“The DMO is committed to making sure that we raise money to fund the 2016 budget deficit from appropriate sources and through appropriate mix during the fiscal year to make sure that capital projects are funded,” Dr Abraham Nwankwo, Director General DMO assured recently in Lagos.
In the medium to long term, debt sustainability in Nigeria hinges on the overall sustainability of the economy, and the overall economic sustainability hinges on diversifying the economy in a sustainable manner. “That is what the government is doing in agriculture, solid minerals, ICT and manufacturing. And to do that, we need a strong infrastructure base and that is why government is spending what it is borrowing on capital projects,” the DMO stressed.
Nigeria’s President Muhammadu Buhari, in demonstration of the government’s commitment to capital projects development recently at the N6.06 trillion 2016 budget signing ceremony in Abuja assured immediate release of N350 billion capital projects development funds into the economy.
Buhari said unlike the previous administration that budgeted N18 billion for roads, the present budget has N200 billion provision for the sector, just a fraction of other capital projects which cut across health, railway, energy, sports ,hospitality, education, security, aviation among others.
He said that the budget signing will trigger concerted efforts to reflate the Nigerian economy, a key element of which is an immediate injection of N350 billion capital projects funds into the economy. “Through the 2016 budget, aptly titled “Budget of Change,” the government seeks to fulfill its own side of the social contract. The Budget I have signed into law provides for aggregate expenditures of N6.06trn,” the President said.
Nigeria’s Vice President, Professor Yemi Osibanjo as well as Zainab Ahmed, Minister of State for Budget and National Planning had earlier stressed the Federal Government’s commitment to ensure that the 2016 budget is fully implemented while funds meant for capital projects are effectively directed to the identified projects.
Professor Osinbajo had disclosed in a paper entitled: ‘The economy – Where we are today,’ delivered at a presidential retreat organised by the Office of the Secretary to the Government of the Federation for the then ministers-designate, that the government was working towards pegging capital expenditure in the 2016 budget at N2trillion, about 30 per cent of the budget sum. This, he said, was against the N1.31tn allocated to capital expenditure in the 2015 budget. He had further said that while the percentage of capital expenditure to recurrent expenditure in the 2015 budget was 19.4, the government tinkered with 40 per cent for the 2016 budget. Osinbajo said, “The budget process will be zero based, a method of budgeting by which all expenses must be justified for each new budget year.
The Debt Management office (DMO) has disclosed that borrowed funds would be deployed to finance capital projects contained in the 2016 N6.06 trillion budget. Dr. Abraham Nwankwo, Director General of Debt Management Office (DMO) re-echoed recently that the federal government has resolved that funds to be borrowed for the 2016 budget financing would be committed to financing capital projects.
Nwankwo, at the DMO organized Capital Market Correspondents Association of Nigeria (CAMCAN) one-day workshop in Lagos, with the theme: “Public Debt and the challenge of financing Nigeria’s economic recovery” said that the DMO is committed to raising capital to fund the 2016 budget deficit.
Such funds, he said are to be raised from appropriate sources and through suitable mix during the 2016 fiscal year to make sure that capital projects are adequately funded. Nkwnkwo said that Nigeria is rightly positioned to borrow more hence the country’s debt to GDP ratio is 13 per cent. “The debt to GDP ratio is 13 per cent, compared to the 56 per cent of peer groups. So in that essence, our debt is still very sustainable” the DG said.
He urged Nigerians to boost contribution to nation building by ensuring sustenance of payment of taxes and other duties to beef up the country’s tax revenue which he said had remained relatively low.
Nigeria’s comparative tax revenue to GDP ratio of less than 7.0 per cent, against a ratio of 18 per cent by the country’s peer group, reinforces the need to widen the tax net for the government to generate more tax revenue, he stressed.
“As our economy grows, as our GDP grows, as we are collecting enough in taxes from individuals and corporate bodies to be able to fund capital projects, our economy will continue to grow” Nwankwo said.
The DMO boss emphasized that the Nigerian debt level is vastly sustainable, as the country still has potential that could be harnessed. These potentials he said, the federal government is presently working to exploit for efficient growth of the economy He said the debt sustainability and overall economic sustainability can be significantly influenced by individuals and corporate bodies paying taxes fully. Nwankwo, commenting on the impact of decline in global oil price said that the Nigerian government is confronting the challenge through diversified, self-sustaining growth in agriculture and agro processing, solid minerals, manufacturing and ICT. In the medium to long term, debt sustainability in Nigeria hinges on the overall sustainability of the economy, and the overall economic sustainability hinges on diversifying the economy in a sustainable manner, he had said.
“That is what the government is doing in agriculture, solid minerals, ICT and manufacturing. And to do that we need a strong infrastructure base and that is why government is spending what it is borrowing on capital projects,” Nwankwo insisted.
With funding from the debt market, greater opportunity would be provided to Nigerians and corporate bodies to contribute to governance and infrastructural development by lending to the government and receiving guaranteed earnings from their investments. It would also help to create the much needed employment opportunities to millions of Nigerians; hence the capital projects to be executed with the funds would serve as elixir for greater employment Also, such capital projects such as roads, rails, hospitals, among others, would be the much needed infrastructures to boost economic advancement as well as reduction of abject poverty in the society. Zainab Ahmed, Minister of State for Budget and National Planning, after the recent Federal Executive Council (FEC) meeting presided over by Vice President Osinbajo revealed that a strategic implementation plan for the 2016 budget had been mapped out.
According to her, the Ministry of Budget and National Planning presented to Council for discussion priority economic activities that the administration needs to undertake to ensure that the purpose for which the 2016 budget was made, which is to stimulate the economy, to create jobs for the country’s teeming youths and to extend support to the poor and very vulnerable, is realized.
She said the ministry presented 34 strategic priority programmes that need to be realised within 2016, noting that each of these projects have very clear deliverables and targets and indicators which will be measured to ensure that the respective ministries, departments and agencies (MDAs) deliver on the desired goals. Ahmed disclosed that these 34 specific areas are grouped into four major objectives. The first is policy, governance and security; the second is diversification of the economy; the third is creating support for the poor and the vulnerable while the fourth is reflating the economy through investment.
The assurance of the DMO that it would raise the needed funds is welcome, especially it has proven capacity to deliver. What is direly needed is the cooperation of Nigerians and others, as well as the conducive environment for the Office to operate and live up to its promise for the ultimate good of Nigeria and Nigerians.
