Economic experts react as NASS passes N7.441trn 2017 budget

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Economic experts react as NASS passes N7.441trn 2017 budget

Why we increased the budget by N143bn
Don’t alter any figure, Dogara warns executive
Budget will help Nigeria exit economic recession— Saraki

By Henry Umoru, Emman Ovuakporie, Godwin Oritse, Nkiruka Nnorom, Rosemary Onuoha & Ediri Ejoh

ABUJA —THE National Assembly, yesterday, passed the 2017 Appropriation Bill of N7.441 trillion, which represented an increase of N143 billion from what was presented last December by President Muhammadu Buhari.

The increase in expenditure came with a significant mark up in the benchmark crude oil price to $44.5 per barrel from the N42.5 per barrel proposed by the President.

However, the National Assembly maintained the daily crude oil production of 2.2 million barrels, and exchange rate of N305 to $1 as proposed by the President.

 

 

Details of the bill show that 30 per cent or N2.18 trillion was allocated to capital expenditure, while recurrent expenditure (non-debt) and debt service received N2.987 trillion and N1.84 trillion respectively.

The debt service allocation comprise N1.488 trillion to service domestic debt; N175.88 million to service foreign debts, while N177.46 million is to retire maturing loans.

Budget breakdown

The breakdown of the capital expenditure shows the Federal Ministry of Power, Works and Housing having the highest capital vote of N553, 713,857,113, followed by Ministry of Defence with capital vote of N139,294,920,350; Federal Ministry of Agriculture and Rural Development with a total of N103,793,201,010; Federal Ministry of Niger Delta has N34,201,500,001; Federal Ministry of Interior got N63,760,562,487; Ministry of Education, N56,720,969,147; Federal Ministry of Health, N55,609,880,120.

Other breakdown of the budget shows the State House having N20,066,000,000; Secretary to the Government of the Federation (SGF) N32,778,490,342; Auditor General for the Federation having, N90,509, 818; Ministry of Budget and National Planning N4,092,773,627; Federal Ministry of Environment N12,479,369,455; Federal Ministry of Finance N5,181,348,624; Ministry of Foreign Affairs N10,291,783,534; Federal Ministry of Industry, Trade and Investment N81,726,971,059; Federal Ministry of Information and Culture N9,546,245,04; Federal Ministry of Interior N63,760,562,487; Federal Ministry of Justice N12,705,755,001; Federal Ministry of Labour and Employment N8,803,520,400; Federal Ministry of Mines and Steel Development N12,455,000,000; Federal Capital Territory Administration N30,397,122,87; Federal Ministry of Niger Delta N34,201,500,001; Federal Ministry of Petroleum Resources N6,793,128,647; Federal Ministry of Science and Technology N41,699,655,490; Federal Ministry of Transportation N241,709,000,000; Federal Ministry of Water Resources N104,245,803,11; Federal Ministry of Women Affairs N4,250,732,000; Federal Ministry of Power, Works and Housing N553,713,857,113; Federal Ministry of Youth and Sports Development N5,441,000,000; Fiscal Responsibility Commission N148,155,391; Independent Corrupt Practices and Related Offences Commission (ICPC) N767,865,170; Infrastructure Concessionary and Regulatory Commission (ICRC) N34,310,245; Federal Ministry of Communications Technology N8,434,669,142; National Salaries, Income and Wages Commission N163,121,916; Office of the National Security Adviser N47,209,203,765; Office of the Head of the Civil Service of the Federation N1,974,176,735.

Why we increased the budget by N143bn

Briefing journalists after passage of the budget, Chairman of the Senate Committee on Appropriations, Senator Danjuma Goje explained that the 2017 budget was raised by the National Assembly “as a result of increased revenue coming to the government due to increase in the crude oil price benchmark to $44.5 per barrel as against $42.5 proposed by the executive.

He disclosed that N10 billion was allocated for the take-off of second runway of the Nnamdi Azikiwe International Airport, Abuja, by the federal government.

“We consider the rehabilitation of the Abeokuta Airport to serve as alternative to the international airport in Ikeja. Last time when Abuja airport runway was undergoing rehabilitation, Kaduna Airport, being the nearest was used as alternative airport.”

Approval of the budget followed deliberation on the report of the Committee on Appropriations on the 2017 Appropriation Bill.

A delightful departure from past is that for the first time National Assembly opens its own budget. It would be recalled that President Muhammadu Buhari had presented the N7.298 trillion budget to a joint session of the National Assembly on December 14, 2016.

The President had during the presentation disclosed that his administration would pay more attention to infrastructure with roads and rail projects enjoying priority attention.

The joint committee on Appropriation however raised the budget figure of N7.298 trillion as presented by President Muhammadu Buhari to N7.441 trillion, meaning an addition of about N143 billion.

