With focus on improving on the 2016 budget, President Mohammadu Buhari takes a defining step to present the 2017 budget proposal to the joint session of the National Assembly today, against all odds. TAIYE ODEWALE looks at the highlights
President Muhammadu Buhari as requested for and approved by both chambers of the National Assembly last week, will today Wednesday 14th December 2016, presents the 2017 Budget estimates to a joint session of the federal lawmakers for approval and passage into law as an appropriation bill.
Buhari had on the 4th of October this year, in line with provisions of the Fiscal Responsibility Act, forwarded to the two chambers of the National Assembly, the 2017-2019 Medium Term Expenditure Frame work (MTEF) and Fiscal Strategic Paper (FSP), containing required assumptions and parameters upon which the budget profile estimated to be N6.9trillion would be based.
According to the President in the MTEF document, the N6.9trillion budget profile would be anchored on critical assumptions of $42.5per barrel as oil price bench mark, 2.2million per day as production level for oil and an exchange rate of N290 to a US dollar aside projecting N1.765 trillion for capital expenditure while N2.563 trillion is for recurrent (non-debt expenditure), N1.639 trillion for debt service and 3.02% GDP growth rate.
But the Senate after about seven weeks of altercation with the presidency over alleged emptiness of the document gave it a general debate and declared the basic assumptions upon which the budget estimates are to be based, as unrealistic and vowed to review them before considering the 2017 budget.
The Senate Leader, Senator Mohammed Ali Ndume (APC Borno South), had in his lead debate on the document submitted thus: “Mr. President, my distinguished Colleagues, the 2017-2019 Medium Term Expenditure Framework and Fiscal Strategy Paper provides the basis for the planning of the 2017 Budget.
“The MTEFF/FSP is a three year planning tool that defines government economic, social and development objectives and priorities Medium Term Expenditure Framework and the Fiscal Strategy Paper is the Assumptions underlying projections of oil and non-oil Revenue in 2017.
“The Medium Term Expenditure Framework and the Fiscal Strategy Paper is proposing a budget that will be predicated on an oil revenue benchmark of $42.5 per barrel for the period 2017 -2019.
“The non-oil revenue for 2017 -2019 is guided by the improved efficiency of collection and expected growth in non-oil GDP, and accordingly customs collection, Companies Income Tax, Value Added Tax and FGN Independent Revenue are non-oil sectors the government is expecting revenue from in 2017.
“The proposal also shows that the government is projecting a 3.02% GDP growth in 2017, while inflation is expected to moderate at 12 ‚92%. The GDP growth would be driven by strong performance in agriculture, wholesale and retail, construction and real estate sectors ‘ among others.
“Similarly, the GDP growth for the medium term is based on the assumptions of average oil production of 2.2mbpd‚2.3 mbpd and 2.4mbpd for 2017,2018 and 2019 respectively with average benchmark oil price of USD42.5pb,USD45pb‚ and USD50pb for 2017,2018 and 2019 respectively as well as an average exchange rate of N290 per dollar. It is also based on an average growth rate of 9.69% during the period.
“The strategies outlined in the document before you my dear colleagues are designed to reposition the Nigerian economy from the shores of recession to a sustainable inclusive growth path. The fiscal strategy for the 2017 -2019 MTEF / FSP therefore is framed to fundamentally restructure the economy for enhanced productivity, efficiency and accountability in the management of national resources with the intent of unlocking the real sector and private sector potentials for bolstering growth.
“The focus of the 2017-2019 MTEF and FSP is the utilization of targeted spending in critical sectors that will translate into quick transformative capabilities and strong linkages with medium term development plans to achieve a more developed infrastructure base to stimulate real sector productivity, job creation and increased private sector investment.
“The policy outline in the Medium Term Expenditure Framework and the Fiscal Strategy Paper are in line with the Change Agenda of this Administration. I therefore urge my colleagues to give this document a very objective analysis for the purpose of referring it to the appropriate Committee and subsequent approval”.
Accordingly , Senators including the Senate President, Bukola Saraki , in their objective analysis of the document , picked holes in its assumptions and projections and resolved to come up with more realistic ones upon which the 2017 budget estimates would be predicated.
One of the ardent critics of the assumptions cum proposals, Senator Dino Melaye (APC Kogi West) made these submissions during the debate: “Mr. President, if we speak the truth, we would die, if we lie, we would die. So I have chosen to speak the truth and die. Mr. President, just this morning the front page of one of the national dailies carried boldly an assertion from the Central Bank of Nigeria that huge debts is responsible for recession and there is no other factual factor responsible for recession than our huge debts.
“I want to say this document that I have before me, this MTEF proposal and projections of the 2017 to 2019 is a lie. This document is not truthful, is not honest, is not transparent and is not factual. In this great chamber, last year we passed the 2016 to 2018 of MTEF of three years, this chamber would want to know what happened to that MTEF and what happened to the 2017 aspect of the three years MTEF we passed last year. Now, there is a new 2017 what is responsible and what the variations are between and comparative analysis of what we received in the MTEF of last year that is meant for three years projection and what we have now. This chamber we need to know.
“We want to know the level of compliance of the MTEF we passed last year and it is for three years, 2016-2018.
What are the new amendments, Is this MTEF predicated on the loan that the executive is requesting to take. We want to know and that is not stipulated in this MTEF. We also want to know that the exchange rate of N290 per dollar is it realistic?
“Is this the truth? Governance is about the truth, is about honesty, is about transparency, and is about opening yourself to the people. Democracy will continue to be government of the people, by the people and for the people never we would allow democracy to be government of the greedy by the greedy and for the greedy. The GDP is going down and this MTEF document is telling me that it is going up. So, how do you corroborate this fraud?
“We should not be talking about deficit to GDP in realistic term we should be talking about deficit to revenue. How much of our revenue is being used in servicing our debts. You need to tell us, we need to know the percentage of our revenues being allocated to service debts and so on and so forth”.
Saraki in his own remarks to Melaye and other Senators’ objections to the parameters set for the 2017 budget as contained in the MTEF document said: “There is no doubt about the fact that these projections are not realistic. The Central Bank of Nigeria has said it is using N305 to a dollar as exchange rate. There is no doubt as well that throughout this year, we did not achieve 2.2 million barrels per day; even in time of peace (in the oil
rich Niger Delta), we have not achieved 2.5mbpd. How realistic is 2.2mbpd next year? The oil price as well looks conservative.
“Like some of our distinguished colleagues said, our responsibility is to work on it and use our capacity to do the right thing. We have our Committees on Appropriation and Finance that should not just take anything from the executive, sign it and return it (verbatim). If it means that we have to rework it, look at it again, turn it around and do what is right, then, that it our responsibility.
“Therefore our committees on Finance and Appropriations would have to give this document the needed critical review and report back to us for further consideration and possible passage and as well organize a debate on the performance of the 2016 budget”.
But as President Buhari based on the faulted parameters and projections, presents the 2017 budget estimates to a joint session of the National Assembly today, what would be the aftermath from the federal lawmakers, reworking it and creating the yearly problems between the executive and the legislature or after pressures from the presidency and other stakeholders , passed it as submitted?. Time will definitely tell.
The proposal also shows that the government is projecting a 3.02% GDP growth in 2017, while inflation is expected to moderate at 12 ‚92%
