President
Muhammad Buhari has presented a N6.08 trillion budget for the fiscal year 2016.
He presented the budget today before a joint session of the National Assembly.
In the budget, capital expenditure takes N1.8 trillion. N396billion is voted for
education, being the largest sectoral allocation. The health sector gets N296
billion while defence has N294 billion. Read his full speech after the cut. It
is titled “The Budget of Change”.
2016 Budget Speech: “The Budget of Change”
Delivered By:
His Excellency, Muhammadu Buhari
President, Federal Republic of Nigeria
To
A Joint Session of the National Assembly (on December 22, 2016)
PROTOCOLS
I am honoured and privileged to present the 2016 Budget proposal. This
is my first address before this joint session of the National Assembly. I have
come here today, not only to address members of the National Assembly, but also
to speak directly to the men and women who placed us here.
2. I know the state of our economy is a source of concern for many.
This has been further worsened by the unbridled corruption and security
challenges we have faced in the last few years. From those who have lost their
jobs, to those young people who have never had a job, to the people in the
North East whose families and businesses were destroyed by insurgents, this has
been a difficult period in our nation’s history, lessons that we must not
forget or ignore, as we plan for the future.
3. By June 2014, oil prices averaged $112 per barrel. But as at
today, the price is under $39 per barrel. This huge decline is having a painful
effect on our economy. Consumption has declined at all levels. In both the
private and public sectors, employers have struggled to meet their salary and
other employee related obligations. The small business owners and traders have
been particularly hard hit by this state of affairs.
4. Fellow Nigerians, the confidence of many might be shaken.
However, I stand before you today promising that we will secure our country,
rebuild our economy, and make the Federal Republic of Nigeria stronger than it
has ever been.
5. The answers to our problems are not beyond us. They exist on our
farmlands; our corporations; in the universities in the hearts and minds of our
entrepreneurs; through the gallantry of our Armed Forces; and the resolute
spirit of Nigerians, especially the youth, who have refused to give up despite
all the obstacles confronting them.
6. This Budget proposal, the first by our Government, seeks to
stimulate the economy, making it more competitive by focusing on
infrastructural development; delivering inclusive growth; and prioritizing the
welfare of Nigerians. We believe that this budget, while helping industry,
commerce and investment to pick up, will as a matter of urgency, address the
immediate problems of youth unemployment and the terrible living conditions of
the extremely poor and vulnerable Nigerians.
7. In the medium to longer term, we remain committed to economic
diversification through import substitution and export promotion. This will
build resilience in our economy. It will guarantee that the problems we have
today, will not confront our children and their children. This shall be our
legacy for generations to come.
2015: A Year of Global and Domestic Challenges
8.
Today, it is widely acknowledged that the global economy has slowed down. This
is particularly the case with emerging markets such as Nigeria. However,
despite the weak emerging market growth rates, our domestic security challenges,
declining oil prices, and the attendant difficulties in providing foreign
exchange to meet market demands, the Nigerian economy grew by 2.84% in the
third quarter of 2015.
9. We
have, and will continue to implement strategies that will maintain
macroeconomic stability and manage the oil price shocks we are experiencing.
10. Upon the
inauguration of this administration on 29th May 2015, we engaged key
stakeholders from various sectors of our economy and interfaced with the heads
of Ministries, Departments and Agencies (MDAs) in order to understand the true
state of our nation. What we found prompted us to take certain strategic
decisions.
11. On the
economy, we injected new leadership at the helm of our revenue generating
agencies including the Federal Inland Revenue Service (FIRS), Nigerian National
Petroleum Corporation (NNPC), Nigerian Communications Commission (NCC), and the
Nigerian Customs Service (NCS). We implemented the Treasury Single Account
(TSA) which, so far, has provided greater visibility of Government revenues and
cash flows. We intervened to support States to navigate their fiscal challenges
by restructuring their commercial bank loans and by providing facilities to
enable them to pay salary arrears.
12. We have
demonstrated a strong will to fight corruption. I am sure you will agree that
the sheer scale of corruption and impunity of the past explains in part, the
economic challenges we now face. On these initiatives, and the many more to
come, we shall not be deterred. We will pursue the recovery of everything that
belongs to the people of Nigeria. No matter where it is hidden. No matter how
long it will take.
