FG proposes N6trn budget in violation of FRA.

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In violation of the law, the federal government on Monday proposed a N6 trillion budget for 2016 at an oil benchmark of $38 per barrel, three months after the time specified for such.

The Minister of Budget and National Planning, Sen. Udoma Udo Udoma said the proposal was contained in the Medium Term Expenditure Framework (MTEF) approved by the council and be submitted to the National Assembly.

Finalising the MTEF and submitting the budget framework to the National Assembly in December is a violation of the Fiscal Responsibility Act (FRA) which specified the time for submission of such document to the lawmakers

Section 11(1b) of the FRA provides that ‘thereafter, not later than four months before commencement of the next financial year, cause to be prepared a medium term expenditure framework for the next three financial year”.

The federal government assured of no cut in the salaries but still undecided on fuel subsidy. Also, 30 percent of the revenue is allocated for infrastructure in 2016, an increase of 15 percent that it currently stands.

After an emergency Federal Executive Council meeting presided over by President Muhammadu Buhari, Udoma said “At today’s council meeting, we approved the Medium Term Expenditure Framework.

“This sets out the policies of government over the next three years. It sets out the fundamental economic underpinning of the budget.

“The highlights are as follows. We project and we are working with 38 dollars crude oil price.

“We consider that to be very conservative but because of the uncertainties we feel that we should start with a conservative crude oil price.

“We also are working with 2.2 million barrels per day production.

“We believe it is achievable, particularly because with the passage of the Petroleum Industry Bill which we are working to achieve, we believe that that is actually a modest figure; that we should be able to produce something higher than that.

“ And so, next year we are looking at an expansionist budget. We are looking at a budget that will be N1 trillion more than last year.

“So we are looking at a budget of about N6 trillion. Last year’s budget, including the supplementary, was about N5 trillion.

“Most of the increases, all the increases actually will be spent on capital because there is the need to increase the capital spend because of our infrastructure issues we have to address.’’

According to him, the plan will be submitted to the National Assembly and a feedback expected after which the budget will be finalised with all the details embedded.

The minister said that the funding for the budget would come from earnings from the non-oil sector.

“We are looking at trying to get more money from the various government agencies, policing their collection and trying to get more money from them.

“We will also look at keeping down our recurrent budget, that means we are looking at savings that we can make from overheads.

“We will also look at the defficiency from our revenue collecting agencies like the FIRS, in terms of companies income tax; in terms of VAT, and then the difference we will have to borrow.

“But the level of borrowing that we anticipate and we are projecting will be well within the maximum that we allow, which is three per cent of the GDP, because we want a prudent budget; we want a credible budget.’’

Udoma futher said that the council was working on the exchange rate that the Central Bank of Nigeria had given for the budget, adding that it was also looking into whether fuel subsidy would be retained in 2016.

According to him, government is projecting almost 30 per cent of the budget on capital projects, up from the 15 per cent or so that it is currently.

“We will try and reduce overheads, but keep personnel cost; we are not going to adjust it by much.

“But we at expecting some savings from the Integrated Payroll and Personnel Information System (IPPIS) which we are using; so we are not cutting anybody’s salary; everybody will get their salaries.’’

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