Buhari's 2016 Budget: The Squandering of Riches Continues- Adebowale

RingTrue with Yemi Adebowale; Email: yemi.adebowale@thisdaylive.com; 07013940521 (text only)

I thought that with the Muhammadu Buhari change mantra, the era of budgeting huge amount for frivolous things in the Presidency would become history in Nigeria. Unfortunately, the reverse is the case as seen from the 2016 budget submitted to the national Assembly. In spite of the poverty, disease, hunger and malnutrition pervading this country, the Buhari administration had the effrontery to budget about N3.7 billion for the purchase of unspecified number of BMW salon cars for the Presidency’s principal officers. Another N189 million was voted to “buy tyres” for various vehicles being used in the Presidency. Who would have thought that Buhari would also indulge in these excesses? It is nauseating to know that Buhari even increased the budget for local and international travels to N1.415 billion as against the N944,672,109 spent in 2015 by him and his predecessor, Dr. Goodluck Jonathan. The amount is N470.38 million or 46.7 per cent more than what Jonathan was allocated for the same item in 2015.

The 2016 budget for the Presidency is filled with all sorts of repulsive expenditure. N326 million was allocated for Aso Rock Wildlife Conservation, including the purchase of exotic animals as against the N24. 6 million budgeted last year by Jonathan. Acquisition of presidential canteen materials and kitchen equipment for the Presidency will gulp N89 million in 2016. State House will spend N104.7m on refreshments and meals. Foodstuff and catering materials worth N102.9 million are to be supplied. The Vice President’s office will get N16.6 million for supply of foodstuff and catering services in 2016. The maintenance of the 10 aircraft in the Presidential fleet will gulp almost N3.65 billion in 2016. Also, N764.67 million was proposed for “construction and provision of recreational facilities in the Presidency.  N322.4 million is allocated for the linking of cable for the driver’s restroom at the State House. I guess they will be laying golden cables.

So, this is the change Nigerians voted for? What has happened to the so-called “efficiency unit set” up by this administration aimed at driving a reduction of overheads by at least seven per cent, personnel costs by eight per cent, and other service wide votes by 19 per cent.?

The planned profligacy aside, the budget itself is dead on arrival. In spite of the forecast by the IMF that crude oil could sell for below $20 per barrel in 2016, our budget was still predicated on crude oil benchmark price of $38 per barrel and a production estimate of 2.2 million barrels per day in 2016. It costs about US$30 to produce a barrel of oil in Nigeria, hence the expectation of revenue of between US$8 and US$9 per barrel by the federal government in the 2016 budget. This could be fiscally damaging because the entire revenue expected from crude oil may not be realised if the price falls below $30 as a result of the glut in the crude oil market. So, oil-related revenue expected to contribute N820 billion to the budget may end up being a mirage. Already, crude oil price was about $31 per barrel yesterday. According to the IMF projection, “price of crude oil could drop between $5 and $15 in 2016 owing to the prospective lifting of economic sanctions on Iran and the capacity of the Middle East oil producing country to roll out additional one million barrels of crude daily.” Additionally, there are concerns following the decision of the USA to lift a ban on the exports of its oil, adding to the global supply glut. If the IMF predictions come to pass, the entire revenue projected to come from crude oil in the 2016 budget will be wiped out. This administration did not plan for this. In the short term, a responsible government should focus on aggressive tax drive to shore up revenue.

The FIRS and Customs can contribute at least N10 trillion to the federation account if properly managed. In the medium term, focus should be on export of agricultural/industrial products and solid minerals for forex inflow. In the long term, we should be working towards the completion of Brass LNG. There is still a big global market for liquefied Natural Gas.

Buhari’s 2016 budget was also predicated on a revenue target of N3.86 trillion resulting in a deficit of N2.22 trillion. The plan is to finance the deficit by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion, amounting to N1.84 trillion. This is most preposterous. How can a government that promised change be looking towards borrowing to finance over 30% of its budget? Again, the plan to borrow N984 billion in the domestic financial market will create crisis for the real sector that depends largely on this market for finance. Of course, federal government bonds and treasury bills will be more attractive, thus creating problem for manufacturers in their quest for finance. Already, manufacturers are gasping for breath because of the stifling policies of the Buhari administration, particularly the forex restrictions. As a result, thousands of Nigerians are being sacked daily by manufacturers.

I sincerely hope that the National Assembly would look at this budget proposal dispassionately and cut off Buhari’s frivolous expenditure proposals. Our distinguished lawmakers must return the budget to about N4 trillion, which is realistic. We should not expect anything from crude oil in 2016.