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As NASS Debate PMB’s External Borrowing Plan
ADEBIYI ADEDAPO
— Oct 30, 2016 5:47 am | Leave a comment
The National Assembly will this week deliberate on the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) which is supposed to provide the framework for the 2017 budget including plans to seek loans by the federal government, ADEBIYI ADEDAPO writes on the issues.
The two federal legislative chambers will this week deliberate and take decisions on major issues bothering on the economy of the country in coming years.
Specifically, both the Senate and the House of Representatives are scheduled to discuss three separate economic matters presented to the legislative assemblies by President Muhammadu Buhari. Clearly, these are not the best of times for the country economically. With the recession projected to abate soon, drastic measures would be needed, urgently.
While most economic analysts agree that the country can only spends its way out of recession, the challenge however is how to generate the funds. The idea of selling some national assets had raised a backlash, just as the activities of militants in the Niger Delta continue to affect the already dwindling revenue from oil. Still, the leadership of the National Assembly had on several occasions expressed willingness to corporate with the executive to over the economic challenge.
Despite some calls for the president to rejig his economic team, the federal legislature had said it was ready to open its doors to the president to come and explain his economic intentions. However, Buhari had on Tuesday, October 4, 2016, submitted the 2017-2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the Senate and the House of Representatives for approval. The MTEF and FSP provides the framework for the 2017 budget.
While the legislators still prepare to deliberate on the MTEF/FSP, the President presented two other letters dated Monday, October 24, 2016. Seeking the National Assembly’s approval of a sum of N180.839,254,430 billion by way of virement to fund shortfalls in the 2016 budget, and the request for an external borrowing of $29.960 billion (N9.13 trillion at interbank rate of N305/$) in the 2016-2018 borrowing plan.
According to the letters, read on both chambers of the National Assembly, the borrowing is meant to address the huge infrastructural deficit in the country.The President stated that $575million would be earmarked for various projects in the North East.
Nigeria’s total debt as at June 30, 2016, was $61 billion (N16 trillion).The outstanding external debt stock for states and federal government is $11 billion (N3.3 trillion), while the domestic debt for the federal government is $37 billion (N11.28 trillion) and that of the states stands at $12 billion (N3.66 trillion).
If the proposal for external debt is granted, the nation’s external debt would rise to $40 billion (N12 trillion).
President Buhari in the letter explained the importance of taking the loan;
“Considering the huge infrastructure deficit currently being experienced in the country and the enormous financial resources required to fill the gap in the face of dwindling resources and the inability of our annual budgetary provisions to bridge the infrastructural deficit, it has become necessary to resort to prudent external borrowing to bridge the financial gap which will largely be applied to key infrastructure projects namely: power, railway and roads project among others.”
Nigeria’s external debt increased to $11.261.89 billion in the second quarter of 2016 from $11.194.65 billion in the first quarter of 2016. The proposed borrowing includes projects and programmes loan of $11.274billion, $10.686billion for Special National Infrastructure Projects, $4.5billlion Euro Bonds and $3.5billion as Federal Government Budget Support.
“Honourable members may also wish to know that with the current relative peace and stability in the North East, it has become extremely urgent to start reconstruction and rehabilitation of the region in order to create jobs for the people and rehabilitate the schools to get the children off the streets and into schools. The World Bank has also provided a sum of $450 million to assist the federal government in this reconstruction and rehabilitation efforts.”
“I would like to underscore the fact that the projects and programmes in the Borrowing Plan were selected based on positive technical economic evaluations as well as the contribution they would make to the socio-economic development of the country, including employment generation and poverty reduction and protection of the most vulnerable and very poor segment of the Nigerian society. The projects and programmes will be implemented in all the 36 states and the Federal Capital Territory.
“I wish to refer to the above subject and to submit the attached draft of Federal Government 2016-2018 External Borrowing (Rolling) Plan for consideration and early approval by the National Assembly to ensure prompt implementation of the project.
“The projects cut across all sectors with special emphasis on infrastructure, agriculture, health, education, water supply, growth and employment generation, poverty reduction through social safety net programmes and governance and financial management reforms among others,” the president explained.
The President who expressed worry over the resurgence of the polio virus disease in the North East, said the situation requires a quick intervention.
“The recent outbreak of polio in the North East is a matter of concern, especially following the recent delisting of Nigeria from the list of polio endemic countries. This therefore calls for urgent and immediate action to stem the tide of the outbreak,” he said, just as he announced that the World Bank had approved a $125 million loan for the federal government to procure vaccines and items to stop and eventually eliminate the outbreak.”
