By FRED ITUA, Abuja
Budget presentations in Nigeria, are like rituals. Every year, the president lays a budget before a joint session of the National Assembly. At the state level, the governor performs a similar function. Local Government chairmen are not exempted from the exercise. For many of them, budget presentations are seen as part of achievements by the executive arm of government.
The presentation and eventual passage of the 2016 budget almost destroyed the fragile relationship which hitherto existed between the presidency and the legislature, over claims that lawmakers padded the budget. The controversy, which trailed the budget, led to its delay before it was eventually reluctantly passed in April this year.
The presentation of the 2017 budget, like the ones before it, did not come without the usual drama and razzmatazz. The drama kicked off with the rejection of President Muhammadu Buhari’s 2016-2018 External Borrowing Rolling Plan request, the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) by the Senate.
Lawmakers who spoke in November during the reconsideration of MTEF and FSP, said the economic team of the President was in disarray. The Senators discredited the document and described it as shallow and empty. They warned that if the document was passed, it would create room for the executive to present a faulty 2017 national budget.
One of President Buhari’s strongest allies in the Senate, Senator Ahmad Lawan, spoke against it. He noted then that the oil production target of 2.2 million barrels per day was unrealistic. He also faulted the inability of President Buhari to resolve the crisis in the Niger Delta region.
Senator Lawan said: “The benchmark is realistic. But I have my reservation about the production level. We need to bring in more efforts to bring reconciliation between the government and people of the Niger Delta. This in my opinion will be the only way through which the government can achieve the 2.2 million barrels of oil per day.
“I also have reservations on the N290 to a dollar exchange rate. I am a practical person. The current exchange rate is more than N300. The black market rate is more than N400. How can we then budget N290? Let us be realistic. This exchange rate cannot work. We must be careful not to produce a document that will not work.”
Senator Dino Melaye, who was more critical, urged his colleagues to reject the proposals. He described the document as false and riddled with falsehoods. He said there was no significant difference between what was passed last year and what has been presented to the National Assembly this year.
Melaye thundered: “If we speak the truth, we will die, if we lie, we will die. I have decided to speak the truth and die. Yesterday, the government said the huge debt is responsible for the current recession. This document is a lie. This document is not truthful, transparent, factual and real. This time last year, we passed an MTEF for three years.
“What happened to the MTEF? What is the difference between what we got last year and what we have now. We want to know the level of compliance of what we got last year. We need to be furnished. These things are not stipulated in the MTEF.
“The proposed rate of exchange rate, is it true? Democracy is about transparency and sincerity. The GDP is going down and this MTEF document is telling me that it is going up? How do you collaborate this fraud? We need to know what percentage of our revenues you will use in servicing our debts.
“Recently, our Minister of Budget and National Planning showcased his ignorance by telling the whole world that he did not know the current debt profile of the country. This document should go back to where it came from. A reasonable document which will meet up with the yearnings of Nigerians should be presented. As it stands now, we cannot take it.”
In his contribution, Senator Gbenga Ashafa said the documents were unrealistic. He said: “We are either to accept or make necessary amendments to what has been presented. We can criticise, but we need to work with what we have. We have looked at the unrealistic projections made. One critical issue I want to raise is the estimated projected earnings of the government. It has a significant shortfall.
“My observation is that those saddled with the responsibility of preparing this document should come up with the list of debts we are owing. We need to know the terms and conditions upon which we will pay back. We need to ensure that we secure a better future for Nigeria and Nigerians.”
Senator Emmanuel Paulker aligned himself with other previous speakers. He noted: “Looking at some of the parameters, it is glaring that you cannot comprehend the truth behind these assumptions. The CBN Governor said the unemployment rate is high. The current inflation rate is 18.9 per cent, but this document is misleading us by saying that the inflation rate is 4.6 per cent. I will not suggest that this document be returned, but we must admit that it was poorly prepared.”
Senator Sani Yerima from Zamfara State opposed his colleagues and insisted that the documents were not empty. He said those uncomfortable with the documents should make their inputs.
He said: “To say that this document is empty means that those saying it have not read it. What we need to do is to look at what is projected. These things were not done from the blues. You cannot just sit here and say that this document is empty. As an economist, I suggest that we pass this MTEF. Whoever has any issues can then make inputs.”
