Nigeria is facing “a difficult cash crunch”, which has forced a N473 borrowing to finance recurrent expenditure.
In this year’s budget ,N882 billon is for borrowing.
Finance Minister Ngozi Okonjo-Iweala told reporters yesterday that the situation was caused by the 50 per cent decline in oil revenues.
For the Federal Government to remain focused on keeping the economy stable and the government running it, “front-loaded the borrowing programme to manage the cash crunch in the economy”.
As a consequence of the revenue challenges, Mrs. Okonjo-Iweala stated that “there has been no capital budget release so far this year”. Traditionally, the first part of the year witnesses low revenue because tax receipts come in from the middle of the year. This has compounded the challenges caused by the steep drop in revenues due to the oil price fall.”
Mrs. Okonjo-Iweala noted that “it is a challenging time that requires daily, weekly and monthly management to keep the country going and that’s what we have been doing”.
Nigeria, she said, has the advantage of being an asset rich country and in times of financial difficulties, the country could leverage on its assets by either selling some off or using them to borrow money to manage the economy, which “is a definite strength”.
However that, she said, has been left for the incoming government to decide. Adjustments will probably have to be made to accommodate the amount of subsidy that needs to be paid also, she said.
In spite of this challenge, the government, Mrs. Okonjo-Iweala added, “has managed to keep the economy stable to the point that the Nigerian economy, which is projected to grow by 4.8 per cent this year is, according to respected analysts, doing much better than many other oil producing countries.”
On the 2015 budget parametres, Mrs. Okonjo-Iweala said the National Assembly passed the budget with an expenditure outlay of N4.493 trillion (up from the N4.425 trillion proposed by President Goodluck Jonathan) representing an increase of N67.43 billion.
For 2015, the National Assembly passed a benchmark oil price of US$53 per barrel $1 higher than the budget proposal, generating an extra revenue of N54.25 billion for the Federal Government.
This budget has not been signed into law by President Goodluck Jonathan - the finance minister said this might be done in a couple of days time.
Other key parameters driving the oil revenue side of the budget the finance minister said were retained: with oil production volume retained at 2.2782mbpd and exchange rate of N190/$, “this is because the inter Bank rate now is at about 197/$ and this is what the Central Bank have asked us to use because of their feeling about the way that the exchange rate will move for the rest of the year.”
Denying earlier reports, the minister said the National Assembly “approved the N100 billion and N45.52 billion provisioned for fuel and kerosene subsidy proposed by the Executive.” While other components of non-oil revenue were also retained as proposed.
The Federal Government Independent Revenue was raised by the National Assembly by N39.294 billion, from N450 billion to N489.294 billion.
Based on this figures, gross Federally Collectible Revenue was increased by N169.845 billion, from N9.61 trillion to N9.78 trillion, as a direct result of raising the benchmark price. The FGN Budget Revenue was also increased to N3.452 trillion, up from N3.358 trillion
On the expenditure side, the aggregate expenditure passed by the National Assembly was N4.493 trillion, N67.43 billion higher than the proposed aggregated expenditure of N4.425 trillion, but debt servicing remained unchanged at N943.62 billion.
Statutory transfers was increased by N9.34 billion, from N366.28 billion to N375.62 billion, budgetary allocation to the Niger Delta Development Commission (NDDC) increased from N45.78 billion to N46.72 billion (an increase of N940 million), while Universal Basic Education (UBE) got an increased budgetary allocation from N67.30 billion to N68.38 billion (an increase of N1.08 billion).
All these the finance minister said “are strictly based on formula driven by the increase benchmark oil price.”
The National Assembly (NASS) allocation was also raised by N5 billion, from N115 billion to N120 billion, that of the Public Complaints Commission (PCC) was raised by N2 billion, from N2 billion to N4 billion same as well as that of the Human Rights Commission (HRC) which was raised by N316 million, from N1.2 billion to N1.516 billion.
Aggregate capital expenditure (inclusive of transfers and SURE-P) was increased to N722.20 billion, from N663.67 billion (an increase of about N58.57 billion). This comprises an increase of N37.77 billion in Ministries Departments and Agencies (MDAs’) capital and N20.80 billion for MDGs under capital supplementation. IPPIS capital (N5 billion) was completely removed from the Appropriation Bill, while Capital development of National Institute for Legislative Studies was increased by N4 billion (from N2 billion to N6 billion), and N1 billion was provisioned for a new project, National Assembly Clinic. In 2015, the provision of N20.78 billion for SURE-P capital spending was retained.
The third component of the budget, the fiscal balance was reduced by the National Assembly from N1,067.12 billion to N1,041.01 billion (a decrease of about N26.11 billion). As a result, the fiscal deficit as a percentage of GDP decreased from 1.11 per cent to 1.09 percent.
The minister noted that “the highlights of the analysis of the 2015 Appropriation Bill passed by the NASS show that the increase in expenditure outlay by N67.43 billion over the proposed budget was financed by the extra revenue from the $1 per barrel increase in the benchmark price (about N54.25 billion) and from the increase in Federal Government Independent Revenue by N39.294 billion. The balance of the increase (i.e. N26.11 billion) was used to reduce the deficit”.
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