Also, the N180.8 billion virement is expected to fund shortfalls in the 2016 budget. The total recurrent expenditure requirement is N166,630,886,954 while the capital expenditure requirement is N14,208,367,476.
The requested virement is from funds appropriated for Special Intervention (Recurrent) – N300 billion (with a balance of N275bn) and Special Intervention (Capital) – N200 billion (with a balance of N145bn) to fund some critical recurrent and capital items in the budget which have inadequate appropriation.
According to President Buhari, the request arose from a number of reasons, which include shortfalls in provisions for personnel costs; inadequate provision for some items like the amnesty programme; continuing requirements to sustain the war against insurgency and depreciation of the Naira.
“The Personnel Cost and Overhead provisions leave no margin for amounts to be vired from them. The only viable provisions from which the required amounts can be vired are those for the Special Intervention Programme which are not likely to be fully utilised this year as it took some time to work out proper operational modalities for its operation,” he said.
“However, considering the fact that budgeted revenues are running behind target largely due to the renewed violence in the Niger Delta, and there are no supplementary revenue sources, the most viable option for now is the virement of appropriated funds from heads or subheads that may not be fully utilized before the end of this fiscal year,” Buhari said.
The President stated that in the course of implementing the 2016 Appropriation Act, several ministries, departments and agencies (MDAs) had presented issues pertaining to salary shortfalls, the settlement of part of which had led to the depletion of the Public Service Wage Adjustment (PSWA) from N33,597,400,000 to N2,758,296,000, while the Committee on Salary Shortfalls, set up by the minister of finance, had also come up with a figure of N41,875,083,020 as the amount needed to settle salary shortfalls of non-IPPIS MDAs.
Other affected areas are the security-related lines in the Service Wide Vote with the Nigerian Air Force requiring about N12,708,367,476 to cover the foreign exchange differentials in the procurement of its critical capabilities; the need to augment the N1,827,570,443 balance in the Contingency Vote in the light of frequently emerging contingencies; and the inadequate provision for NYSC in the 2016 budget, which requires an additional N8.5 billion to cover the backlog of 129,469 corps members, who are currently due for call-up.
“Similarly, the provision for meal subsidy for the Unity Colleges is inadequate for the number of students in the schools. Also, there was no provision for feeding of cadets at the Police Academy, Wudil, Kano. These situations are hampering the operations of the affected agencies,” President Buhari pointed out.
The president further noted that the provision for Statutory Transfer to the Public Complaints Commission (PCC) was reduced to N2bn in 2016 from N4bn in 2015, adding that the agency is consequently experiencing difficulty in paying the salaries of its personnel as and when due. He explained that due to the devaluation of the Naira, the budgetary provisions for Nigeria’s foreign missions were no longer sufficient to cover all their costs, adding that the provision for Presidential Initiative for the North East (N12bn) had a balance of less than N1.5bn, with the increasing burden of internally displaced persons (IDPs), another challenge.
“I implore you to urgently consider the above proposals in order to support our efforts to improve the well-being of our citizens. I assure you that these proposals have been diligently evaluated, and are truly exigent,” the president concluded.
Meanwhile, the projections in the 2017 – 2019 MTEF/FSP expected to engage the lawmakers’ attention during the debate include the proposed 2017 crude oil benchmark of $42.5 per barrel, up from $30 in the 2016 budget and the estimated N7.775 trillion revenue to be generated from oil resources, considering the $42.5 per barrel benchmark and an estimated 2.2 million barrel per day oil production. President Buhari in the 2017, 2018 and 2019 MTEF & FSP, projected a total budget of N6,866,335,052,740 for 2017 fiscal year. Of the N6.866 trillion proposed 2017 budget, the government would spend N1.765 trillion as capital expenditure, N2.563 recurrent (non-debt expenditure) and N1.639 trillion for debt service, even as N350,000 had been budgeted for recurrent social intervention programme in 2017.
But the main opposition party, Peoples Democratic Party (PDP) would not be swayed by the attempt to borrow. Basking in the recent acceptance of APC governors that they take responsibility for the state of the economy, the former ruling party, Faulting the request for external borrowing of $29.960b and the movement of N180b appropriated for special intervention to funding of ‘critical recurrent and capital items’, the party in a statement by his national publicity secretary, Prince Dayo Adeyeye, called on President Buhari to first explain to Nigerians what his Administration has done with the so called ‘recovered looted funds’ and how far the 2016 Budget is fairing.
The statement read in part: “Also, President Buhari must itemize what he intends to finance with this proposed borrowing of almost $30b instead of lumping it up in a coded term, and to plunge the Nation’s future into burden of debt. More so, this approach cannot be the preferred solution to the economic quagmire which this Government created due to ineptitude.