2015 Budget Performance
13. Distinguished
and honourable members of the National Assembly, I now present a review of the
2015 Budget. That Budget was based on a benchmark oil price of $53 per barrel,
oil production of 2.28 million barrels per day and an exchange rate of N190 to
the US$.
14. The projected
revenue was N3.45 trillion, with an outlay of N4.49 trillion, implying a
deficit of N1.04 trillion. Due largely to under-provisioning by the previous
administration for fuel subsidy and the costs required to support the military
operations in the North East, the Government had to obtain National Assembly’s
approval for a supplementary budget of N575.5 billion. I take this opportunity
to thank all members of the National Assembly for the prompt passage of that
Bill.
2016: Budget Assumptions
15. After
reviewing the trends in the global oil industry, we have set a benchmark price
of $38 per barrel and a production estimate of 2.2 million barrels per day for
2016. We have focused on non-oil revenues by broadening our tax base and
improving the effectiveness of our revenue collecting agencies.
16. Also, with the
full implementation of the Treasury Single Account, we expect significant
improvements in the collection and remittance of independent revenues. To
further support the drive for increased remittances, we will ensure that all
MDAs present their budgets in advance, and remit their operating surpluses as
required by section 22 of the Fiscal Responsibility Act.
17. We are
determined to ensure that our resources are managed prudently and utilized
solely for the public good. To set the proper tone, one of our early decisions was
the adoption of a zero based budgeting approach, which ensures that resources
are aligned with Government’s priorities and allocated efficiently. This
budgeting method, a clear departure from previous budgeting activities, will
optimize the impact of public expenditure.
18. In addition to
the proper linkage of budgeting to strategic planning, we are enhancing the
utilization of the Government Integrated Financial Management Information
Systems (GIFMIS) to improve financial management. The recently established
Efficiency Unit is working across MDAs to identify and eliminate wasteful
spending, duplication and other inefficiencies. We engaged costing experts to
scrutinize the 2016 budget proposals. They have already identified certain cost
areas that can be centralized for economies to be made.
19. We have directed the extension of the Integrated Personnel Payroll
Information System (IPPIS) to all MDAs to reap its full benefits. We will also
strengthen the controls over our personnel and pension costs with the imminent
introduction of the Continuous Audit Process (CAP). These initiatives will
ensure personnel costs are reduced. Our commitment to a lean and cost effective
government remains a priority, and the initiatives we are introducing will signal
a fundamental change in how Government spends public revenue.
2016: Laying the Foundation for Sustainable Growth
20. The 2016
budget, as outlined, is designed to ensure that we revive our economy, deliver
inclusive growth to Nigerians and create a significant number of jobs.
21. We aim to
ensure macroeconomic stability by achieving a real GDP growth rate of 4.37% and
managing inflation. To achieve this, we will ensure the aligning of fiscal,
monetary, trade and industrial policies.
22. As we focus on inclusive growth, we are conscious of the current
rate of unemployment and underemployment. This is a challenge we are determined
to meet; and this budget is the platform for putting more Nigerians to work. I
can assure you that this administration will have a job creation focus in every
aspect of the execution of this budget. Nigeria’s job creation drive will be
private sector led. We will encourage this by a reduction in tax rates for
smaller businesses as well as subsidized funding for priority sectors such as
agriculture and solid minerals.
23. As an
emergency measure, to address the chronic shortage of teachers in public
schools across the country, we also will partner with State and Local
Governments to recruit, train and deploy 500,000 unemployed graduates and NCE
holders. These graduate teachers will be deployed to primary schools, thereby,
enhancing the provision of basic education especially in our rural areas.
24. We also intend
to partner with State and Local Governments to provide financial training and
loans to market women, traders and artisans, through their cooperative
societies. We believe that this segment of our society is not only critical to
our plan for growing small businesses, but it is also an important platform to
create jobs and provide opportunities for entrepreneurs.
