Buhari Presents N7.3tn 2017 Budget To National Assembly, Debt Servicing N1.66tn
The Federal Government has proposed a budget of N7.29tn for the 2017 fiscal year, with the primary goal of pulling the country’s economy out of recession and placing it on the path of growth.
President Muhammadu Buhari presented the estimates to a joint session of the National Assembly in Abuja on Wednesday in a speech lasting roughly 51 minutes.Labelled: ‘Budget of economic recovery and growth’, it is 20 per cent higher than the N6.06tn budgeted for 2016.
Its total capital component of N2.24tn is higher than that of 2016 by 30.7 per cent, a projection Buhari said was made to spend more on infrastructure, solid minerals development, agriculture and provide support for local manufacturing firms to speed up growth.
Spending on recurrent expenditure is put at N2.98tn.
Although, the anticipated revenue of N4.9tn for 2017 is higher by 28 per cent than that of the current year, it has a deficit of N2.36tn, representing 2.18 per cent of the Gross Domestic Product.
The President told lawmakers that the deficit would be financed through a projected borrowing of N2.32tn, broken into N1.06tn from external sources and N1.25tn from domestic creditors. However, the debts will be serviced with N1.66tn.
A breakdown of the N4.9tn revenue shows that N1.98tn will come from crude oil sales, while the non-oil sector is expected to generate N1.33tn.
The government projected N807bn to come from independent revenues; recoveries, N565bn; and other sources, N210.9bn.
Like it did in 2016, the government retained 2.2 million barrels as the daily oil production output in spite of the bombing of oil installations in the Niger Delta by militants.
Buhari said he expected that ongoing negotiations between the government and the militants would reduce militancy in the region and improve oil production next year.
The government also laid another bait for the militants by increasing the funding of the Presidential Amnesty Programme to N65bn in 2017.
The crude oil benchmark price was raised to $42.5 per barrel from the $38 that was budgeted in 2016, while the exchange rate was set at N305 to $1.
Buhari said, “Based on these assumptions, the aggregate revenue available to fund the federal budget is N4.94tn. This is 28 per cent higher than the 2016 full-year projections. Oil is projected to contribute N1.985tn of this amount.
“Non-oil revenues, largely comprising Companies’ Income Tax, Value Added Tax, Customs and Excise Duties and Federation Account levies are estimated to contribute N1.373tn. We have set a more realistic projection of N807.57bn for independent revenues, while we have projected receipts of N565.1bn from various recoveries. Other revenue sources, including mining, amount to N210.9bn.
“With regard to expenditure, we have proposed a budget size of N7.298tn, which is a nominal 20.4 per cent increase over the 2016 estimates; 30.7 per cent of this expenditure will be capital in line with our determination to reflate and pull the economy out of recession as quickly as possible.”
As part of the government’s plan to expand infrastructure, the Ministry of Power, Works and Housing has a capital allocation of N529bn, while Transportation is to be given N262bn.
The Ministry of Defence has a combined total capital and recurrent vote of N465bn; Interior, N545bn; Education (excluding basic education), N448bn; Health, N303bn; and Judiciary, N100bn (up from N70bn in 2016).
The President acknowledged that Nigerians were indeed facing hardship due to the downturn in the economy.
He, however, stated that the hardship presented an opportunity for the country to rise to greatness and challenge the creativity and the ability of the citizenry to re-grow the economy.
The President said, “We continue to face the most challenging economic situation in the history of our nation. Nearly every home and nearly every business in Nigeria is affected one way or the other. Yet, I remain convinced that this is also a time of great opportunity. We have reached a stage when the creativity, talent and resilience of the Nigerian people are being rewarded.
“Those courageous and patriotic men and women who believed in Nigeria are now seeing the benefits gradually come to fruition.”
As part of measures for recovery, the President said Nigerians must consume locally-produced goods and patronise ‘made in Nigeria’ services to re-tool the economy.
Buhari, “By this simple principle, we will increasingly grow and process our own food, we will manufacture what we can and refine our own petroleum products. We will buy ‘Made in Nigeria’ goods. We will encourage garment manufacturing and Nigerian designers, tailors and fashion retailers. We will patronise local entrepreneurs.
“We will promote the manufacturing powerhouses in Aba, Calabar, Kaduna, Kano, Lagos, Nnewi, Onitsha and Ota. From light manufacturing to cement production and petrochemicals, our objective is to make Nigeria a new manufacturing hub.”
Buhari also said his economy recovery agenda would include a reform of oil and gas production in such a way that the country would minimise waste.
He disclosed that one major policy coming into effect from January would be to stop direct funding of Joint Venture operations.
He noted, “In addition, we will continue our ongoing reforms to enhance the efficiency of the management of our oil and gas resources.
“To this effect, from January 2017, the Federal Government will no longer make provision for Joint Venture cash calls. Going forward, all Joint Venture operations shall be subjected to a new funding mechanism, which will allow for cost recovery.
“This new funding arrangement is expected to boost exploration and production activities, with the resultant net positive impact on government revenues, which can be allocated to infrastructure, agriculture, solid minerals and manufacturing sectors.”