Senator Bayaro Nafada from Gombe State countered Yerima. He noted: “I have looked at this document. The essence of this document is to prepare the budget. If we do not get this correctly, it is possible that we will not get the budget of 2017 correctly. If we point out areas where there are issues, we are not attacking the government. We are only assisting them.
“Yesterday, the CBN Governor said the official exchange rate is N305 to a dollar. But they are sending us N290 to a dollar. This is unrealistic. Even the projected oil production per day is unrealistic.”
Senator Jibrin Barau said: “The MTEF is a proposal. It is not sacrosanct. I want to say that we look at the document, make necessary adjustments and pass it. If you look at the assumptions in this document, you will see that everything is wrong.”
Senator Samuel Anyanwu observed: “This MTEF is unrealistic. The inaccuracies are too enormous. Those who formulated this document are not transparent. For me, there is no document before us. There is trouble in the Niger Delta and oil production is low. What they are projecting will not work.”
Contrary to the provisions of the constitution, the National Assembly, last Wednesday, accepted Buhari’s budget proposal, without first passing MTEF and FSP. Again, lawmakers, despite contravening provisions of the law, also failed to pass the MTEF and FSP before embarking on its Christmas and New Year break.
Away from lawmakers’ endless drama, President Buhari’s N7.298 trillion budget is considered too ambitious, judging by the dwindling revenues of government and the drastic fall in the price of crude oil at the international market.
But Buhari, during the presentation, said as part of plans to get the country out of recession, the Federal Government decided to devote more resources to some critical sectors of the economy. Like in the 2016 budget where Works, Housing and Power got N433.4billion, the same Ministry in the 2017 budget, received a proposal of N529 billion.
Ministry of Transport got N262 billion. In the 2016 budget, the same ministry got N202 billion. Buhari revealed that the judiciary budget has been increased from N70 billion to N100 billion. He said the increase in funding is further meant to enhance the independence of the judiciary and enable them to perform their functions effectively.
On recurrent, N482.37 billion will be spent by the Ministry of Interior, N398.01 billion by Ministry of Education, N325.87 billion by the Ministry of Defence and N252.87 billion by Ministry of Health. Special Intervention Programmes will gulp N150 billion, while Defence will get N140 billion for capital expenditure.
Water Resources will get N85 billion, Industry, Trade and Investment will get N81 billion. Similarly, Interior will get N63 billion for capital expenditure and Education will get N50 billion.
Universal Basic Education will get N92 billion, while Health gets N51 billion. The Federal Capital Territory will receive N37 billion, while Niger Delta Ministry will get N33 billion. Niger Delta Development Commission on the other hand gets N61 billion.
About N100 billion has been provided in the Special Intervention programme as seed money into the N1 trillion Family Homes Fund that which the President said would underpin a new social housing programme.
The president noted: “This substantial expenditure is expected to stimulate construction activity throughout the country. Efforts to fast-track the modernisation of our railway system will receive further boost through the allocation of N213.14 billion as counterpart funding for the Lagos-Kano, Calabar-Lagos, Ajaokuta-Itakpe-Warri railway, and Kaduna-Abuja railway projects. As I mentioned earlier, in 2016, we invested a lot of time ensuring the paper work is done properly while negotiating the best deal for Nigeria. I must admit this took longer than expected but I am optimistic that these projects will commence in 2017 for all to see.
“Agriculture remains at the heart of our efforts to diversify the economy and the proposed allocation to the sector this year is at a historic high of N92 billion. This sum will complement the existing efforts by the Federal Ministry of Agriculture and CBN to boost agricultural productivity through increased intervention funding at single digit interest rate under the Anchor Borrowers Programme, commercial agricultural credit scheme and The Nigeria Incentive-Based Risk-Sharing System for Agricultural Lending. Accordingly, our agricultural policy will focus on the integrated development of the agricultural sector by facilitating access to inputs, improving market access, providing equipment and storage as well as supporting the development of commodity exchanges.
“The 2017 Budget estimates retains the allocation of N500 billion to the Special Intervention programme consisting of the Home-grown School Feeding Programme, Government Economic Empowerment programme, N-Power Job Creation Programme to provide loans for traders and artisans, Conditional Cash Transfers to the poorest families and the new Family Homes Fund (social housing scheme).
