•Quite ambitious, but implementation is what will make the difference
At a hefty N6 trillion at a time of dwindling revenues from oil, the Federal Government’s Budget 2016 can truly claim to stand tall in ambition: Tall in its assumption of $38 dollars per barrel of crude oil as benchmark at a time of tumbling oil prices; and, tall also in its daily projection of 2.2 million barrels production.
Aside that, the budget answers to the citizens’ craving for fast-track economic growth and diversification that only an expansionary fiscal regime can attain. Although for an economy ill- served by a most decrepit and dysfunctional infrastructure, a 30 percent allocation for capital spend would ordinarily be seen as far below par. However, when compared with the 2015 budget which originally projected aggregate recurrent expenditure of N3.971 trillion or 85.8 percent of aggregate budget (inclusive of SURE -P), and hence capital expenditure at 14.2percent of the aggregate budget (also inclusive of SURE-P) – to which has now been added the recently passed supplementary budget which are principally recurrent, a significant leap forward would appear to have been recorded.
Beyond question, therefore, the budget as a statement of government priority, makes the case for the broad measures tailored to stimulate activities in the real sector, and to turn the tide of infrastructural decay at these particularly difficult times.
As for implementation, the budget will certainly be challenging in a number of ways. Topmost is where the funds to execute the ambitious budget will come from. In the environment of a much reduced revenue inflow from the traditional source – oil, government’s resolve to borrow to finance the budget obviously makes eminent sense.
Of course, with oil prices currently hovering below $40 a barrel, the signs are far from reassuring just as we are under no illusion about the price of oil holding steady anytime in the immediate future. This is why we consider the $38 budget benchmark as somewhat unrealistic. The Federal Government and the National Assembly may wish to take a second look with a view to working out a more appropriate benchmark.
Secondly, the auguries that we can actually sustain the output of 2.2 million barrels per day are also far from assuring. Much as the Buhari administration may wish to take some credit for bringing down the menace of oil theft, the challenge of maintaining a stable regime of production is still there; so is the challenge of getting the market to absorb entire output in a season of glut evidenced by the not-too infrequent reports of unsold cargoes of Nigeria’s Light Bonny. Given what we know of the complexities at these two levels, not even the Federal Government, it would appear, is in a position to offer guarantees. The twain challenges, in our view, are certainly serious as things are.
But so is the lingering issue of fuel subsidy. Given its potential effects on price levels and the cost of living in general, we can understand the government’s reluctance to do away with the fuel subsidy, which is akin to literally throwing vulnerable Nigerians to the hounds of fuel marketers. However, it seems to us that there is hardly a better time than now for the government to weigh carefully the opportunity costs of retaining subsidy. In this, the facts to be borne in mind include, the paucity of funds from factors already highlighted; the nearly one trillion naira outlay annually expended on the subsidy – funds that otherwise could have been channelled into upgrading the infrastructure; and the excruciating pains forced on citizens with every cycle of induced scarcity.
And as we have seen all too often on every occasion of fuel scarcity, whereas it is the ordinary citizens that suffer, the marketers somehow get paid their subsidy dues in the end. Indeed, citizens caught in the grip of their contrived scarcity are ever too eager to pay for fuel above the regulated price while the marketers, ready to cash in on the situation, end up collecting the subsidy twice. And if we may repeat the point that we have always made, the way to go is for the Federal Government to push more aggressively towards self-sufficiency in local refining.
Finally is the issue of discipline in budget implementation. Given the farce that previous Peoples Democratic Party (PDP) administrations made of the budget process, Nigerians have justifiable basis to wonder if the Buhari budget would be different. For, in the final count, only when the goals set out in the budget are successfully delivered would citizens make sense of the change the administration promised.
