Minister of Budget and National Planning, Senator Udoma Udo Udoma, yesterday, told an expanded joint committee of the House of Representatives that the 2017-2019 Medium Term Expenditure Framework, MTEF, had to be altered because key projections in the document have become unrealistic.
It will be recalled that the House of Representatives, through its spokesman, Abdulrazak Namdas, had last Thursday, explained that work on the 2017 budget was being slowed down by the non-passage of the MTEF, as required by the Fiscal Responsibility Act and a prerequisite for the budget passage, but that it was expected that the document would be approved this week, while work on the 2017 budget commences next week.
Udoma, who appeared before the committees alongside the Minister of Finance, Kemi Adeosun; Accountant-General of the Federation, Ahmed Idris, as well as management teams of the Budget Office of the Federation; the Central Bank of Nigeria, CBN; the Nigerian National Petroleum Corporation, NNPC; Federal Inland Revenue Service, FIRS; and others, met with the joint committee of Finance and Appropriations, explained that “all our macro economic projections have to be adjusted due to developments after the budget was finalized in August 2016.”
He explained that the economy was not as robust as expected, as “crude oil production was disrupted and production came down to about half of the expected projection,” pointing out, however, that the new document was prepared after “extensive consultations,” and that it perfectly conformed with the provisions and requirements of the Fiscal Responsibility Act.
Specifically affected in the new adjustments, according to him, include the projected inflation rate of 12.93 percent, which had to be put at 15 per cent, as efforts at bringing it down from the current 18 percent in which it stands “is not possible” while putting other factors into consideration, and the exchange rate of N290 to a dollar and now N305 to a dollar.
Black market’ll soon collapse —Adeosun
On effect of the Treasury Single Account ,TSA, Minister of Finance argued that though the effect in the short term was bad, “but in the long run, it is going to benefit the economy,” noting that it was also an opportunity for the commercial banks to do the real business of banking.
She informed the lawmakers that “the black market would soon collapse because it is not driven by any fundamentals and is a very misleading market. The craze for dollars is not driven by any rational consideration and it will soon collapse.”
According to her, the nation’s currency is valued at between N305 and N315 but the unnecessary demand for dollar was pushing people to buy it at higher rates.
She said: “We are dealing with a shortage of dollars but the Central Bank of Nigeria, CBN, has put in place measures to stimulate more supply of dollars.”
Also speaking on the efforts being made to address dollar shortage, a representative of the deputy governor of CBN, Mr. Moses Tule, said the apex bank was increasing exports to earn more dollars, adding that they are equally trying to reduce demand for foreign exchange.
Budget deficit reduced by N2.438tn to N2.356trn —DMO]
Addressing the committee further on the adjustments in the MTEF, the Director General of Debt Management Office, DMO, Dr. Abraham Nwankwo, disclosed that in terms of oil revenue, out of the outstanding $4.298 million, the Federal Government has taken into account only $574 million while $926 million is provided for early licence renewal.
He explained that “there is a deficit reduction of N2.438 trillion to N2.356 trillion in the revised MTEF FSP despite increment in the 2017 budget from N6.3 trillion to N7.298 trillion.
According to Nwankwo, $1.5 million only was earmarked for stepping rights out of the over $3 billion earlier projected.
The Joint Committee Chairman, Babangida Ibrahim (APC, Katsina), however, assured of the committee’s readiness to properly scrutinise the MTEF and FSP documents before a report on the 2017 budget is presented to the House.
He said the House was yet to see the adjusted copy of the MTEF/FSP and advised the minister to furnish the House with its details.
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