As the National Assembly (NASS) jacked up the 2018 budget to N9.12 trillion yesterday, some financial experts have thrown their weight behind the lawmakers, saying the new threshold would not even be enough to accommodate new and unexpected expenditure of the Federal Government this year.
According to Mr. Bismark Rewane, the Managing Director of Financial Derivatives Company (FDC), in an interview monitored on Channels Television yesterday in Lagos, the country would need between N10 trillion and N11 trillion to take care of minimum wage and subsidy, which were not originally captured by President Muhammadu Buhari’s version submitted to the NASS.
“The oil price is about 45 per cent higher than the budget threshold, the country is now in better revenue position. And since the fuel subsidy is not in the original budget, somebody is going to bear the cost. Also, minimum wage was not in that budget, that means there would be supplementary budget.
“All these show that the N9 trillion will not be enough. A budget of between N10 trillion and N11 trillion will not be too much. That is just below 2 per cent of the GDP. But I urge the government to spend efficiently. Spending and investment should not be confused. What the country needs now is investment. Investment in power, aviation and in petroleum resources. That is what can create jobs,” he added.
For its part, Nigeria’s Organised Private Sector (OPS) beleives that the House of Representatives must have taken the decision to increase the budget out of necessity.
The President of the Manufacturers Association of Nigeria (MAN), Frank Jacobs, who said he would need to get the details of the increase, however, maintained that the action, no doubt, would be in the positive interest of the country.
“For them to do this, they must have come up with something that needs to be taken care of, which the budget as presented must have omitted,” he said.
He reasoned that even the amount added may not be enough for the minimum wage being proposed by the Nigeria Labour Congress (NLC) if that was part of the reason for the increase.
“The N500 billion would not even take care of what labour is asking for going by that proposal being presented to the committee,” he added. Commenting on the development, a Professor of Banking and Finance and Head of Department, Nassarawa State University, Prof. Uche Uwaleke, said he was totally in support of the actions of the National Assembly by jacking up the 2018 budget from N8.6 trillion to N9.1 trillion.
According to him, a budget prepared around July last year and presented in October cannot perform optimally in May 2018 if eventually passed.”
He added that all the estimates used to prepare the budget were no longer realistic today.
“The 2018 budget was prepared when crude oil price was hinged at $45/barrel. But today, we are inching closer to $80/barrel but the National Assembly pegged the new budget estimate at $60/barrel. That’s quite realistic. From all the market and industry forecasts, it can’t crash to the point of hurting this new budget proposal. Besides, the lawmakers retained the 2.2mpd oil output and that is workable given that we’ve enjoyed some stability in output.
“Again, we’ve recorded some improvement in non-oil revenue generation like VAIDS. So the jack up is justifiable and in the N9.1 trillion budget, there is bigger provision for debt servicing and capital expenditure. The country can accommodate this new budget proposal and we can look at how we can cut down on deficit,” he explained.
Prof. Uwaleke, however, expressed fears that the jerk up may attract further delays in having it passed because the executive arm of the government will likely want to scrutinise the job done by the lawmakers.
“In scrutinising the new budget proposal, the President may want to take it to the MDAs to see to what extent their budgets have been tinkered with. If that happens, we will experience some delays in the passage. But in all, I’m for the jerk up of the budget. The old one is no longer realistic,” the professor stated.
However, Mr. Rislanudeen Muhammad, the ex-Managing Director of Unity Bank Plc, argues that the budget jerk up by the National Assembly was uncalled for.
According to him, the lawmakers are playing needless politics with Nigeria’s economy by holding on to the budget for about seven months without making the adjustments they needed to make.
He said the implication was that the government will not be able to do much of capital expenditure but 100 per cent of recurrent.
“We’re already in May and before this is passed, if at all it is, capital expenditure will roll over to 2019 and we have elections coming up and capital projects, which we need urgently, will suffer because a lot of due process is required to carry out capital projects.
“This is the first time in 19 years that our budget will be so delayed.
The ERGP targets 3.5 per cent GDP growth that is premised on 100 per cent budget implementation especially the capital components. But how can we achieve that in this circumstance?
