The Federal Government must go beyond the presentation of the N8.612 2018 Budget by President Muhammadu Buhari, stakeholders say. Beyond the N4.165 trillion projections from non-oil and other revenue sources as against the N2.442 trillion revenue projection from oil & gas and benchmarking the barrel price of crude oil at $45, they say the gains of diversification of the economy and the peace in the Niger Delta must be sustained.
THE N8.612 trillion estimates presented in Abuja on Tuesday by President Muhammadu Buhari to the joint session of the National Assembly for consideration as next year’s Appropriation Bill drew more reactions yesterday.
Critical stakeholders in the various sectors of the economy lauded the benchmarking of the crude oil price at $45 per barrel and the projection of daily production at 2.3 million barrel, among others.
According to them, the Federal Government must not only keep faith with the implementation of the “Budget of Consolidation”, but build on the gains in the agricultural sector to achieve its projections.
The Acting Chairman of Fiscal Responsibility Commission (FRC), Victor Muruako, urged the government to reinforce and build on its recent accomplishments.
Acknowledging that a lot had been done in the agriculture sector, Murako said the government could go further by developing agriculture-related Small and Medium Enterprises (SMEs) to improve on agricultural produce.
He suggested that the conversion of such produce into other consumables that were often imported will reduce importation and shore up export base.
His words: “I am very happy about the sectoral allocation for agriculture, it is one area that will grow this economy, particularly if the right things are done and if SMEs are encouraged.’’
On the budget projections, Muruako said they were realistic and achievable, though ambitious, saying that it was better to plan ambitiously than to make plans that were below reasonable expectations.
He said: “If you look at the projections, they are very aggressive efforts and good, because they are layouts and plans and it is better to plan and get close to your target than to not plan at all.
“Budget is like a financial plan and you have to be ambitious. This government has been ambitious and maybe that is why we have been able to exit recession quickly. These projections are achievable, particularly when you look at the steady decline of inflation.
“We may say it is not so dramatic yet, but I think that the projection rate for inflation of 12.8 per cent is achievable.’’
He also said the projected non-oil revenue was evidence that the administration was serious about diversification, adding that it showed that taxation would be a good revenue generator for the year.
Muruako commended the President for presenting the proposal to the National Assembly early enough, adding that it would be a very beautiful thing for the budget life to return to the January to December cycle.
According to him, the shift in budget cycle would encourage the running of the fiscal year in the ideal way it should be run.
The FRC chief said: “It has not been easy all these years. The inconsistency in the budget cycle did not just start now, there had been numerous challenges but then there have also been a lot of improvement.
“We must first of all commend the President for presenting the budget at this time. Although statutorily, it is not the right time, but I think the time is reasonable enough, it is an improvement from what it used to be.’’
No compromise of full implementation
An economic teacher at the University of Port Harcourt, Prof. Okey Onuchukwwu, urged the Federal Government to ensure full implementation of the bill after its passage into law.
Noting that budget implementation had remained a major problem in the country, Onuchukwu said that the Buhari-led government had in the past two fiscal years “failed to religiously implement the budget’’.
The economist, however, expressed fears that the 45 dollars per barrel benchmark for oil sales appeared unrealistic following the unsteady nature of oil prices.
He said that some projects had had been brought forward into the 2018 appropriation because they were not fully implemented in this year’s budget.
The don said: “I am saying this because some projects keep reappearing in the budget every year. We have seen the Ogoni cleanup reappear.
“The issue is not to put down figures and projects on paper; the issue is to ensure that those figures are implemented.’’
Huge investment in infrastructure a must
A former President of the Association of National Accountants of Nigeria (ANAN), Samuel Nzekwe, urged the Federal Government to ensure enormous investments in infrastructure to grow the economy.
‘‘Massive investment in infrastructure would create enabling environment for the productive sector to thrive and produce at optimal level,’’ Nzekwe told the News Agency of Nigeria (NAN) in a chat yesterday in Ota, Ogun
He noted that the failure to achieve much improvement in the power sector this year made it difficult for the productive sector to contribute maximally to the nation’s Gross Domestic Product (GDP).
He also implored the Federal Government to work harder on the implementation of 2018 Appropriation Bill, to improve the living conditions of the people.
Nzekwe, however, noted that the capital expenditures in the proposed 2018 budget were still very nominal, saying this might not positively impact on the nation’s infrastructure development.
He said that servicing the nation’s debt with 25 per cent was not ideal for any economy that wanted to achieve inclusive and sustainable development.
The former ANAN president urged the government to address the huge recurrent expenditures, to have more funds for infrastructure development.
$45 benchmark for crude reasonable
Some experts lauded the $45 per barrel benchmark for crude oil.
“The current benchmark adopted for oil price seems reasonable,’’ Prof. Adeola Adenikiju, a former president of the National Association of Energy Economics (NAEE), said.
He said: “Currently, the average price of oil is significantly above that due to combination of factors – some fundamental, others part of the normal transitory factors that affect the price of oil.
“Most forecasts of oil seem to project oil price in 2018 around upper $40 to middle $50.’’
When asked what would be the case should crude price suddenly nosedive below $45, Mrs. Felicia Chiogor, a teacher in a private university, said: “Nobody can actually predict what 2018 holds and what interplay of geo-political forces that will impact on global energy market.
