FG Targets N7.9tn 2018 Budget As Senate Approves $1.8bn External Borrowing

  • Proposes $45/b, 2.3mbpd in MTEF
  • Six states get nod for $750bn foreign loans

Ndubuisi Francis and Damilola Oyedele in Abuja

The federal government projects that it would spend about N7.9 trillion next year, about N500 billion more than its N7.44 trillion appropriation for this year.

The government’s plan came to light Thursday through the Minister of Budget and National Planning, Senator Udoma Udo Udoma, during an interactive session with top government officials, civil society organisations and Organised Private Sector (OPS) on the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
The minister, who also said the 2018 estimates would be presented to the National Assembly by October, stated that the government was proposing in the MTEF, a $45 per barrel of oil and a 2.3 million barrel per day (mbpd) oil production quota for the 2018 budget.

He added that the budget would also be predicated on an exchange rate of N305/$; 12.42 inflation rate; a 4.8 per cent GDP growth rate; nominal GDP of N133.97 trillion and N81.60 trillion nominal consumption.
He said the early submission of the budget to the legislature would provide the lawmakers ample time to consider the fiscal document and pass it on time.

“The MTEF outlines the federal government’s fiscal policies and our macroeconomic projections for the next three years from 2018 to 2020 and it provides the broad framework for the 2018 budget,” he said, adding: “We are committed to delivering the 2018 budget to the National Assembly by the beginning of October.”

The minister said the fiscal deficit was expected to rise to N2.77 trillion in 2018 from N2.35 trillion, adding that there was no need for Nigerians to panic about the country’s debt burden.

The nation’s debt profile, he noted, was sustainable as it was still within the threshold approved by the Fiscal Responsibility Act (FRA), 2007.

He also explained that there is no country in the world that does not borrow, pointing out that the federal government was capable of meeting its obligations to its creditors.

“We are maintaining our deficit and debts within sustainable limits. Debt financing will be restructured gradually in favour of foreign financing as part of a strategy to lower debt service burden and free up more fiscal space for the private sector,” he added.

Udoma also disclosed that the government was targeting a total oil production volume of 2.3 million barrels per day with an oil price benchmark of $45 per barrel.

Government’s plan in 2018, he added, was to reduce inflation rate to 12.42 per cent with a Gross Domestic Product (GDP) growth rate of 4.8 per cent and nominal GDP of N133.97 trillion.

In terms of revenue projections, he said the government was targeting N5.16 trillion for 2018 as against N5.08 trillion in 2017.

The amount would be generated from oil revenue — N2.1 trillion, non-oil revenue — N1.36 trillion, dividend from Nigeria Liquefied Natural Gas — N29.58 billion, and minerals and mining — N1.06 billion.

Others are independent revenue from agencies of government — N847.9 billion, domestic recoveries and fines — N364 billion, other federal government recoveries — N138.43 billion and grants and donor funding — N281.6 billion.
On the expenditure, the minister said the government was planning to spend N2.63 trillion on non-debt recurrent expenditure, while N350 billion has been set aside for special intervention programmes.

Udoma said N2.4 trillion would be spent on capital projects implementation as against N2.17 trillion approved for 2017.

He described the targets of the government in 2018 as “ambitious” but noted that they were achievable.
He said: “In line with the goals of the Economic Recovery and Growth Plan (ERGP) 2017-2020, the medium term fiscal policies of government will be directed at achieving macroeconomic stability, accelerating growth, intensifying economic diversification and promoting inclusiveness.

“The need to look onwards to boost non-oil revenues cannot be overemphasised, as we diversify.
“We are on track to achieve full recovery and return firmly to the path of growth. Fiscal prudence must be observed at all levels of governance.”

On specific strategies to achieve the projected revenues, he said that the objective of government going forward was to enhance oil revenues and accelerate non-oil revenues.

According to him, this would be achieved through transition from the traditional Joint Venture Cash Call budget to the self-funding mechanism.


Senate Approves FG’s $1.8bn, States $750m External Borrowing

Meanwhile, the Senate has approved the $1.806 billion federal government 2016-2018 external borrowing (rolling) plan for the Lagos-Kano railway modernisation project, and the reconstruction and rehabilitation of the North-east.
The railway project, which includes the Lagos-Ibadan segment double track is to be funded by China Export-Import Bank for $1.231 billion, while the North-east rehabilitation is to be funded by the World Bank for $575 million.
The Senate also approved the $750 million medium term external loan requests for six states, out of the federal government’s request of $1.49 billion for 10 states.

