5 Amazing Facts About President Buhari’s 2016 Budget

On Monday, December 7, 2015, Nigeria’s president Muhammadu Buhari presided over the Federal Executive Council (FEC), where a total of N6.04 trillion was approved as Nigeria’s expenditure for 2016 budget under the Medium Term Expenditure Framework (MTEF).

Eyebrows were raised and observers believe the budgetary provisions far outweigh the country’s previous budgets, in fact, it remains the highest by any Nigerian leader ever.

But, there are certain conditions responsible for this rise (of about 15%) in the budget, as well as certain changes to the ‘business as usual’ budgets of Nigeria, believed to be Africa’s largest economy.
Naij.com has identified five stunning facts every Nigerian should take cognizance of as the west African nation commences on a year-long spending.

1. No more kerosene subsidy
Although not clearly stated, the president has tacitly done away with kerosene subsidy in the new expenditure of the Nigerian nation as there was no clear provision for it in the budget submitted to the council.

Nigerians queuing for kerosene during a certain period of scarcity. This may reduce in the coming years.

Although it is yet to be seen how this will improve the nation’s economy, there are indications that this new move by the president, who has been increasingly criticised for his late submission of the budget, will go a long way in ensuring that the country does not spend as much as it used to in that sector of the ecenomy.

2. Two sources have been identified for funding of the budget
After the approval of the president’s budget presented at the FEC, the minister of budgetary and national planning, Senator Udo Udoma informed that the country is looking at sourcing funds from two different sources.
He told journalists that Nigeria is looking at increasing non-oil revenue. This means that more money will be demanded from the various government agencies, and their revenues will be closely monitored by the federal government with a view to getting more money from them.

President Muhammadu Buhari’s anti-corruption war will also serve as a source of funding for the budget.

The minister also informed that the recurrent budget for this year would be narrowed down drastically as the country is looking at a situation where savings from overheads take serious prominence.

Aside these two major sources identified to fund the budget for next year, President Buhari’s anti-corruption battle which is toughening up by the passing of each day, is expected to be responsible for about N350.33 billion in 2016.

3. Four key areas top the budgetary allocations
Power, health, education and agriculture are topmost on the president’s mind for next year’s spendings as they have taken more priority.
To show his diversification of the economy from what it used to be seriously dependent on, agriculture, alongside power, take top spot in the budget, a situation which the country had not witnessed in the past budgets in the last 10 years.
Both sectors are likely to gulp a total of N200billion each, which is about 20 percent of the total budget.

This clearly shows President Buhari’s reason for the appointment of former Lagos state governor, Babatunde Raji Fashola to head the power sector which has suffered huge setbacks in the country and his (Fashola’s) subsequent meeting with Dr Ibe Kachikwu of the petroleum resources ministry.

President Muhammadu Buhari seems to have entrusted so much into the hands of Babatunde Fashola

It is believed that the president made the appointment based on his belief that Fashola would not hesitate to step on shoes when he swings into full action n the coming years.
And since the president already stated that it is unwise and unsafe for the country to keep depending on the oil and gas sector for survival, the agriculture sector, under the watchful eyes of Chief Audu Ogbeh and Senator Heineken Lokpobiri, will also major role to play in the diversification of the economy.

4. Nigeria already made provisions to borrow N1.835.88trillion
Apart from domestically generating fund to finance the expenditure for the next fiscal year, the budget indicated that the present federal administration is to borrow the sum of N1.835.88 trillion. This is further broken down thus: the sum of N1.2 trillion would be borrowed domestically while foreign borrowing would be pegged at N635.88 trillion for the period under review.

Nigeria will need to borrow N1.8trillion to fund the budget next year.

Although the fresh policies and measures to taken by the president are in a bid to encourage the rapid diversification of the Nigerian economy away from its current over-dependence on the oil and gas sector, the nation will still have to seek assistance on how to go about some of its projects.
The capital projects (the country’s focus for next year), rather than recurrent expenditures, it was gathered, will take about 30% of the entire allocation.

5. Oil price benchmark for 2016 is fixed at $38 per barrel
In the last two years, oil prices have been consistently inconsistent, with Nigeria, Africa’s leading oil exporter and producer, suffering a huge loss during this period.

This is apparently responsible for the cut in the oil price to an all-time low of $38 per barrel of crude oil with a projection of 2.2 million production barrels per day, according to the framework for the budget.

This graph shows the slumping oil prices has heavily affected Nigeria’s oil revenues. Source: NNPC

Although the country is not totally deviating from oil production and exportation as one of its key areas, the over-dependence on the sector and the corruption linked to it in recent years, especially with the infamous indictment of former petroleum minister, Mrs Diezani Alison-Madueke in a $20billion fraud, will seemingly reduce in the coming years.
Thus, the expectations from the sector is in line with the economic realities of the moment within the country.

Source: naij.com

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