Budget: FG raises capital expenditure by 20%; forecasts N3.9trn revenue earnings in 2016, to spend $31bn on economy

Federal Government has announced plans to raise capital expenditure by 20% next year through borrowing amid falling oil prices.

In his first budget since his election victory in March, Muhammadu Buhari told a joint National Assembly sitting in Abuja, Tuesday, during the presentation of the 2016 budget, that he would spend $31bn in 2016 on infrastructure and the economy.

Describing the 2016 budget as ’Laying the Foundation for Sustainable Growth,’ the President said the country’s budget deficit is expected to double to N2.2 trillion naira next year even as the government would seek funding overseas to the tune of N900bn as well as N984bn naira domestically.

He also added that out of the N3.9 trillion revenue forecast for 2016, only N820bn will come from crude.

“This huge decline is having a painful effect on our economy. Consumption has declined at all levels. In both the private and public sectors, employers have struggled to meet their salary and other employee related obligations,” said Buhari.

While noting the downturn of global economy in 2015, President Buhari, however, stated that the Nigerian economy grew by 2.84% in the third quarter of 2015.

“Today, it is widely acknowledged that the global economy has slowed down. This is particularly the case with emerging markets such as Nigeria. However, despite the weak emerging market growth rates, our domestic security challenges, declining oil prices, and the attendant difficulties in providing foreign exchange to meet market demands, the Nigerian economy grew by 2.84% in the third quarter of 2015,” he said.

On the 2016 budget, Buhari said it is ‘designed to ensure that we revive our economy, deliver inclusive growth to Nigerians and create a significant number of jobs.’

“We aim to ensure macroeconomic stability by achieving a real GDP growth rate of 4.37% and managing inflation. To achieve this, we will ensure the aligning of fiscal, monetary, trade and industrial policies,” he stressed.

The president pledged to improve tax collection and invest in other industries including mining and agriculture.

“The Nigerian economy needs to move away from dependency on oil,” he said.

Nigeria’s unemployment rate is growing, up from 8.2% in the second quarter to 9.9% between July and September according to official figures. Inflation is also rising, hitting 9.4% in September, on fuel shortages and higher food prices.

However, Buhari said he expected Nigeria’s economy to grow by 4.4% next year.

Earlier in his remarks, Senate President Bukola Saraki, said the National Assembly expected ‘that the budget must de-emphasis recurrent expenditure and prioritize the upgrade of infrastructure in order to achieve economic recovery and generate employment for our teeming population. ‘

“The 2016 budget must also be bold and pragmatic in providing transparent incentives and conducive environment that will prime private sector-led development, encourage local production and promote made-in Nigeria goods.

“On the budget we are willing and ready to provide the scrutiny necessary to pass only a budget that can be implemented comprehensively to the letter. We are ready to move swiftly and speedily to pass the 2016 Appropriation Bill,” he said.

Continuing, the senate president said: “Let me assure you Mr. President, that with the 8th National Assembly to help you steer the ship of State in the right direction for growth, transparency, accountability, equal opportunities, inclusion and fairness. We will stand by you and work with you to see Nigeria become the pride of all Nigerians home and abroad and earn the respect it deserves in the global arena.”