- As National Assembly approves MTEF, raises oil benchmark to $44.5
Vice President Yemi Osinbajo, on Wednesday, assured that the newly-developed Economic Recovery Growth Plan of the Buhari administration has been specifically designed to take the country out of recession and in the long term continue to grow the economy.
According to a statement by his spokesman, Laolu Akande, he said the planning of the 2017 was based on the ERGP, which he said would be formally launched next month. Osinbajo spoke at the Buisness Interaction Group attended by several international and local investors and business interests, and hosted by the Nigerian delegation in Davos where he is leading the Nigerian delegation to the yearly World Economic Forum. Assuring that the Buhari administration is very confident about the recovery of the Nigerian economy, Prof. Osinbajo said “it is not difficult to get out of where we are if we understand why we are where we are.”
He reminded his audience that the Nigerian economy remains indisputably the biggest in terms of size of the economy. He said empowerment of Nigerians is at the heart of the Social Investment Programmes of the Buhari administration, even though it also has a social welfare component to help the people survive as they are being empowered.
The Vice President participated and spoke in several events today including a packed international Business Interaction Group of investors focused exclusively on Nigeria. He also spoke at a panel of Building Africa, joined by Rwandan President Paul Kagame, and televised live by the CNBC Africa. At the panel, asked to mention what kind of radical ideas can advance the African continent, Prof. Osinbajo gave the example of the Federal Government’s Social Investment Programme where for the first time half a Trillion Naira is being budgeted by the Federal Government for Social Investment Programmes.
“It is about investment in people, in their skills, in youths, that we have a N500B allocation in our budget last year and proposed for this year also,” the VP explained.
He continued: “It is an investment in education and educating large numbers of people in a short time, it’s a radical thing to make that kind of serious investment in education, ” referring to the N-Power scheme’s training component for young graduates, and non graduates in artesanal and industrial middle-level skills. He also referred to the planned N100,000 supporting grants to students of higher institutions in Science, Technology, Enginerring & Maths, STEM.
In addition, the Vice President noted that the Buhari administration is “committed to investing more in infrastructure,” than in previous times by ensuring that 30% of the budget goes into capital expenditure. Besides, he disclosed that the government is working on how to tap into Nigeria’s huge Pension Fund to finance infrastructure in the country.
To do this he stated that “we have to first derisk” such financing models for infrastructure. An active engagement with, and encouraging the private sector, he said, is also of a great deal, referring to the example of the 650,000bpd refinery project of the Dangote Group, which is going to be the largest single-line refinery in the world.
In the meantime, the two chambers of the National Assembly on Wednesday finally approved the revised version of the 2017-2019 Medium Term Expenditure Framework and Fiscal Strategy Paper. The Senate approved all the critical projections in the MTEF/FSP as proposed by the executive, except the oil benchmark, which was increased to $44.5 a barrel from the proposed $42.5.
By the provision of the Fiscal Responsibility Act, 2007, the MTEF must first be approved by the legislature before the budget is considered and passed. Wednesday’s approval of the MTEF/FSP meant that the Senate and House of Representatives would open debate on the budget as planned on January 24.
The Senate adopted the proposals as recommended by its joint Committee on Finance, Appropriations and National Planning in its report, which was presented to the lawmakers at Wednesday’s plenary. President Muhammadu Buhari had in October 2016 sent the MTEF/FSP to the Senate to serve as the foundation for the 2017, 2018 and 2019 national budgets.
The President had also on December 15 last year presented the 2017 Appropriation Bill to the National Assembly, with a total estimate of N7.298tn. The legislature has yet to work on the budget due to the delayed passage of the MTEF/FSP. Deputy President of the Senate, Senator Ike Ekweremadu, who presided over Wednesday’s plenary, described the passage of the document as a very important step towards the passage of the 2017 budget proposal.
He said, “Hopefully, if we pass this MTEF/FSP, we will be in the position to comment on the consideration of the 2017 budget proposal by next week. It is, therefore, important that we conclude the discussion on this subject and ensure that it is passed today. “Having listened to the comments, it appears to me that the only area that needs to be emphasised is the issue of the exchange rate. We are worried with the huge gap between the parallel market and the official market, and as it has been said by the Chairman of the Appropriations Committee that the Central Bank of Nigeria needs to do something about it, because it is one thing that is breeding corruption.
“We must find a way of bridging that gap and also stabilise the exchange rate so that investors can do their own forecast in terms of their investments. We believe that something needs to be done in the area of the exchange rate.”
The committee, in its report, recalled that daily oil production had been projected to average 2.2 million barrels per day, 2.3mbpd and 2.4mbpd for 2017, 2018 and 2019, respectively. On the oil benchmark price, the report noted that the price of crude oil in the international market fell to as low as $25 per barrel mid-January 2016, with an increase to more than $50 per barrel in October of the same year.
The committee also said while it approved the projected exchange rate of N305 per dollar for the 2017 fiscal year, “a judicious monetary fiscal policy mix and deliberate government policies to expand the productive base of the economy will be expedient to improve the exchange value of the naira relative to the dollar.”
The Citizen with additional report from Punch