“This Government budgeted the Sum of N6.07trn for the 2016 Fiscal Year with deficit of N2.22trn and according to the breakdown, N1.8trn was budgeted for Capital Expenditure and President Buhari is now seeking to borrow over N9trn ($29.960b) for ‘critical infrastructure’.
“This is absurd and way outside the Government budgetary provisions for Capital Expenditure and must be rejected by all well-meaning Nigerians.
“Nigerians will recall that the Minister of Information, Culture and Tourism, Alhaji Lai Mohammed in June 2016 made public through a press statement, an account of recovered looted funds between May 2015 to May 2016 amounting to the sums of N78.3b, $185.1m, £3.5m and €11,250m in cash; while others were under interim forfeiture. What happened to the recovered funds? Or is it the same funds the EFCC and DSS are planting in houses of opposition figures and Justices instead of channeling it into the economy? In addition, the Chairman of Economic and Financial Crime Commission (EFCC), Ibrahim Magu recently confirmed our position when he stated that the Commission recovered more money in 8 months than it recovered in 12 years.
“Nigerians need to know how much revenue government has been able to generate from crude oil, non-oil and independent revenue sources since assumption of office from May 2015 to September 2016. This clarification will boost confidence of Nigerians on the management of their resources especially in this period of recession before thinking of engaging in external borrowing.
“It is no gain saying that the APC led Federal Government has left no stone unturned in castigating the PDP’s 16 years as wasted even with its obvious achievements; one of which was getting reprieve from the Paris Club of Creditors.The APC led Federal Government is again taking Nigeria prior to Year 2005 when external debt burden derailed the growth of Nigeria economy and weakened the GDP before the total cancellation of her debt. This proposed action of the APC’s Government will be a great injustice to the citizens of this Country now and in the future if they are plunged back into debt.
“Let us state unequivocally, that history will not forgive this APC Government and its collaborators if they allow this injustice and maladministration to our economy and citizens to stand.We therefore call on the two Chambers of the National Assembly to reject this anti-people request by an anti-people government that has no genuine interest for the growth and development of the people of this Country.
“We again call on all Nigerians to speak with one voice and stop President Buhari from further destroying of our great Nation, Nigeria and by extension, Africa.”
As NASS Debate PMB’s External Borrowing Plan
ADEBIYI ADEDAPO
— Oct 30, 2016 5:47 am | Leave a comment
The National Assembly will this week deliberate on the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) which is supposed to provide the framework for the 2017 budget including plans to seek loans by the federal government, ADEBIYI ADEDAPO writes on the issues.
The two federal legislative chambers will this week deliberate and take decisions on major issues bothering on the economy of the country in coming years.
Specifically, both the Senate and the House of Representatives are scheduled to discuss three separate economic matters presented to the legislative assemblies by President Muhammadu Buhari. Clearly, these are not the best of times for the country economically. With the recession projected to abate soon, drastic measures would be needed, urgently.
While most economic analysts agree that the country can only spends its way out of recession, the challenge however is how to generate the funds. The idea of selling some national assets had raised a backlash, just as the activities of militants in the Niger Delta continue to affect the already dwindling revenue from oil. Still, the leadership of the National Assembly had on several occasions expressed willingness to corporate with the executive to over the economic challenge.
Despite some calls for the president to rejig his economic team, the federal legislature had said it was ready to open its doors to the president to come and explain his economic intentions. However, Buhari had on Tuesday, October 4, 2016, submitted the 2017-2019 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the Senate and the House of Representatives for approval. The MTEF and FSP provides the framework for the 2017 budget.
While the legislators still prepare to deliberate on the MTEF/FSP, the President presented two other letters dated Monday, October 24, 2016. Seeking the National Assembly’s approval of a sum of N180.839,254,430 billion by way of virement to fund shortfalls in the 2016 budget, and the request for an external borrowing of $29.960 billion (N9.13 trillion at interbank rate of N305/$) in the 2016-2018 borrowing plan.
According to the letters, read on both chambers of the National Assembly, the borrowing is meant to address the huge infrastructural deficit in the country.The President stated that $575million would be earmarked for various projects in the North East.
Nigeria’s total debt as at June 30, 2016, was $61 billion (N16 trillion).The outstanding external debt stock for states and federal government is $11 billion (N3.3 trillion), while the domestic debt for the federal government is $37 billion (N11.28 trillion) and that of the states stands at $12 billion (N3.66 trillion).
If the proposal for external debt is granted, the nation’s external debt would rise to $40 billion (N12 trillion).
