Fiscal plan based on $38 oil price benchmark
The Federal Executive Council on Monday approved an estimated budget of N 6 trillion for the 2016 fiscal year, which is about N1 trillion more than the 2015 budget.
The council, which was meeting for the second time since it was constituted, also approved a $38 crude oil price benchmark as well as a 2.2 million barrels a day oil production target.
Budget and National Planning Minister, Udoma Udo Udoma, who briefed the correspondents after the meeting, said the capital expenditure would take priority over recurrent vote in the new administration’s change agenda. Udoma was flanked by the Minister of State in the ministry, Mrs. Zainab Ahmed and his Information and Culture counterpart, Alhaji Lai Mohammed.
He said thaat the Federal Government was working very hard towards getting the Petroleum Industry Bill (PIB) passed
According to him, the government is projecting 30 percent capital expenditure as against the current 15 percent.
the planning minister said, “Today, Council approved the Medium Term Economic Framework, which sets out the policies of government over the next years, it sets out the fundamental economic underpinning of the budget.
“The highlights are as follows: we project and we are working with $38 crude oil price, we consider that to be very conservative but because of the uncertainty, we felt that we should start with a conservative crude oil price.
“We are also working with 2.2 million barrels a day production, it is achievable, particularly because with the passage of the Petroleum Industry Bill (PIB) which we are working to achieve, we believe that, that is a modest figure that we should be able to produce something higher than that.
“And so next year, we are looking at an expansionist budget, we are looking at a budget that will be N1 trillion more than last year, so we are looking at a budget of about N6 trillion. Last year’s budget, including the supplementary was about N 5 trillion, so we are looking at a N 6 trillion budget.”
He disclosed that all the increases would be spent on capital expenditure , because of infrastructure issues that the country has to address.
On funding of the budget, Udoma said the government would get funds from two sources . First , by increasing non-oil revenue and getting more we are looking at trying to get more money from government agencies.
The government will also look at keeping down recurrent budget, which means we are looking at savings that we can make from overheads.
“We will look at the efficiency from our revenue collecting agencies like the Federal Inland Revenue Service and Value Added Tax and then, based on the difference, we may have to borrow.
“But the level of borrowing that we anticipate and we are projecting will be well within the maximum that we allow, which is three percent of the Gross Domestic Product(GDP), because we want a prudent budget, we want a credible budget.”
On the exchange rate, he said: “We are working on the exchange rate that the Central Bank of Nigeria has given us, that is the rate we are working on.”
Udoma, however, did not provide detailed answers as to whether the current subsidy on petroleum products would be totally removed or retained. He simply said: “We are looking into that.”
