1.37 trillion from non-oil sector.
A breakdown of the recurrent (non-debt) expenditure showed that personnel cost was allocated N1.86 trillion; overhead N229.81 billion; Amnesty Programme N65 billion and refund to special account of N50 billion.
The four ministries with the largest recurrent allocations are Interior (N482.37 billion); Education (N398.01 billion); Defence (N325.87 billion); and Health (N252.86 billion) being about 70 per cent of the total, due to their large personnel.
On capital allocation, he said it had 30 per cent of the budget with more than half of it (56 per cent) going to infrastructure development to stimulate economic recovery and growth.
Accordingly, Power, Works and Housing were allocated N229 billion; Transportation got N262 billion; Special Intervention programme got N150 billion; Defence N140 billion and Water Resources N85 billion.
Others are Industry, Trade and Investment (N81 billion); Interior (N63 billion); Education (50 billion); Universal Basic Education Commission (N92 billion) and Health (N51 billion) while Information and Culture got N41 billion as recurrent and N8.3 billion as capital.
The FCT got allocation of N37 billion; Agriculture got N91 billion; Niger Delta Ministry got N33 billion while the Niger Delta Development Commission (NDDC) had N61 billion.
In addition, Udoma said the Federal Government earmarked N185 billion in the budget for new initiatives.
The initiatives, he identified as the Social Housing Programme; Special Economic Zone Projects; Export-Expansion Grant; and Recapitalisation of the Bank of Industry.
“Some of the initiatives are the provision of N100 billion for new Social Housing Programme with the aim of creating a one trillion naira fund. The government contribution is N900 billion.
“Fifty billion Naira for Special Economic Zone Projects. The Minister of Investment has indicated that what is actually required is about N200 billion. So, the rest will come from the private sector.
“It is going to be Public Private Partnership (PPP); we are going to partner with private sector to get them to contribute toward building these Special Economic Zone Projects.
“Our aim to stimulate export has led us to the revival of the EEG (Export-Expansion Grant). This time in form of the tax credit and we voted N20 billion for that.
“Also, we intend to recapitalise Bank of Industry and Bank of Agriculture and we voted N15 billion for that,’’ the minister said, adding that the new initiative would support economic diversification and inclusive in the government’s growth- drive.
Meanwhile, Prof. Sarah Anyanwu said the Federal Government’s N7.30 trillion budget proposal for 2017 was achievable with a lot of public works and investment in the infrastructure to stimulate the economy.
Anyanwu, the Head of Economics Department, University of Abuja, said the budget would also be realistic with increased focus on the non-oil sector.
She said that the Federal Government needed to execute a lot of manufacturing activities that would boost the economy to make the budget a reality. The don, however, expressed mixed feelings on the benchmarks in the budget.
“The key assumptions for the budget which are exchange rate of N305 per dollar, inflation 15.74 and oil price 42.5 dollar per barrel may not march with the economic reality. I don’t know the kind of rocket science we are going to perform because as of now, dollar at parallel market is almost N500; November inflation rate was 18.48 per cent,’’ she said.
Anyanwu, however, advised the Federal Government and National Assembly to learn from the controversies that surrounded the passage of the 2016 budget and ensure timely passage of the current one.
Similarly, another university don, Prof. Uche Uwaleke, expressed optimism that the 2017 budget, when passed into law, would engender economic recovery for the nation.
Uwaleke, the Head, Department of Banking and Finance, Nasarawa State University, Keffi, said the 2017 budget was a good document capable of bringing about signs of economic recovery, if well implemented.
“Unlike the 2016 budget which was mired in controversies, the 2017 budget estimates, in my view, are anchored on realistic assumptions and benchmarks,’’ he said.
Uwaleke, however, said that the real challenge, as is the case with the 2016 revenue projection, remained the attainment of the 2.2 million barrels per daily oil output.
Similarly, an economist, Dr Aminu Usman, said the budget was achievable if the government could resolve the challenge of pipeline vandalism in the Niger Delta.
Usman, a lecturer at the Department of Economics, Kaduna State University, said that the crisis in the region might affect the budget implementation.
“How would the government achieve the 2.2 million per barrel, with the Niger Delta crisis not yet resolved?
“I think it is too open, considering the fact that the major source of funding the budget will come from oil export,’’ he said.
Nevertheless, the Director-General of Budget Office, Mr Ben Akabueze, expressed optimism that the Federal Government would ensure full implementation of the budget.
Akabueze said over N250 billion of recovered looted funds from corrupt officers was projected to be part of the sources expected to finance the 2017 proposed budget.
The official said that N72 billion of the money had already been recovered.
“We are projecting N258.6 billion looted funds to be part of the revenue to finance 2017 budget.
“Also to be included in budget financing is 320 million dollars, which is N97.6 billion recovered Abacha loots expected from the Swiss government.
“The balance of N90 billion will be from other expected recovery of loots which is now at advanced stages.
Ologunagba writes for News Agency of Nigeria (NAN).