Abuja – the President of the Federal Republic of Nigeria, President Muhammadu Buhari on Tuesday presented N6.08 trillion for the 2016 fiscal year.
Buhari who was accompanied by Vice President Yemi Osinbajo to the presentation of the 2016 budget proposal to the joint session of the National Assembly, disclosed that the N3.86 trillion resulting in a deficit of N2.2 trillion.
According to him, the deficit which is equivalent to 2.16% of the GDP, will take the country’s overall debt profile to 14% of the GDP.
The deficit financing is to be financed “by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion totaling N1.84 trillion.
On the other hand, the crude oil benchmark at $38 per barrel, is the lowest price used in recent times. It was $62 per barrel in 2011, $67 in 2012, $79 in 2013, $76 in 2014 and $53 in 2015.
To shore up its revenue amidst the astronomical drop in oil prices, the Buhari’s administration is focusing on non-oil revenues by broadening our tax base and improving the effectiveness of our revenue collecting agencies.
He also pledged massive investments in infrastructure and security with the view to support our reforms in the agriculture, solid minerals and other core job creating sectors of our economy.
“In 2016, oil related revenues are expected to contribute N820 billion. 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,” Buhari added.
Based on the sectoral allocations, Federal Ministry of Works, Power and Housing got N433.4 billion; Transport got N202.0 billion; Special Intervention Programs got N200 billion; Defence got N134.6 billion; and Interior got N53.1 billion.
Sequel to the trends in the global oil industry, the administration pegged the crude oil benchmark price at $38 per barrel and production estimate of 2.2 million barrels per day for 2016.
“Also, with the full implementation of the Treasury Single Account, we expect significant improvements in the collection and remittance of independent revenues”.
“To further support the drive for increased remittances, we will ensure that all MDAs present their budgets in advance, and remit their operating surpluses as required by section 22 of the Fiscal Responsibility Act.”
He also pledged to ensure that our resources are managed prudently and utilized solely for the public good, through the adoption of a zero based budgeting approach, which ensures that resources are aligned with Government’s priorities and allocated efficiently.
According to him, this budgeting method is expected to optimize the impact of public expenditure.
In addition to the proper linkage of budgeting to strategic planning, we are enhancing the utilization of the Government Integrated Financial Management Information Systems (GIFMIS) to improve financial management.
Buhari explained that “the recently established Efficiency Unit is working across MDAs to identify and eliminate wasteful spending, duplication and other inefficiencies. We engaged costing experts to scrutinize the 2016 budget proposals. They have already identified certain cost areas that can be centralized for economies to be made.
“We have directed the extension of the Integrated Personnel Payroll Information System (IPPIS) to all MDAs to reap its full benefits. We will also strengthen the controls over our personnel and pension costs with the imminent introduction of the Continuous Audit Process (CAP).
“These initiatives will ensure personnel costs are reduced. Our commitment to a lean and cost effective government remains a priority, and the initiatives we are introducing will signal a fundamental change in how Government spends public revenue.”
On employment generation, Buhari unveiled plans to grow small businesses and provide opportunities for entrepreneurs as well as partner with State and Local Governments through provision of financial training and loans to market women, traders and artisans, through their cooperative societies.
“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,” he added.
In the education sector, as an emergency measure to address the chronic shortage of teachers in public schools across the country, Buhari pledged Federal Government’s resolve to partner with State and Local Governments to recruit, train and deploy 500,000 unemployed graduates and NCE holders.
“Furthermore, through the office of the Vice President, we are working with various development partners to design an implementable and transparent conditional cash transfer program for the poorest and most vulnerable.
This program will be implemented in phases. Already, the compilation of registers of the poorest persons is ongoing. In the coming weeks, we will present the full programme, which will include our home-grown public primary school feeding and free education for science, technology and education students in our tertiary institutions. Indeed, this will mark a historic milestone for us as a nation,” Buhari said.
Buhari who acknowledged the sorry state of the nation’s economy, owing to the astronomical slide in the oil price from $112 per barrel as at June 2014 to $39 per barrel, argued that the prevailing socio-economic challenges has been further worsened by the unbridled corruption and security challenges experienced in the last few years.
Other challenges include decline in consumption at all levels, unpaid salaries in both public and private sectors, while small business owners and traders have been particularly hard hit by this state of affairs.
Some of the decisions taken by the new administration include: injection of new leadership at the helm of our revenue generating agencies including the Federal Inland Revenue Service (FIRS), Nigerian National Petroleum Corporation (NNPC), Nigerian Communications Commission (NCC), and the Nigerian Customs Service (NCS) as well as implementation of the Treasury Single Account (TSA) which, so far, has provided greater visibility of Government revenues and cash flows.
The present administration also provided intervention funds to support States to navigate their fiscal challenges by restructuring their commercial bank loans and by providing facilities to enable them to pay salary arrears.
Buhari who reiterated commitment to the ongoing fight against corruption, noted that “sheer scale of corruption and impunity of the past explains in part, the economic challenges we now face.
“On these initiatives, and the many more to come, we shall not be deterred. We will pursue the recovery of everything that belongs to the people of Nigeria. No matter where it is hidden. No matter how long it will take.”
