Buhari Osinbajo present 2016 Budget to National Assembly, Oil still dominates Economy

President Muhammadu Buhari has presented the 2016 budget. Taking a departure from recent past where the budget was transmitted by a representative, Buhari – who was accompanied by Vice-President Yemi Osibajo and other members of the federal cabinet – presented government’s spending plan for 2016 to a packed joint session of the National Assembly.
The President also took the opportunity of the budget presentation to announce that pump price of petrol had not been reviewed from N87. He emphasised that the price of fuel remained at the official price “for now”.

The President arrived in the House of Representatives chambers, which hosts budget presentations, around 10am and he proceeded to present his speech after the welcome address by Senate President Bukola Saraki.
The President disclosed that the government plans to spend N6.08 trillion in 2016 with a revenue projection of N3.86 trillion, resulting in a deficit of N2.22 trillion. And of the total budget sum, N1.8 trillion is earmarked for capital projects.

“To deliver our development objectives, we have increased the capital expenditure portion of the budget from N557 billion in the 2015 budget to N1.8 trillion in the 2016 budget. Distinguished and honourable members of the National Assembly, for the first time in many years, capital expenditure will represent 30% of our total budget. In future years we intend to raise the percentage allocation for capital expenditure,” the President said.
A breakdown of capital expenditure shows that Works, Power and Housing received N433.4 billion, and Transport N202.0 billion. This is just as Special Intervention Programs was allocated N200.0 billion; Defense N134.6 billion; and Interior N53.1 billion.

Buhari stated that the targeted investments in infrastructure and security are linked to government’s reforms in the Agriculture, Solid Minerals and other sectors with capability to create jobs for Nigeria’s youth.
The President, while reiterating his resolve to run a lean and transparent government government, equally said that federal government borrowing will be strictly for capital projects. He added that N113 billion will be set aside as a sinking fund to deal with maturing loans.
The President said: “Our 2016 borrowings will be principally directed to fund our capital projects. Furthermore, the sum of N113 billion will be set aside for a Sinking Fund towards the retirement of maturing loans; while N1.36 trillion has been provided for foreign and domestic debt service. This calls for prudent management on our part, both of the debt portfolio and the deployment of our hard earned foreign exchange earnings.
“In fulfilment of our promise to run a lean government, we have proposed a 9% reduction in non-debt recurrent expenditure, from N2.59 trillion in the 2015 Budget to N2.35 trillion in 2016. Furthermore, we have budgeted N300 billion for Special Intervention Programs, which takes the total amount for non-debt recurrent expenditure to N2.65 trillion”.

Buhari, however, said that the federal government will ensure adequate funding for critical sectors such as education and healthcare, both of which fall under recurrent expenditure.
“We will devote a significant portion of our recurrent expenditure to institutions that provide critical government services. We will spend N369.6 billion in Education; N294.5 billion in Defense; N221.7 billion in Health and N145.3 billion in the Ministry of Interior. This will ensure our teachers, armed forces personnel, doctors, nurses, police men, fire fighters, prison service officers and many more critical service providers are paid competitively and on time,” he disclosed.

Buhari, who admitted the down turn in nation’s economy, owing to the slide in the oil price from $112 per barrel as at June 2014 to $39 per barrel, noted that the prevailing socio-economic challenges has been further worsened by the unbridled corruption and security challenges experienced in the last few years. He, however, stressed his commitment to the ongoing fight against corruption especially in the oil and gas industry.
The President said: “Although we are working to diversify our economy, we will not lose sight of the need to restructure the oil and gas sector which has been marred by corruption and plagued with inefficiencies. Accordingly, I have directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to adjust its pricing template to reflect competitive and market driven components. We believe this can lower input costs and attain efficiency savings that will enable PPPRA to keep the selling price for all marketers of petrol at N87 per liter for now.”

On the issue of ensuring transparency and accountability in non-oil revenue generating agencies, which will lead to increased the availability of funds for government, Buhari said he has appointed qualified persons to head these agencies. This is even as he expressed hope that the Treasury Single Account will block leakages.
In his words, “Some of the decisions taken by the new administration include: injection of new leadership at the helm of our revenue generating agencies including the Federal Inland Revenue Service (FIRS), Nigerian National Petroleum Corporation (NNPC), Nigerian Communications Commission (NCC), and the Nigerian Customs Service (NCS) as well as implementation of the Treasury Single Account (TSA) which, so far, has provided greater visibility of Government revenues and cash flows. The present administration also provided intervention funds to support States to navigate their fiscal challenges by restructuring their commercial bank loans and by providing facilities to enable them to pay salary arrears.”

Saraki, Dogara commend Buhari, promised speedy passage of the budget
Meanwhile, the Senate President commended Buhari for presenting the budget by himself. He stressed that the President’s presence at the National Assembly signalled a new beginning in legislative and executive cooperation.
“Mr President, your coming to this hallowed chamber in person today to present the 2016 draft Appropriation Bill, bears eloquent testimony to your profound respect and commitment to the ideals of our constitutional democracy and the dictates of the rule of law. This is the first time in a few years that the President of Nigeria has personally performed this constitutional task. It highlights the importance you have attached to building a smooth working relationship with the National Assembly. This is a positive gesture that is not lost on all of us,” Saraki said.
Speaker of the House of Representatives, Yakubu Dogara, while giving the vote of thanks equally noted President Buhari presenting the budget personally was a clear departure from the recent past where the head of the executive shunned the National Assembly. He joined Saraki in promising the speedy passage of the budget.
“Indeed change has also come to the Executive: It was fast becoming a norm that the President seats in the Villa and submits the Budget estimates to the Parliament by post, thereby shunning the opportunity which today’s occasion normally presents the President to interact with the legislature and also talk directly to Nigerians about the Budget. I was afraid that, with the revolution in science and technology now, the President, this time around, was going to either email or tweet the Budget estimates to the National Assembly.

“On the budget we are willing and ready to provide the scrutiny necessary to pass only a budget that can be implemented comprehensively to the letter. We are ready to move swiftly and speedily to pass the 2016 Appropriation Bill. The swift passage of the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper already points to our commitment and resolve towards this. I would like to use this opportunity to thank all my colleagues in the Senate and the House for their steadfastness and patriotism in this area. We will apply same but in the light of the great importance of this document we will not short-circuit scrutiny on the altar of expediency,” Dogara stated.
The Speaker, who commended the Buhari on his anti-corruption war and “the general structural improvements that are apparent on the face of the document,” called on the President to employ his characteristic high standards with regard to the implementation of the budget.