Dec 17 2014
International Brent crude oil price dropped to $59.83 per barrel on Tuesday as the Federal Government notified the National Assembly of its intention to present the 2015 budget to it on Wednesday (today) for consideration and approval.
The drop raised fears that the $65 oil benchmark for the 2015 financial estimates might be further reviewed downwards.
The Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, is to present the N4.357.96tn budget to the two arms of the National Assembly.
The details of the financial proposal are contained in the Medium Term Expenditure Framework and Fiscal Strategy document sent to the Senate by President Goodluck Jonathan.
The government proposed N627bn out of the total figure as capital expenditure and N2.622tn for recurrent expenditure.
The revised 2015-2017 MTEF showed a sharp reduction in the figure presented in the MTEF earlier sent to the Senate but was withdrawn following the earlier crash of crude oil price in the international market.
In the first MTEF presented in September, 2014, the government had proposed a benchmark of $78 per barrel of crude oil, with an exchange rate of N160 to a dollar.
The total budget figure then was N4.8tn, but when oil price crashed, the government effected a reduction in the budget benchmark from the earlier proposed $78 to $73 per barrel, with an exchange rate of N162 to a dollar…………………………………………………………………
Okonjo-Iweala had during the announcement of the austerity measures for the economy following the drop in oil prices, explained that efforts had been put in place to strengthen tax administration to get more revenue from the well-off in the society.
She lamented that only 25 per cent of Small and Medium Scale Enterprises are registered taxpayers, noting that remedying that will broaden the tax base.
Also, she said independent auditors only completed three to five audits a year compared to 50 a year in Angola.
Speeding up audits, she added, would help to improve tax collections and anomalies.
On the expenditure side, the minister said that more cuts on spendings would be implemented within the 2015 fiscal period.
However, she assured that more money would be channeled for growth-enhancing projects that would help cushion the impact of the austerity measures on ordinary Nigerians.
Okonjo-Iweala said. “For the immediate 2015 budget, we shall cut certain recurrent spending such as purchase of administrative equipment, overseas travels and trainings, etc.This is the low hanging fruit.
“We shall also complete the work on Integrated Personnel and Payroll Information System which has already covered half the agencies and weeded out 60,000 ghost workers saving N160bn.
“Completing this work could save another N160bn. In the medium term, the current pressures provide a unique opportunity for the country to reduce duplication of agencies,commissions and committees within the administration and to restructure and reduce recurrent expenditure, reform public administration and make serious efficiency gains.
“Inevitably, there will also be some cuts in capital expenditure in the 2015 Budget, but this is being done in a way that is pro-poor and pro-average Nigerian. Focus will be on priority sectors of infrastructure, health, education, and security, as well as growth stimulating and job creating sectors like agriculture, housing and creative industries.”
Culled from Vanguard.
I wish to comment on the areas i highlighted.
Were they not aware they could save cost on some ‘low hanging fruit’ expenditures, improve agriculture , increase tax base etc all these while they we spending extravagantly and borrowing with reckless abandon? I guess our leaders are just shortsighted and live to spend our resources on immediate ‘wants’ thinking every day will be full of plenty, now that situation is changing , they are running around to fix what they should have fixed from the word go. May God help us all.