“However, the essence of the Sovereign Wealth Fund (SWF), where there is a portion of the excess price, could be used for budgetary support.
“Moreover, fiscal and monetary policies can be used to mitigate the impact of any shortfall in the price of oil below the benchmark, if that were to occur on the economy, especially if it’s perceived to the temporary.’’
They both lauded the part of the budget proposal that projected N4.165 trillion from non-oil sector, calling it a welcome development to trigger creativity and reduce oil-dependence.
Non-oil revenue projection impressive
The President of the Institute of Fiscal Studies of Nigeria (IFSN), Mr Godwin Ighedosa, commended the government for making non-oil sector as the centre of its revenue projections to implement its plans next year.
Ighedosa said the proposed N8.612 trillion Budget showed a remarkable shift from over-dependence on oil revenue.
He said: “For the first time, we are projecting that non-oil revenue is going to overtake oil revenue which obviously is a welcome development because since the 1970s, our economy has been largely dependent on oil revenues.
“But the concern right now is where does the government expect to make this much from the non-oil sector? I ask this because the major drivers of employment and commercial activities in the country, which is manufacturing and agriculture, are not doing so very well in their percentage contributions to the GDP.
“Also, if it’s on taxes, it’s still unachievable because our tax to GDP ratio remains one of the lowest in the world at about six per cent and I don’t see government raising it so much to make much difference in 2018. So, getting the non-oil revenue projects would be a long stretch.”
Ighedosa expressed concern about the 2.3 million barrel daily oil projections for the year, pointing out that the problem from the Niger-Delta region was far from over. ,
He said: “Yes, some agreements have been reached between the government and the groups in the Niger Delta which has helped raise the production level a bit. But it’s not enough.
“However, 2.3 million barrels per day for 2018 is a bit of a stretch because some of the groups in the Niger-Delta are already threatening the government.
“They want to break the agreement unless the government implements as quickly as possible some of their key demands and I don’t see the government meeting some of these demands any time soon. So, it may mean that we won’t be able to achieve the revenue projected.”
The IFSN president said the N2.5 trillion budget deficit, which translates to additional borrowings in the 2018 fiscal year to finance part of the budget may pose a challenge as any mention of borrowings is perceived negatively by Nigerians.
He, however, acknowledged the propriety of borrowing for investment as good, adding that doing so would improve the government’s balance sheet.
Ighedosa advised the government to continue to keep a close tab on the ratio of revenue to debt servicing.
Peace in Niger Delta must be sustained
The former Chairman, Nigerian Institution for Electrical Electronic Engineers (NIEEE), Sunday Makinde, also lauded the pegging of the 2018 budget benchmark at S45 dollars.
He said the government was being careful in its decision not minding the present oil price of 62.3 dollars.
The former NIEEE chair said the government was optimistic by the prevailing peace in the Niger Delta by putting the nation’s daily production of oil at 2.3 barrels per day.
Makinde said: “I have to commend the present administration of Buhari for pegging the oil price at 45 dollars benchmark. Some people are considering 50 to 55 dollars because of the present increase in the world price of crude oil.
“The government has been very careful because the increasing price of world oil can crash at any time. Also, the government is taking the advantage of relative peace in Niger Delta by increasing the daily production to 2.3 million barrels per day.”
He urged the government to keep agitated militants in the region in check to sustain the prevailing oil production level.
The stakeholders advised the government to check activities of militants to achieve the 2018 budget revenue target.
According to the President of the Nigerian Association of Petroleum Explorationists (NAPE), Abiodun Adesanya, the most critical aspect would be for the government to maintain continuous dialogue with the militants.
He said that the government will have better revenue to match the 2018 budget projections by checking incessant pipeline vandalism and disruption of oil production.
According to him, the feud between the governments of Saudi Arabia and Iran could boost international crude oil price.
Adesanya said: “This has also impacted on the crude oil sales in Nigeria. If the avengers resume vandalism of the pipeline network, it would affect the country budget’s template.
“The key thing here is that we should not have any challenge with our oil facility so that it would help us to sustain our revenue target.
“The country needs to finance the budget and government should guide its crude oil production and revenue from being affected.’’
He, however, said that implementation would be another challenge for the budget even as he urged the National Assembly to work for its speedy passage and implementation.
He said that the budget outcome and level of implementation would determine its impact on the economy in general and the people in particular.
The local chairman of the Society of Petroleum Engineers (SPE) in Nigeria, Saka Matemilola, urged the government to provide adequate gas infrastructure to boost revenue in the oil and gas sector.
Matemilola said that the government should ensure that there would be adequate provision for key components that would move the petroleum industry forward.
According to him, gas infrastructure remains very key because government is currently working with International Oil Companies (IOCs) to ensure funding.
He said: “Gas infrastructure should be addressed because without addressing the gas infrastructure in the country, the frame work will be in achieving the potential for economy growth.
“Government should develop a revamped gas infrastructure for both upstream and midstream essentially.’’
The SPE chair said that if government could address infrastructural challenges in the oil and gas, it would go a long way in achieving better budget implementation.
|The Nation
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