2017 – What To Expect

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Thanks to all the 25,904 partners who visited the blog in 2016. When the blog started in April 2016, I was not sure of the response considering it is not a gossip blog or one that carries bizarre stories. I truly appreciate your support and wish you compliments of the season.

Now that 2016 is coming to an end with all its challenges in Nigeria: inflation at 18%, exchange rate at N480/$ from N250, diesel at N230 per liter, scarcity of aviation fuel, etc., etc., etc. The question is what does 2017 hold?
2016 & 2017 Budgets – Comparison (Any significant difference?)

S/N Narration 2016 (N) 2017 (N) Difference (N)
1 Recurrent Expenditure 2.65T 2.9T 250B
2 Capital Expenditure 1.8T 2.24T 440B
3 Debt Servicing 1.36T 1.66T 30B
4 Statutory Reserves 260B 419B 159B
5 Total 6.07T 7.22T 879B
Budget Deficit 2.22T 2.269T 700M
Revenue
1 Oil 820B 1.985T 1.17T
2 Non-Oil 1.45T 1.73T 280B
3 Independent Revenue 1.51T 1.24T (270B)
Total 3.86T 5.029 1.17T
Exchange Rate 197.5/$ 305/$ 107.5
Crude Production 2.2MB/day 2.2MB/day
Price of crude $38/barrel $42.5/barrel $4.5
USD Equivalent $30.73B $23.67B ($7.06)

Is the problem of Nigeria a good budget or implementation of budget? My two-kobosense:

  • The budget on the surface of it looks good, if the revenue targets are achieved
  • There is nothing wrong with borrowing if it will be used for infrastructural development
  • Toll gates should be re-introduced to ensure maintenance however, it should only be introduced on completed roads and if possible concessionaired to the construction company.
  • The economy will be reflated if the capital expenditures are all carried out improving liquidity
  • The TSA needs to be reviewed in terms of implementation. My take is that the accounts should reside with commercial banks whereas utilization (withdrawals) should be centralized with Accountant General (AG). In an economy that is public sector driven, keeping the funds outside of the banking system has liquidity implications for banks especially the smaller banks. The accounts should have a “NO DEBIT ALLOWED” flags on them. The AG monthly,will request for bulk withdrawal to meet monthly expenses of ministries and parastatals.
  • Full deregulation of the PMS market should be implemented
  • Interest rates for borrowing needs to come down to support local industries
  • Government should avoid local borrowings through treasury bills so banks can be forced to lend to the real sector.
  • Focus on research for agricultural development and food security.
  • Focus on the mining sectors to reduce or eliminate leakages of revenue
  • Encourage establishment of local refineries with tax breaks and concessions
  • Develop the rail transportation system.
  • Sell off idle assets and assets yielding no profit.

Feel free to add to the list. I wish you a happy holiday and pray for a better Nigeria in 2017.

Forum Discussion:

Due to devaluation of the Naira, the budget for 2017 is technically smaller than the budget for 2016 by $7.06 Billion. That explains why Business Day calls the budget “The “Big, Small Budget”.  However, my take is; big or small, just implement the budget to the letter, that is the only way the economy can start gradual recovery. So, what do you think?

References:

https://politics.naij.com/675773-2016-budget-see-breakdown.html

https://www.naij.com/1077731-what-happened-2016-budget-mixed-reactions-trail-2017-budget.html

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