The Federal Government has prepared a budget proposal of N6.9 trillion for the 2017 fiscal year which will be presented to the National Assembly soon.
This budget estimate is contained in the 2017 to 2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) sent to the National Assembly for approval on Tuesday.
In the document, it was discovered that the government also expects exchange rate to be N290 to $1.
The official exchange rate currently is over N300 to $1 while it is about N480 at the parallel market.
The government also said in the document that it has plans to sustain its developmental projects by unveiling plans to set up a $25 billion infrastructural development fund as a means of attracting non-budgetary resources.
The country’s debt stock currently stands at N16.3 trillion ($61.45 billion) as of June 30, 2016.
In adherence to the three percent threshold set out in the Fiscal Responsibility Act 2007, the 2017 fiscal deficit was projected at N2.7 trillion in nominal terms.
As a means of funding the budget, the government also projected oil benchmark of $42.5 per barrel while production was expected to peak at 2.2 million barrel per day despite the volatility in global oil prices and the uncertainty in the oil production capacity of the nation brought about by the renewed militancy in the oil sector.
The government in the MTEF also expected oil price to be $45bpb and $50bpb, respectively, for 2018 and 2019 with oil production benchmark of 2.3 million and 2.4 million barrels per day for the same period.
The presidency said it expects the country’s “oil and gas sector to rebound with an average growth rate of 9.69 percent during the period while the year-on-year inflation rate is projected at 12.92 percent for 2017 and 12.57 percent for 2019.
“The nominal GDP is expected to increase from N108.735 trillion for 2017 to N129.773 trillion for 2019. Similarly, private consumption expenditure is projected to grow from N80.048 trillion for 2017 to N91.955 trillion for 2019. These are important revenue projections, in addition to enhancing the capacity of the government to increase spending on core social and economic programmes during the MTEF period”.
The aggregate revenue to fund the 2017 budget is projected to increase over the 2016 estimate of N3.855 trillion by about eight percent or about N313 billion. Thirty-three percent of the amount is expected from oil sources while the balance is derivable from non-oil sources in consonance with the government’s renewed focus on diversification of its revenue base.
Meanwhile, the recurrent (non-debt expenditure) and capital payments are projected to increase in nominal terms by N217.42 billion and N177.6 billion, respectively, in 2017 over the 2016 estimate.
On the risks to the Medium-Term Outlook, the document stated that “the Nigerian economy has remained susceptible to a number of recurring risks and persistent shocks. These risks have posed setbacks to government finances, constrained economic growth and consequently slowed the pace of achieving development objectives. These shortcomings have been carefully considered in designing the Medium Term Strategy”.
President Muhammadu Buhari in his letter to the leadership of the two chambers of the parliament said his request was in line with Fiscal Responsibility Act of 2007, adding that “preparation towards the submission of the 2017 budget to the National Assembly is progressing well”.
The Fiscal Responsibility Act requires the executive to prepare the MTEF/FSP and send it to the National Assembly for its consideration. It is on this basis that the budget will be fashioned.
In the document, the government proposed N1.3 trillion as oil revenue to fund the 2017 budget, N14 billion for NLNG dividend, N1 billion from share of minerals and mining, while non-oil revenue is projected at N1.5 trillion.
Others are independent revenue, N1.2 trillion; Federal Government’s share of actual balance in special accounts, N6.5 billion; government’s balances in special levies accounts, N9 billion and government’s unspent balance of previous fiscal year, N50 billion.
The document also revealed that the amnesty programme was increased from N20 billion in 2016 to N65 billion in 2017; debt servicing increased from N1.326 trillion in 2016 to N1.639 trillion in 2017, while the special intervention programme (recurrent) was raised from N300 billion to N350 billion.
The Federal Government noted that the forex policy was revised in its bid to accommodate the pressure on the reserves which stand at about $26.36 billion and allow effectiveness of fiscal adjustment.
President Buhari in the letters to Senate President Bukola Saraki and the Speaker, House of Representatives, Yakubu Dogara, asked for expeditious consideration of the document which will form the basis for the 2017 budget.