The Federal Government is currently working on the 2016 budget that will be between N7tn and N8tn. The figures are higher than the 2015 budget of N4.4tn. Vice President Yemi Osinbajo disclosed this in a paper entitled: ‘The economy – Where we are today’, which he delivered at a presidential retreat organised by the Office of the Secretary to the Government of the Federation for ministers-designate on Thursday.
The retreat, which ends today (Friday), is holding behind closed-doors inside the old Banquet Hall of the Presidential Villa, Abuja, and has ‘Delivering change: From precepts to practice’ as its theme. According to a copy of the paper obtained by our correspondent, Osinbajo told his audience that the government was working towards pegging capital expenditure in the 2016 budget at N2tn.
This, he said, was against the N1.31tn allocated to capital expenditure in this year’s budget. He further said that while the percentage of capital expenditure to recurrent expenditure in the 2015 budget was 19.4, the government would propose 40 per cent for next year’s budget. Osinbajo said:
“The budget process will be zero based, a method of budgeting by which all expenses must be justified for each new budget year. For the Medium Term Expenditure Framework, the actual 2015 budget is N4.4tn, while the proposed 2016 budget will be N7tn to N8tn. Capital expenditure for the 2015 budget is N1.31tn, while the proposed capital expenditure for 2016 is N2tn.”
The vice president also disclosed that 655 Ministries, Departments and Agencies of the Federal Government had so far registered for the Treasury Single Account domiciled with the Central Bank of Nigeria. He put the number of TSA sub-accounts so far created by the CBN at 755.
Osinbajo further said that 518 MDAs had been verified and now had access to the central bank’s accounts.Despite the September 15 deadline given to all the MDAs to key into the TSA system, the vice president said 137 MDAs had yet to comply with the directive. He added that a total of N1.4tn had so far been paid into the TSA to date.
A TSA is a unified structure of government bank accounts enabling consolidation and optimal utilisation of cash resources. It is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments, and gets a consolidated view of its cash position at any given time.
While giving an overview of the current state of the nation’s economy, Osinbajo noted that Nigeria experienced its worst economic decline in decades in May 2015.
“In May 2015, Nigeria experienced its worst economic decline in decades with sharp decline in oil prices from an average of $105 between 2011 and 2014, to $45 in 2015; foreign reserves at 10-year low of $29.595bn; oil production has declined to 2.05 million barrels per day; and power supply down to less than 3,000MW,” he said.
The vice president noted that the insurgency being witnessed in the North-East also led to a decline in agriculture production and an extensive damage to infrastructure. He also noted that extensive corruption and mismanagement of resources were noticed in the Nigerian National Petroleum Corporation’s parallel budgets and what he called the legacy defence expenditure in the North-East.
Osinbajo put the budget deficit in 2015 at N1.05tn against the N960bn recorded in 2014, adding that foreign reserves had reduced from $38.4bn in 2014 to $30.2bn this year. The vice president also put the nation’s Absolute Poverty Index at 62.6 per cent, while unemployment was at 8.2 per cent.
While putting the population of the poor at 110 million, Osinbajo said most Nigerians had remained poor despite rising revenues and Gross Domestic Product growth because the nation’s main revenue earners, the extractive oil and gas, did not by themselves create many jobs.
He also attributed the situation to the irony of a top-down economic model where the major revenue earner was extractive and the value chain was poorly developed. Other factors, according to him, are corruption and lack of transparency; infrastructure problems as well as low spending on health care, education and others.
Osinbajo said the nation could get out of possible recession by embarking on massive infrastructure building/renewal programme; social spending/social protection; improved consumer spending and job creation; and expansionist fiscal/monetary policies.