· May trigger inflation, CBN chief warns
Ndubuisi Francis and Damilola Oyedele in Abuja
The full implementation of the N6.03 trillion 2016 budget will depend on the ability of the federal government to meet its revenue targets, the Minister of Finance, Mrs. Kemi Adeosun, has said.
The minister spoke yesterday at the House of Representatives sectoral debate on economic diversification and said: “I cannot promise that every single agency would receive every money appropriated for them (because) the budget is an estimate and funds would be released based on revenue.”
Assuring the legislators, however, that government was committed to ensure that available funds were judiciously deployed, monitored and backed by result measurement, she said that efforts were being intensified to boost revenue generation outside the sale of crude oil.
Adeosun said despite the paucity of funds, ministries, departments and agencies (MDAs) were not required to lobby to access funds, adding that the funds would only be released after the needs had been determined and prioritised.
She added that MDAs would only be able to access funds for capital projects after providing full details of planned expenditure. “You have to tell us what you want to do with the money, but for capital projects, we would measure,” the minister explained.
To ensure that the revenue projections were met for better budget implementation, she said the federal government was looking to improve efficiency in collection of taxes, custom duties and levies.
Adeosun unveiled plans to improve the efficiency of the Nigeria Customs Service (NCS) to collect duties and levies by modernising their equipment and improving personnel welfare, which she said was below that of other paramilitary agencies.
The minister was cautious when fielding questions on the clamour for the new minimum wage, noting that the government was more interested in reducing the cost of living.
“This budget wants to cut power costs, transport costs; people spending hours on the roads,” she said, telling the legislators that the Ministry of Agriculture was taking steps to reduce the prices of staple products.
Adeosun also defended President Muhammadu Buhari’s frequent trips abroad and declined to quantify the financial implications to the nation’s treasury.
“Nigerians have underestimated how badly our international reputation was damaged. I would rather talk about how much has been restored,” she said, adding that the trips also serve to pressure countries holding on to funds looted from Nigeria.
According to the minister, “These countries, who have enjoyed the benefits of being in custody of the funds are not in a hurry to return them to Nigeria’s coffers.”
She cited Switzerland, which she said was still holding on to $320 million looted by a former Head of State, Gen. Sani Abacha, insisting that certain conditions had to be met before it could be returned. “Now they are giving us conditions, and we asked, why didn’t they impose conditions before the monies were taken there?”
The minister clarified that not all recovered loot was in cash, as some were in form of properties, jewellery and watches.
She explained that some of the recovered properties would be deployed to serve as offices for government agencies still operating from rented properties. Adeosun further explained that over N4 billion would be saved from the strategy.
Speaking on the efforts to block leakages in the system, the minister disclosed that 1.2 million civil servants and 320,000 police personnel had been captured on the Integrated Payroll and Personnel Information System (IPPIS).
This, she said, had reduced the wage bill to N4.2 billion monthly, after the elimination of 43,122 fraudulent payroll entries, adding that the military, and other paramilitary agencies would be captured before the end of 2016.
Adeosun cited cases where people who were no longer in the service of government continued to draw salaries, some drawing multiple salaries across different agencies.
She narrated an astonishing discovery where one person was found to have about 200 accounts, and drawing salaries and emoluments across several of the accounts.
All those found culpable were being investigated and would be prosecuted by the Economic and Financial Crimes Commission (EFCC), while others would be made to refund the monies as deductions from their salaries or their pensions, she said.
The minister listed initiatives aimed at reinforcing the economy to include greater coordination of fiscal and monetary policy to achieve non-inflationary growth, improving the ease of doing business and specific policy initiatives to catalyse Medium, Small and Micro Enterprise growth.
The initiatives, Adeosun said, were expected to result in real GDP growth rate of over four per cent in 2017, infrastructure development to drive economic growth, diversification of the economy and growth of non-oil sector, improvement in overall business environment and key socio-economic indicators.
In a related development, the Director, Monetary Policy, Central Bank of Nigeria (CBN), Mr. Moses Tule, has expressed concern that the implementation of the N6.06 trillion 2016 budget could trigger a hyper-inflationary trend in the economy.
Tule predicated his concern on the fact that the budget was only signed in May and became implementable the same month, leaving the government with what he called only seven months to run the budget.
His seven-month prognosis however detracts from the fact that the National Assembly injected a clause in the Appropriation Act that in spite of being signed in May, this year’s budget should run a 12-month cycle.
The CBN chief, who presented a paper in Abuja yesterday on “Evolving the Most Sustainable Framework for the Nation’s Fiscal and Monetary Policy Regime and Budget Administration,” said it would be difficult for the government to inject over N6 trillion into the economy within a period of seven months without triggering hyper-inflation.
At the forum, which was the inaugural edition of the Nigerian Economic Stakeholders Summit (NESS), with the theme, “The Nigerian Economy: Navigating a Sustainable Landscape,” Tule said the budget was too huge to be injected into the economy in seven months without igniting a hyper-inflationary trend.
He pointed out that monetary, fiscal, policy and budgetary coordination among relevant stakeholders was desirable to achieve a stable economy.
In another presentation, his CBN counterpart, Mrs. Tokunbo Martins, who spoke on “Critical Adjustment Strategies for Commercial Banks to Cope with Stress and Threats of Treasury Single Account Regime”, said the introduction of the Treasury Single Account (TSA) had brought with it liquidity stress on deposit money banks.
Martins, who is CBN’s Director of Banking Supervision, said the aggregate transfer to the CBN from the commercial banks on inception of TSA in August 2015 stood at N2.67 trillion.
She noted that this adversely affected the banks as the attendant liquidity stress led to staff redundancies and forced the banks to embark on layoffs.
Martins observed that banks that channeled their energies into mobilising deposits from the public sector were mostly affected, adding that such over-reliance on public sector funds was flawed.
She said with TSA already in place, banks were adopting other deposit mobilisation strategies, noting that the large proportion of the unbanked which presently stands at 39.5 per cent of adult population presents a great opportunity.
According to her, banks have already deployed this strategy as aggregate industry savings deposit increased from N2.9 trillion in August 2015 to N3.3 trillion in April 2016.
Martins advised banks to retrain and re-channel the skills of redundant employees who were made to chase public sector funds.
In his remarks, the Chairman, Senate Committee on Finance, who was the chairman of the occasion, Senator John Enoh, said nobody anticipated that about a year ago, the Nigerian economy was going to take the kind of plunge it has currently taken.
He lamented that so many things had happened to the economy in recent time such that the nation’s GDP is in the negative region or the first time in over two decades, adding that the incumbent administration should make the economy a priority.
The lawmaker noted that while the fight against corruption was desirable, the government should not sacrifice the economy while pursuing that.
Enoh stated that it would be unfortunate if the well-being of the people would deteriorate to the level that would push them into preferring a corrupt system that gave them comfort to the one fighting corruption at the expense of their well-being.
He wondered what the federal government had been doing in terms of releasing the N350 billion it set aside in the budget to stimulate the economy.
In his remarks at the event, the Speaker, House of Representatives, Hon. Yakubu Dogara, said the National Assembly was of the belief that the present corruption and recent economic measures introduced by the President Buhari government would yield the desired results in due course.
“We have provided strong legislative backing to the government to execute its programmes promised to the Nigerian people,” Dogara said in a speech presented on his behalf by the Chairman, House Committee on Banking and Currency, Hon. Jones Onyereri.
Dogara said for Nigeria to meet its developmental challenges, foster sustainable growth and economic development, efforts should be focused on good governance, anti-corruption measures, security of lives and property, poverty eradication, and job creation, among others.