Buhari apologises for fuel scarcity •Cash transfer for poor Nigerians
Oil benchmark is $38 per barrel •Petrol price N87 ‘for now’
Total budget – N6.08 tr •No provision for fuel subsidy
Capital budget is N1.8tr •To restructure oil and gas sector
Revenue projection – N3.86 tr •Meals for primary school pupils
Deficit – N2.22 tr •Free Education for Science/Tech students
SECTORAL ALLOCATIONS
Health – N221.7b •Transport – N202.0b
Defence – N134.6b •Interior – N53.1b
Works, Power and Housing – N433.4b
Special Intervention Programmes – N200b
Labour/Employment –N500b
Education- N369.6b
The employment of 500,000 people as teachers is the highlight of the N6.08 trillion budget estimates for next year presented yesterday to the National Assembly by President Muhammadu Buhari.
The proposal, the first by the Buhari administration, seeks to stimulate the economy, making it more competitive by focusing on infrastructural development, delivering inclusive growth and prioritising the welfare of Nigerians.
It is, according to the President, designed to ensure that “we revive our economy, deliver inclusive growth to Nigerians and create a significant number of jobs”.
The budget proposal, while helping industry, commerce and investment to pick up, will urgently address youth unemployment and the terrible living conditions of the extremely poor and vulnerable, Buhari said.
The government aims to ensure macroeconomic stability by achieving a real GDP growth rate of 4.37% and managing inflation.
To achieve this, Buhari said, fiscal, monetary, trade and industrial policies will be aligned.
He said: “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 subsidised 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 said that they also intend to partner with State and Local Governments to provide financial training and loans to market women, traders and artisans, through their cooperative societies.
The belief is 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”.
Buhari noted that through the office of the Vice President, the government was working with various development partners to design an implementable and transparent conditional cash transfer programme for the poorest and most vulnerable.
“This programme 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,” he assured.
Buhari noted that after reviewing the trends in the global oil industry, the government set a benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day for 2016.
The government, he said, has focused on non-oil revenues by broadening the country’s tax base and improving the effectiveness of the revenue collecting agencies.
He said that with the full implementation of the Treasury Single Account (TSA), “we expect significant improvements in the collection and remittance of independent revenues”.
To further support the drive for increased remittances, the President said that his government would ensure that all MDAs present their budgets in advance, and remit their operating surpluses as required by Section 22 of the Fiscal Responsibility Act.
On the fight against corruption, Buhari said: “We have demonstrated a strong will to fight corruption. I am sure you will agree that the 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.”
Buhari said his administration was determined to ensure that the country’s resources are managed prudently and utilized solely for the public good.
“To set the proper tone, one of our early decisions was the adoption of a zero based budgeting approach, which ensures that resources are aligned with government’s priorities and allocated efficiently.
“This budgeting method, a clear departure from previous budgeting activities, will optimise the impact of public expenditure,” he said.
The President noted that 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”.
“The recently established Efficiency Unit is working across MDAs to identify and eliminate wasteful spending, duplication and other inefficiencies. We engaged costing experts to scrutinise the 2016 budget proposals. They have already identified certain cost areas that can be centralised for economies to be made.”
The President said he had directed the extension of the Integrated Personnel Payroll Information System (IPPIS) to all MDAs to reap its full benefits.
He said: “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.”
Giving details of the budget, Buhari said the N6.08 trillion budget was a revenue projection of N3.86 trillion, resulting in a deficit of N2.22 trillion.
He said: “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 , totalling 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.
“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.
“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 litre for now.”
The President blamed fuel scarcity on market speculators and resistance to change by some stakeholders.
He said: “The current fuel scarcity with long queues at petrol stations all over the country causing social dislocation is very unfortunate.
“Government profoundly apologises 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.”
Buhari, who said he had directed the NNPC to explore alternate funding models that will enable the country to honour its obligations in Joint Ventures (JVs) and deep offshore fields, added: “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 the country’s development objectives, capital expenditure has been raised from N557 billion in the 2015 budget to N1.8 trillion.
Buhari said 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.”
The project for capital expenditure, he said, is “a fulfillment of our promise to align expenditure to our long-term objectives, and a sign of government’s commitment to sustainable development.”
He added: “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 Programmes – 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.”
The President said his administration want to invest to safeguard lives and property as well as invest in equipping farmers with the right tools, technology and techniques and invest in empowering and enabling miners to operate in a safe, secure and humane environment.
Insisting that “indeed, the future looks bright”, the President asked that “we all work together to make this vision a reality”.
He noted that the 223% year on year growth in capital expenditure demonstrates our desire to make Nigeria more competitive, and start the journey to deliver sustainable development.
He said: “In fulfillment of our promise to run a lean government, we have proposed a 9% reduction in non-debt recurrent expenditure, from N2.59 trillion in the 2015 Budget to N2.35 trillion in 2016. Furthermore, we have budgeted N300 billion for Special Intervention Programmes, which takes the total amount for non-debt recurrent expenditure to N2.65 trillion.”
The President noted that “the Efficiency Unit set up by this administration together with effective implementation of GIFMIS and IPPIS will drive a reduction of overheads by at least 7%, personnel costs by 8% and other service wide votes by 19% while saying that “this budget will be executed to provide optimum value by ensuring every naira spent by this Government, counts”.
The government, he said, “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, policemen, fire fighters, prison service officers and many more critical service providers are paid competitively and on time.”
He also said borrowings would be principally directed to funding the capital projects and that 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,” he said
On scarcity of foreign exchange, 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.”
Buhari said the exchange rate regime was being carefully assesses, keeping in mind the country’s willingness to attract foreign investors but at the same time, managing and controlling inflation to a level that will not harm the average Nigerians.
He added: “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.
“So, to the investors, business owners and industrialists, we are aware of your pains. To the farmers, traders and entrepreneurs, we also hear you. The status quo cannot continue. The rent seeking will stop. The artificial current demand will end. Our monetary, fiscal and social development policies are aligned.”
The President concluded that in spite of the global economic uncertainties, “we must remain steadfast in our commitment to steer this country back to greatness”.
Buhari said: “The Nigerian economy needs to move away from dependency on oil. Our growth must be inclusive. Nigerians must be part of the growth story. As a government, we shall deliver security, jobs and infrastructure. This is the right of all Nigerians.
“I know many people will say ‘I have heard this before’. Indeed, trust in government, due to the abuse and negligence of the past, is at an all-time low.
“This means we must go back to basics. Our actions will speak for us. My team of dedicated, committed and patriotic Nigerians is well aware of the task ahead and I can assure you that we are taking on the challenge.”
The President reiterated his promise that “we will not betray the trust reposed in us”, adding: “We will welcome and be responsive to your feedback and criticisms.
He said “We are here to serve. And, indeed, Nigerians will get the service they have longed for and which they rightly deserve.
“We as a government cannot do it alone. We will require the support of all civil servants, the organised labour, industry groups, the press , of course, our religious and traditional institutions. This is a call for all of us to stand and serve our country.
“This Budget represents a major step in delivering a new opportunity for Nigeria. It demonstrates our confident optimism that despite the challenging times, we have the will, resourcefulness and commitment to deliver prosperity to our people. And by the Grace of Almighty God and the sheer will and determination of the Nigerian people, we will come out stronger and more united than ever.”
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