•Crude oil benchmark $50.5 •Production benchmark is 2.3m/day …Exchange rate is N305/$!
Bimbola Oyesola; Isaac Anumihe; Uche Usim; Adewale Sanyaolu; Chinwendu Obienyi
Economy experts yesterday advised the Federal Government to ensure that it proritises capital expenditure and back it up with sufficient liquidity if it does not want to encounter some economic backlashes that could frustrate policy objectives of the 2018 Appropriation Act.
The advice came as President Muhammadu Buhari assented to the 2018 budget after over six months it was submitted to the joint session of the National Assembly. The N9.1 trillion 2018 budget was premised on crude benchmark of $50.5 per cent per barrel, a production benchmark of 2.3 million barrels per day and an exchange rate of N305/$1.
For instance, in his reaction, Prof Uche Uwaleke, the Head of Banking and Finance at Nassarawa State University, said the delay in the budget passage was regrettable but added that the government must roll up its sleeves and immediately delve into capital projects that are vital to the economy.
His words: “Again, we’re in the rainy season and works are slow. No doubt, the delay in the budget passage will affect its implementation. But we will have to roll it over. Again it’s close to election period. Capital projects need cash backing. We never really have issues with recurrent expenditure. We must try to cover lost grounds. We need a lot of liquidity, but again, that threatens inflation. CBN then needs to monitor things very closely to create stability by also checking liquidity. It should maintain its tight monetary stand.
“We hope no serious shocks come our way both by oil price and output. It is a good thing that the government is also generating revenue via non oil means like taxes. Let us focus on power, roads, rail and other infrastructure.”
In his view, the Chief Executive Officer, Financial Derivatives Limited, Mr. Bismark Rewane, said the issue of the passage of the budget is not about throwing money around but about the absorptive capacity of the economy. ‘‘If we throw all the money in Nigeria into the economy in one month, it won’t get anywhere because the economy cannot absorb such huge inflow”, he said. He, however, advised that it was better to spend diligently rather than frittering the money away on all manner of projects that would not add value to the economy and the quality of lives of Nigerians.
Rewane said the quality of spending is as important as the quantity of spending, saying that we are now going to spend in four months what we should spend in one year because by October, preparations would have been in top gear ahead of 2019 elections. He noted that all the monies to be spent now may not achieve the desired objectives, adding that, the unintended consequences will be more than projected outcome.
For Mr Kurfi Garba, the CEO of APT Securities, capital expenditure should be given top priority because the recurrent spending is ongoing.
He stated: “Looking at the issue of the budget, the recurrent expenditure is ongoing and so whether the budget is signed or not, it does not affect it. So now that the budget has been signed, they should look at the capital expenditure which has to with roads. That should be given priority because it is an issue of serious concern. It is also common knowledge that we have a challenge with security. As for unemployment, it is really worrisome. So the earlier they look at it, the better. Now that the budget has been approved, if the issues are addressed, it will be better for everybody.”
Mr Johnson Chukwu, the CEO of Cowry Asset Management Limited, also threw his weight behind capital spending.
According to him, “the most critical thing which the government should do is to focus on implementing the capital components of the budget, particularly transport infrastructure and the works, housing and power sector. All these should attract the government’s attention in the coming months. The government, given the timeline of the budget, must ensure that budget implementation and execution of the projects start in earnest so that we can see some action before the expiration of the timeline.”
For its part, organised labour, however, lamented that the budget’s taking off almost at the end of the second quarter portends under-development for the country and its citizens.
Comrade Issa Aremu, Regional President of Industrial Global and the General Secretary of the National Union of Textile Garment and Tailoring Workers (NUTGTWN), said late budget signing simply means late development.
Though he reasoned that it was better late than never, he noted that signing the budget this late showed unseriousness on the part of government.
Aremu lamented that the unfortunate aspect of the budget was that it has no provision for the Nigerian workers.
“There is no provision at all for the new Minimum Wage. If it takes this long for the budget, when will the supplementary come”, he queries.
Aremu said that if Nigeria is to be a corporate entity, the shareholders would have sacked the board at the helms of the affair as they would be impeding the progress of the organisation.
He said, “We only hope it will be the last time we will be politicising the budget. The blame I believe should be for the National Assembly as the Executive had submitted the Appropriation Bill since November last year.
“The spirit of governance is that the two arms should work together for government to achieve the two major responsibilities of governance, which is security and welfare.”