The recent declaration by Minister of Budget and National Planning, Senator Udo Udoma, that unless the Internally Generated Revenue (IGR) of Nigeria rises by 40 per cent, it would have to borrow more than proposed to implement the 2017 budget has drawn the ire of analysts and financial experts.
Udoma had also told newsmen that for the 2017 budget to be fully implemented, Nigeria will raise its local and foreign loans beyond what has been projected in the budget, which has been sent to the Presidency for accent into law.
Nigeria’s IGR was N1.187 trilion in 2016, which is expected to rise to at least N2.32 trillion in 2017, going by the calculation of the minister. before the budget of N7.44tn would be easily implemented.
Though the Federal Government is still planning to borrow a total of $2.35 billion from domestic and foreign sources, its failure to carry more impressive reforms had stalled moves in securing similar loas from the international institutions, especially the World Bank in 2016.
But the budget column that would allow the country spend N540bn on debt servicing than it will spend on 10 key sectors of the economy, as contained in the budget breakdown of 2017, has raised questions among experts on the direction the budget tagged, ‘Recession Exit Budget Proposal’ would go in achieving this goal.
The Budget Bill, has provided N1.84tn for debt servicing and N1.3tn for some key sectors of the economy, including agriculture, power, works and housing, education, health, transport, mines and steel, defence, police, and trade and investment, but does not have much provision on how to source the deficit.
With the IMF/World Bank insisting that the IGR drive of the government not being strong enough, analysts fear that this might be the reason for resorting to introducing more tax windows on corporate organisations, which are already crying over the effects of “multiple taxation,” in the past three years.
An economist, Mike Dumem, the CEO of a management consultancy, Cultex Marketing, put it this way:” The government has no option now than to dance to the tune of the IMF, which is that it should disengage from holding any equity share in any public company. This, therefore , means that the sale of some key national assets has become imperative, otherwise, the country’s dream of exiting the recession soon would be a far cry.
“As it stands today, the private sector has been overstretched with poor revenue earning, multiple taxation and lack of facilities, especially, power to drive their investment.
“Adding more on them at this time amounts to over-kill and it would create more crisis.”
Dr. Solomon Ezemon, of the Business School, University of Lagos, is of the opinion that the instability from the political front has been having a lot of negative effects on the economy, generally.
“The situation that Nigeria is facing today will never see it exit totally from the recession soon. Mind you, the 2016 budget did not run its full course, though the government has been spending money based on its proposal.
“But the question is, where is it drawing such money if not from the $1 billion Eurobond, which is supposed to be investment-targeted?
“Again the 2017 budget has been clustered with so much proposed expenditure on recurrent, leaving the capital aspect lying fallow, hence the confusion as to where to borrow money to fund it; whereas a well articulated budget will have deficits, no doubt. But policy makers would have plotted from where to source the funds, based on investment plan.
“Perhaps, the President’s (Buhari’s) health condition is causing the lack of needed focus on all of this, others wise, what the minister is saying is like looking for an impossible way of increase on IGR at this stage of the economy.”
Other commentators criticise the budget provision of debt servicing taking up to N330bn of the N2.17tn provided for capital expenditures in all the sectors of the economy.
The government says it hopes to realise the debt service funds from anticipated high performance of oil and non-oil sources, but nothing shows that the non oil sector has any possibility of rising beyond its present 25 per cent performance, thereby still making Nigeria have to fall back on oil to make up the bulk of the revenue generation as usual.
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