The Committee summarized the Appropriation bill thus: “That the House do consider the Report of the Committee on Appropriations on a Bill authorises the issue from the Consolidated Revenue Fund of the Federation, the total sum of N7,441,175,486,758 (Seven Trillion, Four Hundred and Forty-One Billion, One Hundred and Seventy-Five Million, Four Hundred and Eighty-Six Thousand, Seven Hundred and Fifty-Eight Naira) only, of which, N434,412,950,249 (Four Hundred and Thirty-Four Billion, Four Hundred and Twelve Million, Nine Hundred and Fifty Thousand, Two Hundred and Forty-Nine Naira) only, is for Statutory Transfers, N1,841,345,727,206 (One Trillion, Eight Hundred and Forty-One Billion, Three Hundred and Forty-Five Million, Seven Hundred and Twenty-Seven Thousand, Two Hundred and Six Naira) only, is for Debt Service, ?177,460,296,707 (One Hundred and Seventy-Seven Billion, Four Hundred and Sixty Million, Two Hundred and Ninety-Six Thousand, Seven Hundred and Seven Naira) only is for Sinking Fund for maturing bonds, N2,987,550,033,436 (Two Trillion, Nine Hundred and Eighty-Seven Billion, Five Hundred and Fifty Million, Thirty-Three Thousand, Four Hundred and Thirty-Six Naira) only, is for Recurrent (Non-Debt) Expenditure while the sum of N2,177,866,775,867 (Two Trillion, One Hundred and Seventy-Seven Billion, Eight-Hundred and Sixty-Six Million, Seven Hundred and Seventy-Five Thousand, Eight Hundred and Sixty-Seven Naira) only, is for contribution to the Development Fund for Capital Expenditure (Exclusive of Capital Expenditure in Statutory Transfers) for the year ending on the 31st December, 2017. ”

NASS opens own budget

For the first time in eight years, the National Assembly unveiled its own budget for 2017, which was increased to N125 billion from the N115 billion approved for National Assembly in 2016.

The breakdown shows that of the N125 billion approved for the National Assembly, the Management has a vote of N14,919,065,013; the Senate has an allocation of N31,398,765,886 while the House of Representatives would spend N49,052,743,983.

The breakdown further shows that the total allocation for the Legislative Aides is N9,602,095,928; National Assembly Commission gets N2,415,712,873; Public Accounts Committee, PAC for the Senate was allocated a total sum N118,970,215 while House of Representatives PAC got N142,764,258.

The breakdown of the proposed N125 billion which covers 10 critical areas of expenditures shows that under personnel costs, a total vote of N6.714 billion was allocated for the National Assembly Management, N1.856 billion for the Senate, N4.923 billion for the House of Representatives, N8.917 billion for legislatives Aides, N961.127 million for NASS Service Commission and N416.452 million for NASS Legislative Institute.

Out of the N85.878 billion appropriated as total over head costs, the National Assembly Management got N6.193 billion, N25.111 billion for the Senate, N39.635 billion for the House of Representatives, N11.767 billion for General Services, N1.144 billion for NASS Service Commission, N1.229 billion for NASS Legislative Institute, N534.968 million for Legislative Aides, N118.970million for Public Account Committee (PAC) in the Senate and N142.764mmillion for PAC in the House of Representatives.

Under capital votes, Management got N2.011billion, N4.430billion for the Senate, N4.493billion for the House of Representatives, N2.727billion for NASS Legislative Institute, N309.791million for NASS Service Commission, N150million for Legislative Aides and N816.928million for General Services.

Also in the breakdown was an item known with the executive in terms of Service Wide Votes with a vote of N391.396 million for both the Senate and the House of Representatives.

Budget will help Nigeria exit economic recession— Saraki

Speaking after the passage of the budget, Senate President Bukola Saraki,who noted that the budget would help Nigerians get out of the economic recession, said: “This budget that we have passed, you recall, enabled us to record a number of first. This is the first time we had a public hearing as part of the process of the 2017 Appropriation Act. The level of engagements with the Civil Society played a part in making this budget a different and remarkable one. Another first, we have achieved, is ensuring that the line by line details of the budget was laid down along with the Bill. Again this is a great achievement for us.

“Another first we achieved is making the budget of the National Assembly available to the public, which had been an issue for a long time. I am very proud of what we achieved and we do hope that this budget of recovery, we believe has reflected equity, it has ensured efficiency and adequate resources to all relevant sectors, and will go a long way in helping Nigerians to come out of the economic recession.

“I appreciate the level of consultation and the good working relationship and corporation that existed between us and the executive for us to get to this point. This is a remarkable difference from what we saw in 2016 and it shows that the entire country is better for it.

“I commend Nigerians for their patience and understanding to this point. We believe that the budget we have done this time will bring value to all of us.”

Don’t alter any figure, Dogara warns executive

On his part, after the passage of the Budget, Speaker of the House of Representatives, Yakubu Dogara warned the executive that on no account should the figures of the Appropriation Bill be altered without the consent of the National Assembly.

The House dissolved into the Committee of Supply by 12.30pm and the Speaker started announcing each item on the various sub-heads but as soon as it got to that of the Secretary to the Government of the Federation, SGF it was greeted by yells of No!No!No!

But eventually the N51,933,366,906 was carried after the Speaker mildly reminded them that the items had been verified.