“MTEF was presented in October last year and the budget proper in November.
According to Mr. Bismark Rewane, the Managing Director of Financial Derivatives Company (FDC), in an interview monitored on Channels Television yesterday in Lagos, the country would need between N10 trillion and N11 trillion to take care of minimum wage and subsidy, which were not originally captured by President Muhammadu Buhari’s version submitted to the NASS.
“The oil price is about 45 per cent higher than the budget threshold, the country is now in better revenue position. And since the fuel subsidy is not in the original budget, somebody is going to bear the cost. Also, minimum wage was not in that budget, that means there would be supplementary budget.
“All these show that the N9 trillion will not be enough. A budget of between N10 trillion and N11 trillion will not be too much. That is just below 2 per cent of the GDP. But I urge the government to spend efficiently. Spending and investment should not be confused. What the country needs now is investment. Investment in power, aviation and in petroleum resources. That is what can create jobs,” he added.
For its part, Nigeria’s Organised Private Sector (OPS) beleives that the House of Representatives must have taken the decision to increase the budget out of necessity.
The President of the Manufacturers Association of Nigeria (MAN), Frank Jacobs, who said he would need to get the details of the increase, however, maintained that the action, no doubt, would be in the positive interest of the country.
“For them to do this, they must have come up with something that needs to be taken care of, which the budget as presented must have omitted,” he said.
He reasoned that even the amount added may not be enough for the minimum wage being proposed by the Nigeria Labour Congress (NLC) if that was part of the reason for the increase.
“The N500 billion would not even take care of what labour is asking for going by that proposal being presented to the committee,” he added. Commenting on the development, a Professor of Banking and Finance and Head of Department, Nassarawa State University, Prof. Uche Uwaleke, said he was totally in support of the actions of the National Assembly by jacking up the 2018 budget from N8.6 trillion to N9.1 trillion.
According to him, a budget prepared around July last year and presented in October cannot perform optimally in May 2018 if eventually passed.”
He added that all the estimates used to prepare the budget were no longer realistic today.
“The 2018 budget was prepared when crude oil price was hinged at $45/barrel. But today, we are inching closer to $80/barrel but the National Assembly pegged the new budget estimate at $60/barrel. That’s quite realistic. From all the market and industry forecasts, it can’t crash to the point of hurting this new budget proposal. Besides, the lawmakers retained the 2.2mpd oil output and that is workable given that we’ve enjoyed some stability in output.
“Again, we’ve recorded some improvement in non-oil revenue generation like VAIDS. So the jack up is justifiable and in the N9.1 trillion budget, there is bigger provision for debt servicing and capital expenditure. The country can accommodate this new budget proposal and we can look at how we can cut down on deficit,” he explained.
Prof. Uwaleke, however, expressed fears that the jerk up may attract further delays in having it passed because the executive arm of the government will likely want to scrutinise the job done by the lawmakers.
“In scrutinising the new budget proposal, the President may want to take it to the MDAs to see to what extent their budgets have been tinkered with. If that happens, we will experience some delays in the passage. But in all, I’m for the jerk up of the budget. The old one is no longer realistic,” the professor stated.
However, Mr. Rislanudeen Muhammad, the ex-Managing Director of Unity Bank Plc, argues that the budget jerk up by the National Assembly was uncalled for.
According to him, the lawmakers are playing needless politics with Nigeria’s economy by holding on to the budget for about seven months without making the adjustments they needed to make.
He said the implication was that the government will not be able to do much of capital expenditure but 100 per cent of recurrent.
“We’re already in May and before this is passed, if at all it is, capital expenditure will roll over to 2019 and we have elections coming up and capital projects, which we need urgently, will suffer because a lot of due process is required to carry out capital projects.
“This is the first time in 19 years that our budget will be so delayed.
The ERGP targets 3.5 per cent GDP growth that is premised on 100 per cent budget implementation especially the capital components. But how can we achieve that in this circumstance?
“MTEF was presented in October last year and the budget proper in November.
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-Sun
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