Experts divided on N9.1tn budget funding capacity
Finance and economic experts have expressed divergent views on the capacity of the Federal Government to effectively implement the 2018 budget signed into law on Wednesday by President Muhammadu Buhari.
The budget, which was passed last month by the National Assembly, was raised by over N508bn, bringing it to N9.12tn as against the original estimates of N8.61tn presented to the legislature on November 7, 2017 by the President.
Speaking on the government’s ability to implement the budget, some finance and economic experts said the Federal Government should be able to generate adequate revenue to fund its programmes as outlined in the fiscal document.
Others, however, said the implementation might not be fully realised owing to the timing of the signing of the budget.
Those that spoke in separate telephone interviews with our correspondent include the Head of Department, Banking and Finance, Nasarawa State University, Prof Uche Uwaleke; and the Registrar, Institute of Finance and Control of Nigeria, Mr Godwin Eohoi.
Others are a former Director-General, Abuja Chamber of Commerce and Industry, Mr Chijioke Ekechukwu; a developmental economist, Odilim Enwagbara; and a former Managing Director, Unity Bank Plc, Mr Rislanudeen Mohammed.
Uwaleke said the signing of the budget by the President would boost investors’ confidence in the economy.
He explained that while the delay in the budget process would affect the full implementation of its capital component, the signing of the fiscal document would in the short-term provide the much needed direction for the economy.
He said, “It’s a welcome development because it is better late than never. We are likely going to see an upsurge in economic activities and it’s going to accelerate the pace of economic recovery now that the budget has been signed
“The President has assented to it to stop further delay, because the amendments that were made by the National Assembly are justified as the assumptions sent by the Executive are no longer realistic. So, we expect that economic activities can commence, particularly in the capital market.
“Activities in the capital market, most especially the equities segment of the market, have been down as a result of uncertainties caused by the delay in the budget passage. Now that the budget has been signed, the market will react positively, because we now have a short-term direction.”
In his comments, Mohammed stated that due to the late signing of the budget, its implementation would be seriously affected.
He said while the overheads, personnel and debt service components would be fully implemented, the timing of the budget would make it difficult for the capital votes to be fully utilised.
He stated, “The government cannot implement the budget effectively. What will happen is that the recurrent expenditure will be fully implemented, the statutory transfers will also be fully implemented, but the capital expenditure will suffer because there will be no time.
“What they can implement with the delayed budget is about 40 per cent to 50 per cent of the capital votes and this is not good for the economy, because it is the capital projects that will have direct effect on the livelihood of Nigerians. Politics has overtaken economics.”
But Eohoi said in view of the fact that oil prices had being on upward trend in addition to the aggressive tax revenue drive of the Federal Government, implementing a budget size of N9.1tn would not be too difficult.
He stated, “It will be possible to finance the budget of N9.1tn, because looking at the oil price, it was at $50 to a barrel when the budget was presented, but now it is selling far above $70 per barrel. So, it is still within acceptable limit for the lawmakers to raise the benchmark to $50 per barrel.
“There are other windows available for the government to generate more revenue considering the aggressive drive to raise tax revenue from six per cent of the Gross Domestic Product to 15 per cent. So, I think the budget is implementable by the government.”
In his comments, Enwagbara said at N9.1tn, the Federal Government’s budget was still low compared to the country’s GDP size.
He noted that for the budget to make any significant impact, it must be raised to about 10 per cent of the GDP.
Enwagbara stated, “Nigeria’s budget is for consumption and what they did is to increase the capital portion of the budget. But I believe we should also raise the budget benchmark price from the $50 proposed by the lawmakers to $80 per barrel to enable us deploy more revenue to fund the budget.
“The budget should be increased further to about 10 per cent of our GDP, because we have one of the lowest budgets in the world. When South Africa is budgeting about $200bn, Nigeria is having about $28bn budget for the year; this is very low for us as a country.”
Ekechukwu, on his part, said, “The budget figure can be absorbed by the expected revenue from oil and other sectors. This revenue expectation does not obliterate the deficit end of the budget, which will still be funded by debts.
“Much as the debt profile of Nigeria is rising every day, the debt to GDP ratio is still not above any tolerable benchmark. As far as the increase is not arising from indiscriminate and arbitrary mark-up for selfish gains, the budget will be implementable.”