The Federal Government will borrow N2.36 trillion to fund the deficit in the N7.298 trillion budget presented to the National Assembly on Wednesday, the Minister of Budget and National Planning, Senator Udoma Udo Udoma has said.
“This fiscal plan will result in a deficit of N2.36 trillion for 2017 which is about 2.18% of GDP. The deficit will be financed mainly by borrowing which is projected to be about N2.32 trillion.
“Our intention is to source N1.067 trillion or about 46% of this borrowing from external sources while, N1.254 trillion will be borrowed from the domestic market’, he said.
The Minister noted that in the budget proposal which is a nominal 20.4% increase over 2016 estimates, 30.7% of the expenditure will be devoted to capital projects in line with the determination of the administration to reflate and pull the economy out of recession as quickly as possible.
The 2017 Budget is based on a benchmark crude oil price of US$42.5 per barrel; an oil production estimate of 2.2 million barrels per day; and an average exchange rate of N305 to the US dollar.
Based on these assumptions, aggregate revenue available to fund the federal budget is N4.94 trillion. This is 28% higher than 2016 full year projections. Oil is projected to contribute N1.985 trillion of this amount.
Non-oil revenues, largely comprising Companies Income Tax, Value Added Tax, Customs and Excise duties, and Federation Account levies are estimated to contribute N1.373 trillion. The government it hoped to realize N807.57 billion for Independent Revenues, N565.1 billion from various Recoveries and other sources including mining of about N210.9billion to fund the budget.
Meanwhile, the Minister will on Monday give a breakdown of the highlights of the 2017 Budget estimates presented on Wednesday to the National Assembly by President Mohammadu Buhari.
Presenting the broad estimates to the National Assembly on Wednesday, President Buhari said the implementation of the 2017 Budget will be based on government’s economic recovery and growth strategy.
The Plan, which builds on the Strategic Implementation Plan for the 2016 Budget, provides a clear road map of policy actions and steps designed to bring the economy out of recession and to a path of steady growth and prosperity.
The President said “we continue to face the most challenging economic situation in the history of our Nation. Nearly every home and nearly every business in Nigeria is affected one way or the other. Yet I remain convinced that this is also a time of great opportunity.”
The President said: “we have reached a stage when the creativity, talents and resilience of the Nigerian people is being rewarded. Those courageous and patriotic men and women who believed in Nigeria arenow seeing the benefits gradually come to fruition. I am talking about the farmers who today are experiencing bumper harvests, the manufacturers who substituted imported goods for local materials and the car assembly companies who today are expanding to meet higher demand.”
Vowing that his government will change the Nigerian economic focus from dependence on a single commodity and the habit of Nigerians depending on foreign goods, the President said government will increasingly grow and process local food, engage in local manufacturing and refining of petroleum products.
“We will buy ‘Made in Nigeria’ goods. We will encourage garment manufacturing and Nigerian designers, tailors and fashion retailers. We will patronize local entrepreneurs. We will promote the manufacturing powerhouses in Aba, Calabar, Kaduna, Kano, Lagos, Nnewi, Onitsha, and Ota. From light manufacturing to cement production and petrochemicals, our objective is to make Nigeria a new manufacturing hub.”
President Buhari explained that the implementation of the 2016 Budget was hampered by the combination of relatively low oil prices in the first quarter of 2016, and disruptions in crude oil production which led to significant shortfalls in projected revenue. “This contributed to the economic slow-down that negatively affected revenue collections by the Federal Inland Revenue Service and the Nigerian Customs Service.”
Government’s priorities in 2017, according to him, will be a continuation of the 2016 plans but adjusted to reflect new additions made in the Economic Recovery and Growth Plan. “In order to restore growth, a key objective of the Federal Government will be to bring about stability and greater coherence between monetary, fiscal and trade policies while guaranteeing security for all.”