- 2017 oil benchmark set at $42.50, exchange rate N290/$, economy to grow at 3%
- Avoid Jonathan’s pitfalls, Sanusi warns Buhari
As the federal government fine-tunes
preparations for the 2017 budget, wednesday it approved the Medium Term
Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) for
2017-2019, estimating that the nation’s economy will grow at an average
of 3.73 per cent in the next three years.
The Minister of Budget and National
Planning, Udo Udoma, who disclosed this in Abuja, after the Federal
Executive Council (FEC) meeting presided over by President Muhammadu
Buhari, said the economy is projected to grow by three per cent in 2017,
4.26 per cent in 2018 and 4.04 per cent in 2019.
“The reason the GDP growth rate for 2019
is slightly lower than 2018 is because it’s an election year and
usually in an election year, because of the uncertainties, we have also
made provisions for that,” he clarified.
The minister said government set $42.50
as a reference price in 2017 for oil and projected that it would rise to
$45 in 2018 and $50 in 2019.
He said: “Government is being very
conservative in terms of the reference price of crude oil, even though
we are expecting it to go higher than this, but we are keeping to an
extremely conservative price scenario.”
In terms of oil production, he said
government would retain this year’s estimate of 2.2 million barrels per
day for 2017 despite the fact that the militancy in the Niger Delta has
forced oil production to below one million barrels per day.
For 2018, government remained ambitious
and expects production to rise to 2.3 million barrels per day, while in
2019 it is targeting an increase to 2.4 million barrels per day.
The minister said: “The Federal
Executive Council meeting approved the Medium Term Expenditure Framework
(MTEF) and Fiscal Strategy Paper (FSP) for 2017-2019.
“As you know, the Fiscal Responsibility
Act requires the executive to prepare the MTEF/FSP and send it on to the
National Assembly for their consideration.
“And it is on the basis of the MTEF that
the next budget will be fashioned. So, in short, we have started the
process of preparing the 2017 budget.
“Before the MTEF was presented to FEC
for consideration, there were extensive consultations with the private
sectors, governors and NGOs.
“In the 2017-2019 MTEF, the government intends to intensify efforts in pursuing a manpower driven economy.
“So we intend to intensify efforts to
diversify the economy; we intend to go on with the implementation of
on-going reforms in public finance; we intend to enhance the environment
for ease of doing business so as to generate private sector
investments.
“We intend to continue to pursue gender
sensitive, pro-poor and inclusive social intervention schemes, similar
to what we did in 2016 – our social intervention programmes is going to
be sustained.
“We intend to devote even more resources
to critical infrastructure projects, just as we did this year. So we
will continue to spend more on roads, rails, transport infrastructure,
ports and so on.
“We intend to focus on governance and security and we intend to maintain the zero-based budgetary approach.”
Also speaking at the briefing, the
Minister of Industries, Trades and Investments, Okechukwu Enelamah, said
FEC also approved the ratification of the World Trade Organisation
(WTO) Trade Facilitation Agreement.
He explained that the agreement was approved by all the members of WTO at the ministerial conference held in 2013.
He said: “What that agreement seeks to do is basically to lower the cost of trade generally for everybody.
“There was a clear understanding that
everyone benefits from lowering the cost of doing trade, it is
particularly beneficial to developing countries that want to access the
international market.”
He said Nigeria was one of the countries that approved the agreement.
“We have been going through the process
to ratify the agreement so that it will come into effect. The idea is
that the agreement will come into effect when it is ratified by two
thirds of all the countries that approved it originally, we think that
will happen sometime this year,” he added.
He said that given the importance of
trade to Nigeria, it was appropriate that Nigeria not only ratifies the
agreement but also that it should champion the cause of lowering the
cost of doing businessm which the agreement seeks to achieve.
When asked to produce figures of what
other sectors such as mines and agriculture would contribute to the
economy in view of government’s diversification programmes, Udoma said
that the MTEF included projections for other sectors, but did not
disclose the figures.
He said: “Even though we want to
diversify, we still have to use a particular number to plan in terms of
revenue from crude oil. It doesn’t mean we don’t use numbers for other
receipts. I was just reading the highlights.
“We have numbers for everything, we have
numbers we expect to get from customs, VAT, independent revenue, etc.
So we have numbers for all the things we expect but because oil is
volatile and is an area that has caused us to be where we are today, we
want to assure Nigerians that we are not going back to using high
estimates even though we sense that prices may be moving towards $60 per
barrel in the next year or so, we are still going to use conservative
numbers.”
On the exchange rate projections, he said government would use N290 to $1 as the exchange rate in 2017.
He said: “We believe that the naira will
stabilise and we believe that N290 to $1 is a fair estimate from the
central bank of what the naira is worth.”
On the level of implementation of this
year’s budget, the minister said: “In terms of the performance of the
current budget, in terms of the capital budget, we have released over
N400 billion and we are up to date in terms of the recurrent, all
salaries have been paid, overheads are released, statutory transfers
have been made.”
He said the government had done well in terms of implementation of the budget.
In a related development, the Emir of
Kano, Alhaji Muhammad Sanusi II, has warned that the inconsistencies in
the country’s economic policies by successive administrations have
plunged the nation into unprecedented hardship.
Sanusi added that if Buhari does not act
fast by reviewing his economic policies, his administration might end
up the way of ex-President Goodluck Jonathan.
Sanusi insisted that Nigeria has to retrace its step in terms of economic policies.
He also cautioned Buhari on the activities of those he described as “voodoo economists” in the corridors of power.
Delivering a lecture in Kano yesterday
at Tahir Guest Palace, during the 15th Joint Planning Board (JPB) and
National Council on Development Planning organised by the Ministry of
Budget and National Planning in collaboration with the Kano State
Government, Sanusi said the inconsistencies in the country’s current
economic policies do not favour business and investment in the country.
The emir also advised the federal
government to copy Lagos in terms of formulating policies that could
boost trade, business and attract investors, adding that the Lagos
example could bail the country out of its current economic woes.
He decried Nigeria’s over-dependence on
oil, pointing out that more investment in agriculture, the power sector,
manufacturing and infrastructure development and attractive incentives
to investors would enhance the growth of the nation’s economy.
According to him, “I just saw that we
are always blaming the past administration, but we have also made
mistakes in this administration.
“The problem is that there is nothing we are facing today that we did not know would happen. That is the truth.
“We made mistakes, many of them
deliberate. We ignored every single warning. Not building roads, not
building power, and other necessary infrastructure that can boost the
economy and development of the country.
“We are spending 30 to 40 per cent of
every naira we earn servicing debt. The new borrowings were simply
recycled into much higher recurrent expenditure. The country’s GDP was
growing largely due to consumer spending.
“In 2010 when I was the central bank
governor, the government increased the minimum wage to N18,000. I
protested but they went ahead and borrowed money to pay.
“In 2012, as CBN governor, I said that
this was an unsustainable wage bill; we needed to reduce the size of
public service, which fell on deaf ears.
“I believe we have started retracing our
steps and we have to retrace our steps. If a policy is wrong, it is
wrong and it has to be changed.”
He further advocated for the devaluation
of the naira, stating that those who are advising the president on the
nation’s economy are not getting it right.
In his opinion, only very few Nigerians
are benefitting from the current economic policies, noting that some of
them are making the rich get richer, while the poor continue to wallow
in poverty.
According to him, Nigeria has also been hampered by bad trade policies which are responsible for the collapse of industries.
Sanusi further warned that the economic
downtown could engender terrorism and other crimes, because millions of
Nigerian youths are jobless and restiveness.
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