The Federal Government has commenced work on the 2017 Appropriation Bill with the Federal Executive Council (FEC) yesterday approving a three-year fiscal framework that pegs a benchmark of $42.5 per barrel of crude oil in next year’s budget.
This is contained in the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) both for 2017-2019 approved by the FEC - in line with the Fiscal Responsibility Act - at its meeting chaired by President Muhammadu Buhari.
The framework also fixed the benchmark of $45 and $50 per barrel of crude oil for 2018 and 2019 Budgets, respectively.
Global crude oil price currently hovers around $50 per barrel.
Also approved was a crude oil production target of 2.2 million barrels per day (mbpd) for 2017; 2.3 mbpd for 2018 and 2.4 mbpd for 2019.
Economic growth rate is targeted at three percent, 4.26 percent and 4.0 4 percent respectively for 2017, 2018 and 2019; while a flat foreign exchange rate of N290 to a dollar was proposed.
Explaining these projections to newsmen after the FEC meeting, the Minister of Budget and National Planning, Udoma Udo Udoma, said the growth projection for 2019 declined from the previous year because it will be an election year when investors are usually cautious about their expenditures.
Asked why so there was so much emphasis on crude oil earnings when the administration is talking of diversifying the economy, the Minister said that there would be no back-pedalling on diversification but the government would not go back to using high oil price estimates “even though we sense that prices may be moving towards $60 per barrel in the next year or so”.
He noted that estimates for crude oil earnings were benchmarked because of the volatility of the price of the product.
Udoma stressed that “we are keeping to being very conservative in terms of the reference price of crude oil even though we are expecting it to go higher than this but we are keeping to an extremely conservative price scenario”.
He said the private sector, governors and Non-Governmental Organisations were widely consulted in arriving at the estimates and that greater focus would be placed on good governance, security and infrastructure like roads, rail and ports while government will sustain zero-budgeting methods.
His words: “In the 2017-2019 MTEFF, the government intends to intensify efforts in pursuing manpower-driven economy. So, we intend to intensify effort to diversify the economy, go on with the implementation of ongoing reforms in public finance, enhance the environment for ease of business so as to generate private sector and private investment.
“We intend to continue to pursue gender sensitive, pro-poor and all-inclusive social intervention schemes similar to what we did in 2016; our social intervention programmes are going to be sustained.
“We intend to devote even more resources to critical infrastructure projects just as we did this year. So, we will continue to spend more on roads, rails, transport infrastructure, ports and so on. We intend to focus on governance and security and we intend to maintain the zero-based budgetary approach.”
Udoma said the FEC did not discuss the controversial proposal for emergency economic powers which Buhari’s Economic Management Team, chaired by Vice-President Yemi Osinbajo, is considering for the quick resuscitation of the national economy.
However, on the level of implementation of the 2016 Budget, the Minister said that “in terms of the capital budget, we have released over N400 billion and we are up to date in terms of the recurrent. All salaries have been paid, overheads have been released and statutory transfers made.”
Meanwhile, the FEC also approved that Nigeria should ratify the World Trade Organisation (WTO) Trade facilitation agreement.
The Minister of Trade and Investment, Dr Okechukwu Enelamah, explained that the agreement, which was approved at WTO’s ministerial conference in 2013, seeks to lower the cost of trade among member-nations.
“It is particularly beneficial to developing countries that want to be able to access the international market. Nigeria was one of the countries that approved the agreement then and we have been going through the process to ratify the agreement so that it will come into effect.
“The idea is that the agreement will come into effect when it is ratified by two-thirds of all the countries that approved it originally; we think that will happen sometime this year,” he stated.
Thursday, 25 August 2016
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FG adopts $42.5 oil benchmark, N290/$ exchange rate
FG adopts $42.5 oil benchmark, N290/$ exchange rate
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