The states whose loan requests were approved are Abia, Ebonyi, Enugu, Kano, Ondo and Plateau.
The approvals followed the adoption of the reports of its Committee on Local and Foreign Debts chaired by Senator Shehu Sani (Kaduna Central).

The terms of the China EXIM bank loan include a maturity tenure of 20 years with a moratorium of seven years at interest rate of 2.5 per cent. It also includes a management fee of 0.5 per cent, a commitment fee of 0.2 per cent, and duration of three years.

The committee in its report observed that the railway project would link the North to the South by rail and promote trade, create jobs and also reduce pressure on roads infrastructure.

“That the Senate do recommend the immediate negotiation for the Eastern corridor (Port Harcourt – Maiduguri) and submit same for approval by the National Assembly,” it read.

The committee also recommended for approval by the Senate, the remaining segments of the Rail Modernisation Project as soon as they are approved by the Board of China EXIM Bank.

The segments are Kano-Kaduna segment, the Lagos-Calabar segment (coastal railway project), and the Port-Harcourt – Maiduguri segment (eastern corridor).

It added that the World Bank funded projects would facilitate the much needed rehabilitation and resettlement of the people of the region back to their respective homelands and allow schools to be re-opened.

The breakdown of the utilisation of the $575 million World Bank loan includes $125 million for polio eradication support and routine immunisation project, $75 million for community and social development project, and $125 million for Nigeria States Health Programme Investment project.

Others are $100 million for State Education Programme Investment Project, $100 million for Nigeria Youth Employment and Social Support Project and $50 million for Fadama III project.

In its report on the loans for the six states, the committee said the loans would facilitate the provision of critical infrastructure and social amenities for the residents and citizens.

It however said there was a need for phased approval of the loan requests for the ten states, which include Ogun, Jigawa, Kaduna and Katsina.

A breakdown of the approved loans are $70 million from African Development Bank (AfDB) for Ebonyi Ring Road Project (to be co-financed by Islamic Development Bank), $200 million ADB facility for Rural Access and Mobility Project (RAMP) in Abia State, and $200 million IDB loan for Kano State Integrated Agricultural and Water Resources Development.

It also approved a $100 million request for Enugu and Kano from the French Development Agency for the third National Urban Water Sector Reform (NUWSRP-III).

“That the remaining four states in the borrowing plan be deferred,” the report read.
The Senate directed the relevant committees to ensure effective oversight on the implementation of the projects for which the loans were approved.

In another development, the Senate passed the bill to establish the Nigerian Financial Intelligence Agency (NFIA) which would grant operational, legal and financial autonomy to the NFI unit.
The bill, if signed into law, would decouple the NFIU from the Economic and Financial Crimes Commission (EFCC) and domicile it in the Central Bank of Nigeria (CBN). The agency would however operate independently without control from the apex bank.

The bill also places the NFIA on first line charge.
The swift passage of the bill is borne out of the Senate’s determination to avert the expulsion of Nigeria from the Egmont Group, a network of 154 national financial intelligence units, which suspended Nigeria in early July 2017.
The bill was first presented to the Senate last week, and its passage was accelerated to avoid a blacklisting of Nigeria’s financial system.

In his comments following the passage, the Deputy Senate President, Senator Ike Ekweremadu, lauded his colleagues for the swift passage of the bill.

“We believe that this is a major contribution in the fight against corruption in Nigeria and we believe the international community will take us more seriously for taking the step today. I hope that Egmont group will also take the decision to lift the suspension on Nigeria because of this step we have taken today,” he said.

“The fact of relocating the agency under the CBN will give other agencies sufficient access to the job of this agency in such a way that there will be no control of the NFIU that will lead Nigeria to another round of suspension. We have taken the right step especially when it is considered that what we have done today is in consonance with what is done in other countries of the world where we have similar agencies,” Ekweremadu added.
Meanwhile, the lawmakers have embarked on their annual six-week long recess, to resume on September 19, 2017.