By Olanrewaju Ajao The Federal Government has approved the Medium Term Expenditure Framework (MTEF) in preparation for the presentation of the 2016 Budget.
The decision was taken at an emergency Federal Executive Council meeting presided over by President Muhammadu Buhari.
The Council pegged crude oil price at $38 per barrel with a proposal of N6 Trillion for the 2016 Budget.
Speaking to State House Correspondents after the meeting, the Minister of Budget and National Planning, Senator Udoma- Udo- Udoma stated that Federal Government pegged the crude oil benchmark at $38 because they consider it to be very conservative due of the uncertainty in crude oil price.
According to him, the Federal Government is proposing a N6 Trillion budget for 2016, a N1 trillion increase in the 2015 budget, taking into account the recently passed supplementary bill by the National Assembly.
The Minister noted that the increase in the budget will be spent on capital expenditure adding that there was an urgent need to address the deficit in infrastructure.
The increase in the budget, according to the Minister will be sourced from increase in non-oil revenues, monies from government agencies and keeping down on the recurrent bills adding that the government may borrow to make up for the increase .
He also revealed that the government expected to generate a total of 2.2 million barrels of crude oil per day.
“At today’s Council, the 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 fell 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.”
Continuing ; 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 budget which was about N 5 trillion, so we are looking at a 6 trillion budget.
“All the increases actually will be spent on capital, because there is the need to increase the capital because of the infrastructure issues that we have to address.
He added that: “We will get the funding from two sources, we are looking at trying to increasing our non-oil revenue, we are looking at trying to get more money from the various government agencies, policing their collection and trying to get more money from them, we will also look at keeping down our recurrent budget, that means we are looking at savings that we can make from overheads.
“We will look at the efficiencies from our revenue collecting agencies like the FIRS, in terms of company income tax, in terms of VAT, and then the difference, we will 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 3% of the GDP, because want a prudent budget, we want a credible budget, so we are working on that now.
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.
On the whether subsidy will be retained in the 2016 Budget, he stated that the government is looking into that.
He also explained that the government is projecting almost 30 % capital project, up from the 15 %.
“We are projecting about 30%. We will try and reduce overheads, but keep personnel cost, we are not going to adjust it by much, but we at expecting some savings from the IPPIS system which we are using, so we are not cutting anybody’s salary everybody will get their salaries,” he said.
Meanwhile, President Buhari has sworn in two permanent secretaries. They are Olukunle Bamigbose and Isa Dutse.
The two men were among the 18 permanent secretaries recently appointed but were not available when their colleagues were sworn in.
