Budget: FG Alters 2016 – 2018 Revenue Projections

Minister of Budget and National Planning, Senator Udoma Udo Udoma, on Monday told an expanded joint committee of the House of Representatives that the 2016-2018 Medium Term Expenditure Framework (MTEF) had to be altered because key projections in the document have become unrealistic over time.

Udoma, who alongside the Minister of Finance, Kemi Adeosun, Accountant General of the Federation, Ahmed Idris, as well management teams of the Budget Office of the Federation, the Central Bank of Nigeria (CBN), the Nigeria National Petroleum Corporation (NNPC), Federal Inland Revenue Service (FIRS) and others, met with the joint committee.

LEADERSHIP had reported that chief executives of revenue generating agencies would interact with the  House joint committees on Finance, Appropriation, National Planning and Economic Development, Legislative Budget and Research and Aids, Loans and Debt Management‎ working on the 2017-2019 Medium Term Expenditure Framework ( MTEF) and the Fiscal Strategy Paper (FSP).

Specifically, the House committee seek to determine the feasibility or otherwise of the revenue benchmark quoted by President Muhammadu Buhari in the proposed budget.

The committee  led by that of Finance and Appropriation, explained that all  macro economic projections have to be adjusted due to developments after the budget was finalised in August (2016)”.
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According to Udoma, the economy was not as robust as expected, as crude oil production was disrupted, and production came down to about half of the expected.

He pointing out that the new document was prepared after extensive consultations, and that it perfectly conformed with the provisions and requirements of the Fiscal Responsibility Act.

Specifically affected in the new adjustments, according to him include the projected inflation rate of 12.93 percent, which had to be put at 15 percent, as efforts at bringing it down from the current 18 percent in which it stands is not possible while putting other factors into consideration, and the exchange rate of N290 to a dollar, and now N305 to a dollar.

“Based on the new adjustments, several other things had to be modified”, he stated.

He however explained that it was not all gloomy, as there have been positive adjustments too, especially in the area of revenue generation targets, which has helped in the reduction of the 2017 budget deficit initially projected at N4.438 trillion to a new projection of N2.356 trillion.

According to him, of the aggregate N7.298 projected expenditure, capital allocation has been jerked up to 31 percent, from the initial 28 percent, explaining that relevant government agencies have been tasked to recover outstanding royalties, while Early Step-in Rights could bring in $1.5 billion, oil production licensing about $926 million, and marginal oil fields; $100 million.

On effect of the Treasury Single Account (TSA), Minister of Finance argued that though the effect in the short term was bad, “but in the long run, it is going to benefit the economy”, noting that it was also an opportunity for the commercial banks to do the real business of banking.