President Buhari in the letter explained the importance of taking the loan;
“Considering the huge infrastructure deficit currently being experienced in the country and the enormous financial resources required to fill the gap in the face of dwindling resources and the inability of our annual budgetary provisions to bridge the infrastructural deficit, it has become necessary to resort to prudent external borrowing to bridge the financial gap which will largely be applied to key infrastructure projects namely: power, railway and roads project among others.”
Nigeria’s external debt increased to $11.261.89 billion in the second quarter of 2016 from $11.194.65 billion in the first quarter of 2016. The proposed borrowing includes projects and programmes loan of $11.274billion, $10.686billion for Special National Infrastructure Projects, $4.5billlion Euro Bonds and $3.5billion as Federal Government Budget Support.
“Honourable members may also wish to know that with the current relative peace and stability in the North East, it has become extremely urgent to start reconstruction and rehabilitation of the region in order to create jobs for the people and rehabilitate the schools to get the children off the streets and into schools. The World Bank has also provided a sum of $450 million to assist the federal government in this reconstruction and rehabilitation efforts.”
“I would like to underscore the fact that the projects and programmes in the Borrowing Plan were selected based on positive technical economic evaluations as well as the contribution they would make to the socio-economic development of the country, including employment generation and poverty reduction and protection of the most vulnerable and very poor segment of the Nigerian society. The projects and programmes will be implemented in all the 36 states and the Federal Capital Territory.
“I wish to refer to the above subject and to submit the attached draft of Federal Government 2016-2018 External Borrowing (Rolling) Plan for consideration and early approval by the National Assembly to ensure prompt implementation of the project.
“The projects cut across all sectors with special emphasis on infrastructure, agriculture, health, education, water supply, growth and employment generation, poverty reduction through social safety net programmes and governance and financial management reforms among others,” the president explained.
The President who expressed worry over the resurgence of the polio virus disease in the North East, said the situation requires a quick intervention.
“The recent outbreak of polio in the North East is a matter of concern, especially following the recent delisting of Nigeria from the list of polio endemic countries. This therefore calls for urgent and immediate action to stem the tide of the outbreak,” he said, just as he announced that the World Bank had approved a $125 million loan for the federal government to procure vaccines and items to stop and eventually eliminate the outbreak.”
Also, the N180.8 billion virement is expected to fund shortfalls in the 2016 budget. The total recurrent expenditure requirement is N166,630,886,954 while the capital expenditure requirement is N14,208,367,476.
The requested virement is from funds appropriated for Special Intervention (Recurrent) – N300 billion (with a balance of N275bn) and Special Intervention (Capital) – N200 billion (with a balance of N145bn) to fund some critical recurrent and capital items in the budget which have inadequate appropriation.
According to President Buhari, the request arose from a number of reasons, which include shortfalls in provisions for personnel costs; inadequate provision for some items like the amnesty programme; continuing requirements to sustain the war against insurgency and depreciation of the Naira.
“The Personnel Cost and Overhead provisions leave no margin for amounts to be vired from them. The only viable provisions from which the required amounts can be vired are those for the Special Intervention Programme which are not likely to be fully utilised this year as it took some time to work out proper operational modalities for its operation,” he said.
“However, considering the fact that budgeted revenues are running behind target largely due to the renewed violence in the Niger Delta, and there are no supplementary revenue sources, the most viable option for now is the virement of appropriated funds from heads or subheads that may not be fully utilized before the end of this fiscal year,” Buhari said.
The President stated that in the course of implementing the 2016 Appropriation Act, several ministries, departments and agencies (MDAs) had presented issues pertaining to salary shortfalls, the settlement of part of which had led to the depletion of the Public Service Wage Adjustment (PSWA) from N33,597,400,000 to N2,758,296,000, while the Committee on Salary Shortfalls, set up by the minister of finance, had also come up with a figure of N41,875,083,020 as the amount needed to settle salary shortfalls of non-IPPIS MDAs.
Other affected areas are the security-related lines in the Service Wide Vote with the Nigerian Air Force requiring about N12,708,367,476 to cover the foreign exchange differentials in the procurement of its critical capabilities; the need to augment the N1,827,570,443 balance in the Contingency Vote in the light of frequently emerging contingencies; and the inadequate provision for NYSC in the 2016 budget, which requires an additional N8.5 billion to cover the backlog of 129,469 corps members, who are currently due for call-up.
“Similarly, the provision for meal subsidy for the Unity Colleges is inadequate for the number of students in the schools. Also, there was no provision for feeding of cadets at the Police Academy, Wudil, Kano. These situations are hampering the operations of the affected agencies,” President Buhari pointed out.
