estimates to a joint session of the National Assembly by
President Muhammadu Buhari, some economic experts
have expressed doubts over the ability of the Federal
Government to fund the proposed budget.
The president had presented a N6.08 trillion budget for
2016 with recurrent expenditure of N2.65 trillion and
capital expenditure of N1.8 trillion.
The budget, which is to be driven by a oil benchmark of
$38 per barrel is based on projected revenue of N3.86
trillion and deficit of N2.22 trillion with the latter set to
be financed through domestic borrowing of N984 billion,
and external borrowing of N900 billion, totaling N1.84
trillion.
But some economic experts who spoke to Vanguard
while hailing the budget proposal, expressed doubts
over some aspects of the document, especially the
ability of the government to generate the projected fund
to finance the budget.
In his reaction, the Chief Executive Officer, SOFUNIX
Investment and Communications Limited, Mr. Sola Oni,
said “The key issue is how do we finance the budget so
that it does not end up as a mere political campaign
gimmick?”
Mr. Oni, who is also an Investment analyst added that
“one fundamental approach is how the Federal
Government can leverage on the robust platform
provided by the capital market in Nigeria to bridge
infrastructural gaps.
“If we are deviating from over dependence on income
from crude oil, which its budgetary base price of 38
dollar per barrel has slumped to 36 dollar even before
the approval by the National Assembly, it stands to
reason that there are many rivers to cross in order to
realize the potential benefits embedded in the budget”.
Financial Derivatives Company in its comment on the
budget proposal expressed doubts over government’s
ability to achieve a Capital expenditure spending of N1.8
trillion, which is 30 per cent of the total budget, if the
government fails to achieve the projected revenue.
The company said: “The budget also clearly
acknowledges current inadequacies in the supply of
foreign exchange to Nigerians and its impact on traders
and business operators who are hugely reliant on
imported inputs. It also went as far as assuring
Nigerians and foreign investors that the Central Bank of
Nigeria will incorporate some flexibility to its foreign
exchange management which will encourage additional
inflows of foreign currency”.
On his part, David Adonri, Managing Director, Highcap
Securities Ltd, said the 2016 budget appeared over
ambitious for various reasons.
“The budget appears to me to be over ambitious
because the crude oil revenue is dwindling very fast and
the forecast is that it will dwindle further. Judging by the
revenue the government collected since June up to
date, the revenue has dwindled and allocation to states
has also dwindled, I don’t see the reason why the
budget should be higher than last year’s budget.
“Secondly, from my analysis so far, I don’t know how
realistic it is that they are going to meet the revenue
target. You can see that the revenue from crude oil
sales is less than N1 trillion, and then the non-oil
revenue which is about N1.5 trillion appears to be over
ambitious.
“Then the balance which is going to come from budget
deficit is the very worrisome aspect because N1.5
trillion projected as revenue from independent sources
which are not stated was because of certain things they
are going to do if they plug some holes here and there.
That they can realise that N1.5 trillion appears to be
subjective. And then that they plan to realise N350
billion from monies that will be recovered from corrupt
politicians to the best of my knowledge is clouded in
uncertainties.
However, two other economic analysts, Emeka Okolo
and Higo Aigboje, looked at the 2016 budget from the
area of implementation.
In their separate reactions, they said the budget looked
good on paper, but if past experiences are anything to
go by, its implementation may just be the problem.
Mr. Okolo, who is Managing Director, Molten Trust
Limited said: “What I am concerned is that the budget
should be implemented; we are no longer interested in
discourse everyday again; we want implementation of
the budget. On paper, it is good, but implementation is
always the issue.
“I know that some will say that the main issue is that
borrowing is too much, borrowing is not the issue. The
main issue is to use the borrowing for what it is meant
for, that is the bottom-line. If they can implement it
faithfully, that is okay”.
Mr. Aigboje, Managing Director/Chief Executive Officer,
Capital Bancorp Plc, reacted thus: “The 2016 budget is
very positive if it is faithfully implemented and can bring
about economic prosperity. Nigeria’s problem is not
about budgets, but about the implementation process”.
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