The Speaker, after the items were all certified, read out the 10 clauses raised in the report and they were all endorsed by the members.

The House at this point dissolved into plenary to treat other items in the Order Paper of the day’s business.

Earlier, Chairman House Committee on Appropriation, Rep Mustapha Dawaki had presented budget report after reading its long title.

Also speaking, Chairman, House of Representatives Committee on Media and Public Affairs, Abdulrazaq Namdas, said the capital expenditure component of N2.1trillion will get Nigeria out of recession.

Speaking at a media briefing after the passage of the budget, Namdas said: “The capital expenditure will enhance power, agriculture, defence and finally help revamp the economy.

He explained that “everything was done to give Nigerians a sense of belonging and we’ll continue to improve on the process as we were very thorough this time around.

Economic experts react

Head, Stockbroking Service, Lead Capital Plc, Mr. Dolapo Ashiru, expressed discomfort with the jerk-up of the budget’s oil price benchmark.

According to him, though $44.50 per barrel crude oil target projected by NASS is not ambitious, but would have been safer if the NASS had stuck with the President’s projected $42.50 per barrel benchmark.

However, he opined that the N1.8 trillion earmarked for debt servicing, which constitute about 24 per cent of the total budget was rather high. But he also explained that the high amount allocated to debt servicing was due to the high interest environment.

Going forward, government has to look for a way to generate revenue internally rather than borrowing, Ashiru said.

He stated: “The $44.5 crude price target is not ambitious given the fact that crude oil price has in recent time risen to more than $50 per barrel. I would have preferred if they stuck with $42.5 per barrel. $44.5 target is too near the current price, but it is still achievable.

“Concerning the high amount of money the government wants to use for debt servicing, first of all, the government wants to borrow ambitiously. When the government wants to handle a lot of infrastructural project, it needs to borrow. Unfortunately, it is borrowing in Naira.

“So N1.8 trillion is over 20 per cent of the budget; that is where we are now. It is a major chunk of the budget; it is rather high, but we are happy that most of the money is for infrastructural projects. Again, it is because of high interest rate environment; so, it is the price we have to pay for development.”

He stated that the government might go for supplementary budget because in dollar terms the N7.44 trillion is less than what was budgeted last year, though it is higher in Naira term. “If we want to spend more money to get out of recession, we have to spend more on infrastructure. So, there could be a supplementary budget,’’ he added.

Oil industry at a standstill — Ene

On his part, former Chairman of the Petroleum Technology Association of Nigeria, PETAN, Engr. Emeka Ene, called for a speedy roadmap to the alternative funding agreed on when the government exited the Joint Ventures, JV, cash call.

According to him, “It is a good thing that the budget is passed, going by the exit of the JV cash call.

“However, we are earnestly awaiting the commencement of the alternative funding mechanism as agreed on by the Federal Government. The International Oil Companies, IOCs, independent operators and the Nigeria National Petroleum Corporation, NNPC, need to make sure that it is working for prosperity of the industry.

“Yes, we are happy at the exit of the cash call. But the oil industry is at a standstill, as investments are declining owing to delay in operation of alternative funding. To this end, the oil business is no longer competitive among our competitors, as investors are not coming in because our operating costs are high.”

Reacting on the adjusted benchmark at $44.50 to a barrel against earlier proposed $$42.50, Ene noted that the move became necessary following current realities.

“The benchmark at $44.50 is a realistic one. The supply cap from OPEC has been narrowed to between $50 and $55 per barrel, which makes it a close call for Nigeria. At the moment, the oil companies are operating on the benchmark of $45 per barrel, and that is the reality on ground.”

Allocation to port access road too poor – CILT boss

In his reaction, Mr. Alban Igwe, Deputy National President, Chartered Institute of Logistics and Transport, (CILT), lamented that the budget was silent on the port access roads.

He expressed concern on the percentage of the budget allocated to infrastructure, particularly the port access roads, saying that the amount may look or sound big, but in percentage term, it is too insignificant to meet the needs of Nigerians.

Igwe observed that the port access road is critical to the economic development, arguing that the distribution of goods and service starts from the nation’s ports as infrastructure is key to national development.

Allocations to power, infrastructure impactful – MD, Mutual Benefits

Also commenting, Mr. Segun Omosehin, Managing Director, Mutual Benefits Assurance Plc, said that the amount that is allocated to power, infrastructure and housing as well as the transportation sector could directly impact the economy if fully implemented.

He stated: “Anything you put on infrastructure will directly impact the economy because it will touch the common man. Also, government took a decisive step to put a specific amount for social welfare, which is to provide cash for the less privileged Nigerians and is highly commendable.

“Note that the government plans to finance the budget deficit through debt and about 52 per cent of that debt is to be sourced locally. About N1.2 trillion is to be sourced locally and this will have direct impact on activities in the economy.

Within these parameters, there are areas for companies like ours that are concerned with covering risks associated with economic activities in the system to be hopeful. The picture painted from the budget gives hope that activities will pick up and insurance will do well,” Omosehin noted.

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