The president further noted that the provision for Statutory Transfer to the Public Complaints Commission (PCC) was reduced to N2bn in 2016 from N4bn in 2015, adding that the agency is consequently experiencing difficulty in paying the salaries of its personnel as and when due. He explained that due to the devaluation of the Naira, the budgetary provisions for Nigeria’s foreign missions were no longer sufficient to cover all their costs, adding that the provision for Presidential Initiative for the North East (N12bn) had a balance of less than N1.5bn, with the increasing burden of internally displaced persons (IDPs), another challenge.
“I implore you to urgently consider the above proposals in order to support our efforts to improve the well-being of our citizens. I assure you that these proposals have been diligently evaluated, and are truly exigent,” the president concluded.
Meanwhile, the projections in the 2017 – 2019 MTEF/FSP expected to engage the lawmakers’ attention during the debate include the proposed 2017 crude oil benchmark of $42.5 per barrel, up from $30 in the 2016 budget and the estimated N7.775 trillion revenue to be generated from oil resources, considering the $42.5 per barrel benchmark and an estimated 2.2 million barrel per day oil production. President Buhari in the 2017, 2018 and 2019 MTEF & FSP, projected a total budget of N6,866,335,052,740 for 2017 fiscal year. Of the N6.866 trillion proposed 2017 budget, the government would spend N1.765 trillion as capital expenditure, N2.563 recurrent (non-debt expenditure) and N1.639 trillion for debt service, even as N350,000 had been budgeted for recurrent social intervention programme in 2017.
But the main opposition party, Peoples Democratic Party (PDP) would not be swayed by the attempt to borrow. Basking in the recent acceptance of APC governors that they take responsibility for the state of the economy, the former ruling party, Faulting the request for external borrowing of $29.960b and the movement of N180b appropriated for special intervention to funding of ‘critical recurrent and capital items’, the party in a statement by his national publicity secretary, Prince Dayo Adeyeye, called on President Buhari to first explain to Nigerians what his Administration has done with the so called ‘recovered looted funds’ and how far the 2016 Budget is fairing.
The statement read in part: “Also, President Buhari must itemize what he intends to finance with this proposed borrowing of almost $30b instead of lumping it up in a coded term, and to plunge the Nation’s future into burden of debt. More so, this approach cannot be the preferred solution to the economic quagmire which this Government created due to ineptitude.
“This Government budgeted the Sum of N6.07trn for the 2016 Fiscal Year with deficit of N2.22trn and according to the breakdown, N1.8trn was budgeted for Capital Expenditure and President Buhari is now seeking to borrow over N9trn ($29.960b) for ‘critical infrastructure’.
“This is absurd and way outside the Government budgetary provisions for Capital Expenditure and must be rejected by all well-meaning Nigerians.
“Nigerians will recall that the Minister of Information, Culture and Tourism, Alhaji Lai Mohammed in June 2016 made public through a press statement, an account of recovered looted funds between May 2015 to May 2016 amounting to the sums of N78.3b, $185.1m, £3.5m and €11,250m in cash; while others were under interim forfeiture. What happened to the recovered funds? Or is it the same funds the EFCC and DSS are planting in houses of opposition figures and Justices instead of channeling it into the economy? In addition, the Chairman of Economic and Financial Crime Commission (EFCC), Ibrahim Magu recently confirmed our position when he stated that the Commission recovered more money in 8 months than it recovered in 12 years.
“Nigerians need to know how much revenue government has been able to generate from crude oil, non-oil and independent revenue sources since assumption of office from May 2015 to September 2016. This clarification will boost confidence of Nigerians on the management of their resources especially in this period of recession before thinking of engaging in external borrowing.
“It is no gain saying that the APC led Federal Government has left no stone unturned in castigating the PDP’s 16 years as wasted even with its obvious achievements; one of which was getting reprieve from the Paris Club of Creditors.The APC led Federal Government is again taking Nigeria prior to Year 2005 when external debt burden derailed the growth of Nigeria economy and weakened the GDP before the total cancellation of her debt. This proposed action of the APC’s Government will be a great injustice to the citizens of this Country now and in the future if they are plunged back into debt.
“Let us state unequivocally, that history will not forgive this APC Government and its collaborators if they allow this injustice and maladministration to our economy and citizens to stand.We therefore call on the two Chambers of the National Assembly to reject this anti-people request by an anti-people government that has no genuine interest for the growth and development of the people of this Country.
“We again call on all Nigerians to speak with one voice and stop President Buhari from further destroying of our great Nation, Nigeria and by extension, Africa.”
