Federal government has on Monday alerted the public to be prepared for what lies ahead in the country’s economy as the federal government makes strict economic policies especially as it vowed to strictly monitor expenditure of all Ministries, Department and Agencies, MDAs to avoid wastes.
The Federal government also plans to reduce Personnel cost form N1.8 trillion to N100 billion in the 2016 budget, as part of the move to reduce expenditure and save cost. The government also alerted the public of the excessive N1 trillion that spent on fuel subsidy in the year 2015 which include the Nigeria National Petroleum Corporation, NNPC. Hence to give more attention to Internally Generated Revenue, IGR to fund the N6 trillion 2016 budget, it would remove fuel subsidy, move the price of petrol per liter from N87 to N97.
“Price of refined products today is N87. It was N97 before it was reduced and we really have to go back to that because we don’t really have the finance to remove it,” Says the Minister of state for Petroleum Resources,Ibe Kachikwu who along side the Ministers for Budget and National Planning, Udoma Udo Udoma; Finance, Mrs Kemi Adeosun, Governor, Central Bank of Nigeria, Godwin Emefiele; Executive Chairman, Federal Inland Revenue Service, FIRS, Babatunde Fowler, appeared before the joint committee s of the National Assembly on Finance to defend the 2016, 2017 and 2018 Medium Term Expenditure Framework and Fiscal Strategy Paper, MTEF & FSP documents presented to the National Assembly by President Muhammadu Buhari.
The Minister for Budget and National Planning, Udoma Udo Udoma noted further that it was important that substantial reductions were made on the spending pattern in order to achieve the expected change.
In preparing the MTEF, we seek a dramatic shift from spending on recurrent to spending on capital aspect of the budget. It is going to be tighter for everybody. All non essential expenditure would be cut out. We will reduce the overheads by 7 per cent. We are beginning a journey of change and Change has to start with the clarity of purpose of where we are going.
challenging times need firm and robust response. This is what the MTEF represents. It was also designed to create better governance; to turn things around and promote economic prosperity for the people.
Udoma made this statement explaining that the MTEF was prepared in such a way that it would help combat the economic challenges ahead. The minister went further to state that “It is going to be tighter for everybody. All non essential expenditure would be cut out. We will reduce the overheads by seven per cent. We are beginning a journey of change and change has to start with the clarity of purpose of where we are going.”
Speaking more on how the country will generate funds for its 2016 budget, the minister stated that surpluses that might not be on essential things that we want to focus on will be swept off. He also added that government also need to borrow fund to aid the budget “ultimately we must borrow N1.8 trillion to fund this budget apart from all those adjustments we are trying to make” he said.
However, the Finance Minister explains the various strategies to be taken by the government to reduce the N1.8trn to N100 billion next year
For instance, we are already working with banks so that we can go cashless; so that we could give debit cards to MDAs to procure items.
If they want to buy fuel for instance, their drivers would make use of the cards. We would be able to control the cards to know who and where the fuel was bought. We are really working hard to drive down overhead.
If we don’t attack our recurrent, the risk is that extra money goes into it and we will have nothing to show for it, this is a big risk that we cannot afford.
Speaking further on how and where the government will borrow money, she said: “We are speaking with some of the lenders already. The money we will borrow will be capital tied, project tied. Much of the concessional money is project tied. Also most funds we are taking from the various EXIM banks is specifically tied to capital projects”.
Meanwhile, Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu, added that federal government has since August, been exceeding two million daily production through stringent monitoring of our production by getting quick fixes to instances of pipelines breaking. He went further to say that
The internal projection for our system next year is in excess of 2.4m which is coming from enhanced and increased production from NPDC field. A lot of efficiency had really been applied in this regard.
NPDC will for instance be producing 300, 000 barrels on its own while other partners would process at least 2.2m barrels.“We would address issues of security and other impediments to the realization of our target. We are looking at a collective and holistic handling of security issues between the NNPC and the oil majors, with us taking the lead.
He explained that OPEC is expecting an increase in production from January 2016 even as they also expect a hipe in the price per barrel “…we expect it to go up by $45 to $50 per barrel in spite of OPEC projection. We expect it to hit $70 per barrel in 2017” he said.
On subsidy payment for 2015 he said, “The total subsidy figure for 2015 when taken along with the NNPC will be in excess of N1trn. We can get this specifics but the point is largely that it does not involve NNPC because the agency takes its, off-cuff. We will work towards taking those figures off our budget in 2016. They are critical issues.“The current pricing work we are doing had shown that there shouldn’t really be subsidy. The government doesn’t need to fund subsidy.