FG Proposes N6tn Budget for 2016, Pegs Oil Benchmark at $38

 Minister of Budget and National Planning, Senator Udoma Udo Udoma

 Retains exchange rate at N198/$1, remains mute on subsidy removal
The Federal Executive Council (FEC) met for the first time monday since its inauguration three weeks ago, during which it approved the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) for 2016 to 2018 and proposed a N6 trillion budget for 2016.
Briefing State House correspondents after the council meeting, which was convened solely to consider the MTEF/FSP and lasted for over four hours, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the MTEF/FSP that was approved would provide the fiscal policy direction of the government in the next three years.
He added that the council, in the proposal, pegged the oil benchmark for the 2016 budget at $38 per barrel, a peg, he said was considered conservative and sustainable.


The minister said that the council also projected crude oil production of 2.2 million barrels per day (mbpd) for next year’s budget¨According to him, the 2016 budget proposal, which is about a trillion naira above the 2015 budget, was an expansionist projection with the aim of increasing infrastructure spending to 30 per cent from its current 15 per cent. He added that the MTEF/FSP would be forwarded to the National Assembly for consideration and passage while the executive continues to work on the 2016 budget proposal to be submitted to the lawmakers at a later date.
Asked how the government intends to fund the budget in the face of dwindling oil prices and the attendant decline in revenue, Udoma said the administration would expand its earnings from non-oil revenue sources and reduce recurrent expenditure.

¨He said: “We will get the funding from two sources: we are looking at trying to increase our non-oil revenue; 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 look at the efficiencies from our revenue collecting agencies like the Federal Inland Revenue Service (FIRS), in terms of company income tax, in terms of Value Added Tax (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 3 per cent of GDP, because we want a prudent budget, we want a credible budget, so we are working on that now.”
On whether the government has plans to cut workers’ salaries, Udoma said pay cuts were not in the cards, adding that wages would be paid as and when due.
He however hinted that the government was expecting to make savings from the Integrated Personnel and Payroll Information Systems (IPPIS) that is currently in use for disbursement of staff salaries.
While maintaining that the present exchange rate given by the Central Bank of Nigeria (CBN) was maintained in the MTEF, the minister said the council was yet to decide on whether or not to retain fuel subsidies.