“The allocation for the Presidential Amnesty Programme has been increased to N65 billion in the 2017 Budget. Furthermore, N45 billion in funding has been provisioned for the rehabilitation of the North East to complement the funds domiciled at the Presidential Committee on the North East Initiative as well as commitments received from the multinational donors.”
He said the 2017 budget oil benchmark will be pegged at $42.50. This is a departure from $38 per barrel which was used for 2016 budget.
The daily oil production volume for 2017, he said, would be retained at 2.2 million barrel. The exchange rate was put at N305 to a dollar. The new exchange rate is significantly higher than that of 2016. The 2016 budget exchange rate was pegged at N197 to a dollar.
Buhari said a total of N10 trillion is being targeted by the Federal Government as revenue during the 2017 fiscal year. Out of this amount, about N5 trillion is expected to be generated from the sale of crude oil.
Non-oil revenues will rake in about N5.06 trillion. These revenues are expected to come from corporate and company taxes, Nigeria Liquefied Natural Gas, Stamp Duties, capital gains tax, value added tax, Customs, excise, fees, surcharges on luxury items, special levies and Federal Government independent revenue.
Out of the N7.298 trillion, President Buhari said N1.488 trillion will be spent on servicing domestic debts. In 2016 budget, the Federal Government earmarked N1.307 trillion for that.
On foreign debt, the Federal Government will spend N175.882 billion. It spent N54.480 on foreign debt servicing in the 2016 budget.
On capital expenditures, the Federal Government budgeted N2.058 trillion. In the 2016 budget, N1.587 was earmarked by the Federal Government for capital projects.
Recurrent expenditures will gulp N1.866 trillion. About N1.748 was budgeted for the same purpose in the 2016 Appropriation. The new figure is coming despite claims by the Federal Government that thousands of ghost workers have been yanked off from government’s payroll.
The Federal Government also intends to borrow a total of N2.321 trillion. Out of this, N1.253 will be sourced locally, while N1.067 will be gotten from foreign sources. In the 2016 budget, N1.182 was reportedly borrowed locally, while N635.8 billion was gotten through foreign borrowing.
Some lawmakers from both the Senate and the House of Representatives expressed divergent views on the budget.
Spokesman of the Senate, Senator Sabi Abdullahi said: “There is improvement different from what we got last year. From the budget, the executive is very ambitious by increasing spending on capital projects. We have more for the road, agriculture, infrastructure and other areas.
“We believe that they have done their home work better than what they did last year. By the time the details are submitted, we will begin to see what they have done. We are hopeful.
“One area that interests me is the increase in budget for the judiciary. They have added N30 billion. We want to see the judiciary improve. We will do the needful and ensure that things are done right this time around unlike in previous years.
“When we consider the MTEF, we will know if the exchange rate is realistic. We will look at it then. What we had last year was unrealistic, but I cannot say for now if this will be different. We have to wait and see.”
Spokesman of the House of Representatives, Hon. Abdurarak Namdas said: “As far I am concerned, the budget is okay, but we need to work on it. There will be inputs from lawmakers to make it good for the entire country.
“I can see that the President has increased the capital expenditure from N1.8 trillion to over N2 trillion in 2017. My only concern is that I do not know if we can produce 2.2 million barrels per day.”
Another member of the House of Representatives, Hon. Sergius Ogun, said: “We are hopeful that like the President tagged it ‘Budget of Recovery’, it will take us out of recession. The items contained in the budget are achievable. Even the daily production of 2.2 million barrels per day is achievable as long as there is peace in the Niger Delta.”
Speaking, the African Democratic Congress (ADC) said there is nothing to cheer about the 2017 budget.
National Chairman of the party, Chief Ralph Okey Nwosu stated this in an interview in a telephone interview with Sunday Sun.
His words “The APC government appears to lack the skill to lead the country out of the present quagmire. That is my worry about the Budget. If the strategy is wrong and the skills of dealing with a fluid, complex and complicated situation and an economy so distressed are not there, not even all the borrowing can save the nation.
“So for me and our party, the ADC, there is nothing to cheer about. In a depressed state, leaders must find ways to generate enthusiasm and create hope to sustain it. Even if the World Bank and IMF and other institutions and nations raise a trillion dollars for this government, I do not see hope; there is too much politics, hate, and ineptitude.”