25. Furthermore,
through the office of the Vice President, we are working with various
development partners to design an implementable and transparent conditional cash
transfer program for the poorest and most vulnerable. This program will be
implemented in phases. Already, the compilation of registers of the poorest
persons is ongoing. In the coming weeks, we will present the full programme,
which will include our home-grown public primary school feeding and free
education for science, technology and education students in our tertiary
institutions. Indeed, this will mark a historic milestone for us as a nation.
The 2016 Budget
26. Distinguished members of the National Assembly, I now present,
the 2016 Budget proposals of the Federal Government. Based on the assumptions I
presented earlier, we have proposed a budget of N6.08 trillion with a revenue
projection of N3.86 trillion resulting in a deficit of N2.22 trillion.
27. The deficit, which is equivalent to 2.16% of Nigeria’s
GDP, will take our overall debt profile to 14% of our GDP. This remains well
within acceptable fiscal limits. Our deficit will be financed by a combination
of domestic borrowing of N984 billion, and foreign borrowing of N900 billion
totaling N1.84 trillion. Over the medium term, we expect to increase revenues
and reduce overheads, to bring the fiscal deficit down to 1.3% of GDP by 2018.
28. In 2016, oil related revenues are expected to contribute N820
billion. Non-oil revenues, comprising Company Income Tax (CIT), Value Added Tax
(VAT), Customs and Excise duties, and Federation Account levies, will
contribute N1.45 trillion. Finally, by enforcing strict compliance with the
Fiscal Responsibility Act, 2007 and public expenditure reforms in all MDAs, we
have projected up to N1.51 trillion from independent revenues.
29. Although we are working to diversify our economy, we will not
lose sight of the need to restructure the oil and gas sector which has been
marred by corruption and plagued with inefficiencies. Accordingly, I have
directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to adjust its
pricing template to reflect competitive and market driven components. We
believe this can lower input costs and attain efficiency savings that will
enable PPPRA to keep the selling price for all marketers of petrol at N87 per
liter for now.
30. The current fuel scarcity with long queues at petrol stations
all over the country causing social dislocation is very unfortunate. Government
profoundly apologizes to Nigerians for this prolonged hardship and misery. It
is as a result of market speculators and resistance to change by some
stakeholders. Government is working very hard to end these shortages and bring
fuel to the pumps all over the country.
31. I have also directed the NNPC to explore alternate funding
models that will enable us to honour our obligations in Joint Ventures (JVs)
and deep offshore fields. We are confident that these measures can be achieved
and will lower the burden that the traditional cash calls have imposed on our
budget and cash flows as well as contribute towards shoring up our national
reserves.
32. To deliver our development objectives, we have increased
the capital expenditure portion of the budget from N557 billion in the 2015
budget to N1.8 trillion, in the 2016 budget. Distinguished and honourable
members of the National Assembly, for the first time in many years, capital
expenditure will represent 30% of our total budget. In future years we intend
to raise the percentage allocation for capital expenditure.
33. This is a fulfillment of our promise to align expenditure to
our long-term objectives, and a sign of government’s commitment to sustainable
development. This increased capital expenditure commits significant resources
to critical sectors such as Works, Power and Housing – N433.4 billion;
Transport – N202.0 billion; Special Intervention Programs – N200.0 billion;
Defence – N134.6 billion; and Interior – N53.1 billion. These investments in
infrastructure and security are meant to support our reforms in the
Agriculture, Solid Minerals and other core job creating sectors of our economy.
34. We will invest to safeguard lives and property.
35. We will invest in equipping our farmers with the right tools,
technology and techniques.
36. We will invest in empowering and enabling our miners to operate in a
safe, secure and humane environment.
37. We will invest in training our youths, through the revival of
our technical and vocational institutions, to ensure they are competent enough
to seize the opportunities that will arise from this economic revival.
38. Indeed, the future looks bright. And I ask that we all work together
to make this vision a reality. The 223% year on year growth in capital
expenditure demonstrates our desire to make Nigeria more competitive, and start
the journey to deliver sustainable development in our country.
