- To raise $1bn Eurobond for infrastructure before year-end Governors back measures
Ndubuisi Francis and Tobi Soniyi in Abuja
The federal government disclosed friday that it is on the verge of releasing another tranche of N350 billion as part of the 2016 Budget capital vote, even as a total of N150 billion had been extended to some states under the Budget Support Fund, in the past three months.
The disclosures came as the government rehashed a cocktail of measures being put in place to reflate and pull the economy out of recession.
Addressing journalists in Abuja alongside key heads of parastatals under her ministry, the Minister of Finance, Mrs. Kemi Adeosun, stated that so far, a total of N420 billion had been released and cash-backed as capital vote since the budget was signed into law in May, adding that another N350 billion was on the verge of being released to bring the total releases to about N770 billion.
“We have a plan to reflate the Nigerian economy, to reposition it. When an economy is in recession, demand goes down because confidence goes down, people don’t have enough money to spend and there’s not enough money circulating in the system. “What the government wants to do is to step in and begin to spend and pump in more money into the economy and then get things moving again.
“When we started about a year ago; we said this economy needed to be reflated. Growth was slowing consecutively for a number of quarters and there was always the remote risk of recession. We planned for that scenario that if that happens this is what we need to do.
“Now, the general thrust has not changed. We need to reflate the economy; we need to switch the economy from a consumption-driven economy to an investment-driven economy.”
According to her, one of the sectors that received the largest chunk is Power, Works and Housing, adding that quite a lot had also gone into defence because of the necessity “to rebuild the credibility of the army to continue in their efforts in the new phase.”
Adeosun listed other sectors that have been major beneficiaries of the capital releases as Interior and Transportation.
“Of course, you see activities have resumed on the abandoned four international airport projects. We have funded those. Agriculture received significant funding because of the time-sensitivity of the sector and because food price was rising and we needed to intervene to make sure that production is increased so that we can get food prices down.
“We are releasing another N350 billion. The focus is going to be similar. There will also be the funding of about N60 billion in the Social Intervention Programme and that’s very important in terms of putting money into people’s pockets. Those are the programmes that we really cash-backed
She stated that because of the resolve of the federal government to use infrastructure and some key sectors as the fulcrum to stimulate economic growth, a move to raise $1 billion Eurobond had commenced.
“We are about to appoint our advisers. We are raising additional $1billion. Two weeks ago, we approved the external borrowing plan. That was very important because we said we will be borrowing the cheapest money first. We have approved that plan from the World Bank, the ADB, from GCAP, with interest rates as low as 1.5 per cent, with tenor as long as 40 years to intervene in some specific areas, which include agriculture, education, health, rebuilding of the North-east and railway projects which are very key to what we are doing,” Adeosun said.
Explaining some of the technicalities that impinge on government’s efforts to make appreciable impact on the economy and the people at large, she said: “There is always a time difference between when you release money and when it takes effect. What we are trying to do is to shorten that lag.”
According to the minister, some of the delays arise from the procurement process, adding that a way out was being worked out with the ministries “to try and speed things up.
“If we don’t go through the open procurement process, it doesn’t actually provide the opportunity for Nigerians.”
“If a ministry has to award contracts and no one knows, then they can only award it to people they know; to their friends and families and we are trying in this administration to get away from that to be transparent. That has caused some delays but we are working with the BPP (Bureau of Public Procurement) to see how we can fast-track the process so that the money can trickle down into the pockets of Nigerians.
“Already, there are activities on roads, on power and health solid minerals, water resources and work is ongoing. We have a strategic plan that will take us out of the recession that we found ourselves in. We want to make sure the recession is as short as possible. We don’t think that it would be a long recession because some of the initiatives that we have will now begin to bear fruits,” Adeosun said.
The minister lamented that meeting the Cash Calls obligation also has far-reaching implications on government’s funds, noting that, for example, only N41 billion was realised from oil sales while N110 billion was expended to fund Cash Calls.
“If we had that money, we could have pumped it into the economy. We are working with the Ministry of Petroleum Resources and NNPC to get out of the Cash Calls; that is the long-term plan, to allow those Joint Venture operators to borrow money that they need rather than taking money from the Federation Account and that will improve the money in circulation. There are also initiatives to get out of funding cash calls from the federation account.
On Budget Support funds, she said: We have also done a lot of work with the Sub-national governments around the Budget Support plan. Many of them have not been paying salaries for months. We have now been able to support them with additional monies every month from the FAAC account and many of them have now resumed paying salaries.
“We are monitoring, because the loan facilities were conditional. We have sent the monitoring and evaluation committee out to go and check that they are actually doing what they undertook to do and we are pleased to report that many are paying salaries and that will also have a huge effect on demand and help to get the economy moving,” she disclosed.
According to her, since the commencement of the Budget Support Plan, N50 billion had been set aside for interested states to draw from in the past three months, with each of them getting the same amount of money.
The minister noted that with the prudent management of resources and the different ways things are being done by the current administration, in addition to the various measures in place, the current recession in the economy would be shortlived.
She stated that apart from overcoming the recession, “a long-term plan to reposition the economy and make sure that we don’t go through this boom and burst cycles that are driven by the oil prices does not rear its head in the future.
“The economy has to be more resilient than that so that we don’t find ourselves back to where we are now,” she added.
On personnel cost, the Head of the Continuous Audit Team of Mr. Mohammed Dikwa, said through the concerted efforts of his team in weeding out ghost workers from the system, personnel cost had reduced by 20 per cent.
He said about 30,000 names found on the payroll were discovered not to be on the employ of the federal government.
Governors back measures to rescue economy…
State Governors have expressed support for the economic measures being introduced by the Buhari’s administration to bring the country out of recession.
Chairman of the Nigeria Governors Forum (NGF) and Zamfara State Governor, Abdulaziz Yari told State House Correspondents yesterday that this was one of the resolutions reached at the extraordinary meeting of the NGF held at the old Banquet Hall of the State House, Abuja.
Yari said: “Also the governors resolved with a commitment to encourage the federal government to continue along the line to bring the country out of recession.”
On the issue of insurgents, he said that members resolved that it must be treated as a matter of national emergency
According to him, the forum also agreed to activate the states’ task force on polio or the primary health care, which is to be led by the deputy governors.
The governors, he said, also expressed their commitment to paying their counterpart funding towards polio eradication.
He said that the governors would engage the Minister of Health in order to give urgent attention to eradication of Lassa fever in the country.