Nigeria’s federal government is proposing to borrow some N2.32 trillion to partly fund the 2017 budget deficit estimated at N2.36 trillion and about 2.18 percent of the country’s Gross Domestic Product (GDP).
The Federal Government is proposing a record N7.298 trillion budget for fiscal year 2017, some 20.8 percent raise from N6.8trillion for 2016.
President Buhari while presenting the proposed 2017 budget estimates to a joint session of National Assembly Wednesday in Abuja confirmed the planned borrowing, and also announced government intention to source N1.067 trillion – about 46 percent from external sources while, N1.254 trillion will hopefully come from the domestic market.
Buhari intends to use the 2017 expansionary budget to spend the country out of biting economic recession and has tagged it a “Budget of economic recovery and growth”.
“With regard to expenditure, we have proposed a budget size of N7.298 trillion which is a nominal 20.4% increase over 2016 estimates. 30.7% of this expenditure will be capital in line with our determination to reflate and pull the economy out of recession as quickly as possible,” the President told the law makers.
He said government is proposing an oil benchmark for 2017 at $42.50, daily oil production estimate of 2.2 million barrels per day; and an average exchange rate of N305 to the US dollar.
Based on these assumptions, government hopes to aggregate revenues to about N4.94 trillion in 2017, about 28 percent higher than 2016 full year projections. Oil is projected to contribute N1.985 trillion of this amount.
Non-oil revenues, largely comprising Companies Income Tax, Value Added Tax, Customs and Excise duties, and Federation Account levies are estimated to contribute N1.373 trillion.
Buhari said government has set a more realistic projection of N807.57 billion for Independent Revenues, while projecting receipts of N565.1 billion from various Recoveries. Other anticipated revenue sources, including mining, amount to N210.9 billion.
Out of the proposed N7.298 trillion aggregate expenditure, N419.02 billion; is being proposed for Statutory transfers and N1.66 trillion for Debt service.
Sinking fund has been estimated to gulp N177.46 billion to enable government retire certain maturing bonds; Non-debt recurrent expenditure would take N2.98 trillion; and while Capital expenditure of N2.24 trillion (including capital in Statutory Transfers) is being proposed.
Under Statutory Transfers, government increased the budgetary allocation to the Judiciary from N70 billion to N100 billion, an additional funding meant to enhance their independence and enable them to perform their functions effectively, according to the President.
A significant portion of recurrent expenditure has been provisioned for the payment of salaries and overheads in institutions that provide critical public services. This includes N482.37 billion for the Ministry of Interior; N398.01 billion for Ministry of Education; N325.87 billion for Ministry of Defence; and N252.87 billion for Ministry of Health.
Government maintained personnel costs at about N1.8 trillion.
“It is important that we complete the work that we have started of ensuring the elimination of all ghost workers from the payroll. Accordingly, adequate provision has been made in the 2017 Budget to ensure all personnel that are not enrolled on the Integrated Personnel Payroll Information System platform are captured,” the president also noted.
Meanwhile, the president has tasked the Efficiency Unit of the Federal Ministry of Finance to cut certain overhead costs by 20 percent. “We must eliminate all non-essential costs so as to free resources to fund our capital expenditure.”
The 2017 capital budget of N2.24 trillion (inclusive of capital in Statutory Transfers), or 30.7 percent of the total budget, reflects government determination to spur economic growth and has been targeted at priority sectors and projects.
Specifically, we have maintained substantially higher allocations for infrastructural projects which will have a multiplier effect on productivity, employment and also promote private sector investments into the country,” Buhari noted.
He listed proposed Key capital spending provisions in the Budget to include; Power, Works and Housing: N529 billion; Transportation: N262 billion; Special Intervention Programmes: N150 billion; Defence:N140 billion; Water Resources: N85 billion.
Industry, Trade and Investment gets N81 billion; Interior:N63 billion; Education N50 billion Universal Basic Education Commission: N92 billion; Health: N51 billion; Federal Capital Territory: N37 billion; Niger Delta Ministry: N33 billion; and Niger Delta Development Commission: N61 billion.
N100 billion has been provided in the Special Intervention programme as seed money into the N1 trillion Family Homes Fund that will underpin a new social housing programme.
“This substantial expenditure is expected to stimulate construction activity throughout the country,” according to the president.