President Goodluck Ebele Jonathan will soon assent the 2015 Approriation bill recently passed into law by the National Assembly as the Coordinating Minister for the Economy and the Minister of Finance, Dr Ngozi Okonjo-Iweala pointed out that it has been difficult to manage the economy so far.
The minister, addressing the media on the state of the economy and the 2015 Appropriation bill on Tuesday in Abuja stated that the economy was living up to the grim expectations painted at the begining of the year due to the reduction in the crude oil prices.
She said due to the cashflow problem being encountered by Nigeria, the government is on a monthly basis managing the economy as the situation demands.
According to her, five months into the 2015 fiscal year, government has only been able to pay workers’ salaries while no capital vote has been released so far as a result of paucity of funds
Explaining the nature of cash flow problem that is peculiar to the country, the Coordinating Minister said there is usually low fund within the first few months of the year while the situation improves in the middle of the year only to revert to paucity of fund in the latter part of the year.
She said “Traditionally the first part of the year witnesses low revenue because tax receipts come in from the middle of the year. This has compounded the challenges caused by the steep drop in revenues due to the oil price fall. As a consequence of the revenue challenges, there has been no capital budget released so far this year”
As a result of this trend, the minister said the Federal Government had borrowed N472billion both internally and externally out of the N882billion loan projected in the 2015 budget.
“We have front-loaded the borrowing programme to manage the cash crunch in the economy, Out of the N882 billion budgetary provision for borrowing, the government has borrowed N473 billion to meet up with recurrent expenditure, including salaries and overheads.”
“As you know, I have been honest with you since the current economic problems started. I would like to repeat: we have serious challenges, things have been tough since the beginning of the year and they are likely to remain so till the end of the year. We have serious challenges but we also have strengths and if we do the right things we can keep a steady course and emerge out of the current situation”
As a result of the 50 per cent decline in oil revenues, she disclosed that the country had faced a difficult cash crunch , while the focus is on keeping the economy stable and the government running through a series of measures.
These challenges notwithstanding, the minister said the Federal Government had managed to keep the economy stable to the point that the Nigerian economy which is projected to grow by 4.8 per cent this year is according to respected analysts, doing much better than many other oil producing countries.
She said one positive feature despite the clear challenges is the fact that food prices, though inching up are still quite stable, while inflation is still in single digit.
“This has helped to reduce some of the pressure that Nigerians are going through. We also have the advantage that we are an asset rich country and that is a definite strength.It is a challenging time and requires daily, weekly and monthly management to keep the country going and that’s what we have been doing.”she stated.
On whether the federal government will release capital votes this year in view of the crisis within the economy, Dr Okonjo-Iweala said since the present government would soon wind down by May 29, she could not speak for the incoming administration, adding however that “the situation looks grim.”
The Coordinating Minister for the economy also stated that there were no major differences in the Appropriation bill sent to the National Assembly and the one passed into law.
She said the NASS passed a benchmark oil price of US$53 per barrel ($1 higher than the budget proposal generating an extra revenue of N54.25 billion for FGN)
The minister said other key parameters driving the oil revenue side of the budget such as oil production volume of 2.2782mbpd and exchange rate of N190/$ were retained.
Also she said the NASS approved the N100 billion and N45.52 billion provisioned for fuel and kerosene subsidy proposed by the executive, while other components of non-oil revenue were also retained as proposed.
The minister disclosed that the FGN Independent Revenue was raised by N39.294 billion, from N450 billion to N489.294 billion.
Based on the above, the minister said the Gross Federally Collectible Revenue increased by N169.845 billion, from N9.61 trillion to N9.78 trillion, as a direct result of raising the benchmark price,
Also she said the aggregate expenditure passed was N4.493 trillion, N67.43 billion higher than the proposed aggregated expenditure of N4.425 trillion while debt service remains unchanged atN943.62 billion.
The minister explained that statutory transfers was increased by N9.34 billion, from N366.28 billion to N375.62 billion.
Breaking down the statutory transfers, Dr Okonjo- Iweala said “NDDC increased from N45.78 billion to N46.72 billion (an increase of N940 million), while UBE increased from N67.30 billion to N68.38 billion (an increase of N1.08 billion). These are strictly based on formula driven by the increase benchmark oil price.”
She said aggregate capital expenditure (inclusive of transfers and SURE-P) was increased to N722.20 billion, from N663.67 billion (an increase of about N58.57 billion).
This , she said , comprises of an increase of N37.77 billion in MDAs’ capital and N20.80 billion for MDGs under capital supplementation.
The minister said IPPIS capital (N5 billion) was completely removed from the Appropriation Bill, while capital development of National Institute for Legislative Studies was increased by N4 billion (from N2 billion to N6 billion), and N1 billion was provisioned for a new project, National Assembly Clinic
Disclosing that the fiscal deficit was decreased from N1,067.12 billion to N1,041.01 billion (a decrease of about N26.11 billion), the minister stated that the highlights of the analysis of the 2015 Appropriation Bill passed by the NASS show that the increase in expenditure outlay by N67.43 billion over the proposed budget was financed by the extra revenue from the $1 per barrel increase in the benchmark price (about N54.25 billion).
Nigerian Tribune News – culled from:http://tribuneonlineng.com/content/it-has-been-difficult-managing-economy-year-%E2%80%94okonjo-iweala#overlay-context=