39. In fulfillment of our promise to run a lean government,
we have proposed a 9% reduction in non-debt recurrent expenditure, from N2.59
trillion in the 2015 Budget to N2.35 trillion in 2016. Furthermore, we have
budgeted N300 billion for Special Intervention Programs, which takes the total
amount for non-debt recurrent expenditure to N2.65 trillion.
39. As I mentioned earlier, the Efficiency Unit set up by this
Administration together with effective implementation of GIFMIS and IPPIS will
drive a reduction of overheads by at least 7%, personnel costs by 8% and other
service wide votes by 19%. Distinguished and honourable members, this budget
will be executed to provide optimum value by ensuring every naira spent by this
Government, counts.
40. We will devote a significant portion of our recurrent expenditure
to institutions that provide critical government services. We will spend N369.6
billion in Education; N294.5 billion in Defence; N221.7 billion in Health and
N145.3 billion in the Ministry of Interior. This will ensure our teachers,
armed forces personnel, doctors, nurses, police men, fire fighters, prison
service officers and many more critical service providers are paid
competitively and on time.
41. Distinguished and honourable members of the National Assembly,
our 2016 borrowings will be principally directed to fund our capital projects.
Furthermore, the sum of N113 billion will be set aside for a Sinking Fund
towards the retirement of maturing loans; while N1.36 trillion has been
provided for foreign and domestic debt service. This calls for prudent
management on our part, both of the debt portfolio and the deployment of our
hard earned foreign exchange earnings.
42. I am aware of the problems many Nigerians currently have in
accessing foreign exchange for their various purposes – from our traders and
business operators who rely on imported inputs; to manufacturers needing to
import sophisticated equipment and spare parts; to our airlines operators who
need foreign exchange to meet their international regulatory obligations; to
the financial services sector and capital markets who are key actors in the
global arena.
43. These are clearly due to the current inadequacies in the supply
of foreign exchange to Nigerians who need it. I am however assured by the
Governor of Central Bank that the Bank is currently fine-tuning its foreign
exchange management to introduce some flexibility and encourage additional
inflow of foreign currency to help ease the pressure.
44. We are carefully assessing our exchange rate regime keeping in
mind our willingness to attract foreign investors but at the same time,
managing and controlling inflation to level that will not harm the average
Nigerians. Nigeria is open for business. But the interest of all Nigerians must
be protected. Indeed, tough decisions will have to be made. But this does not
necessarily mean increasing the level of pain already being experienced by most
Nigerians.
45. So to the investors, business owners and industrialists, we are
aware of your pains. To the farmers, traders and entrepreneurs, we also hear
you. The status quo cannot continue. The rent seeking will stop. The artificial
current demand will end. Our monetary, fiscal and social development policies
are aligned.
Conclusion
46. Mr. Senate President, Mr. Speaker, distinguished members of the
National Assembly, in spite of the global economic uncertainties; we must
remain steadfast in our commitment to steer this country back to greatness.
47. The Nigerian economy needs to move away from dependency on oil. Our
growth must be inclusive. Nigerians must be part of the growth story. As a
Government, we shall deliver security, jobs and infrastructure. This is the
right of all Nigerians.
48. I know many people will say “I have heard this before”. Indeed,
trust in Government, due to the abuse and negligence of the past, is at an
all-time low. This means we must go back to basics. Our actions will speak for
us. My team of dedicated, committed and patriotic Nigerians is well aware of
the task ahead and I can assure you that we are taking on the challenge.
49. We will not betray the trust reposed in us.
50. We will welcome and be responsive to your feedback and criticisms.
51. We are here to serve. And indeed, Nigerians will get the service
they have longed for and which they rightly deserve.
52. We as a Government cannot do it alone. We will require the support
of all civil servants, the organized labour, industry groups, the press and of
course, our religious and traditional institutions. This is a call for all of
us to stand and serve our country.
53. This Budget represents a major step in delivering a new opportunity
for Nigeria. It demonstrates our confident optimism that despite the challenging
times, we have the will, resourcefulness and commitment to deliver prosperity
to our people. And by the Grace of Almighty God and the sheer will and
determination of the Nigerian people, we will come out stronger and more united
than ever.
54. Thank you and God bless the Federal Republic of Nigeria.
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