The Federal Executive Council (FEC) at an emergency meeting yesterday approved the Medium Term Expenditure Framework (MTEF) in preparation for the presentation of the 2016 budget.

The meeting, which was presided over by President Muhammadu Buhari, proposed an all-time high expenditure of N6 trillion for the 2016 budget. It also pegged the crude oil price benchmark at an all-time low of $38 per barrel.

The N6 trillion expenditure profile is the highest in the history of the country. It was N4.07 trillion in 2010, N4.22 trillion in 2011; N4.74 trillion in 2012, N4.92 trillion in 2013, N4.6 trillion in 2014 and N5.06 trillion in the current year (including the N574.5 billion approved as supplementary budget).

On the other hand, the crude oil benchmark, at $38 per barrel, is the lowest price used in recent times. It was $62 per barrel in 2011, $67 in 2012, $79 in 2013, $76 in 2014 and $53 per barrel in the current year.

Speaking to State House correspondents after the meeting, the minister of budget and national planning, Senator Udoma Udo Udoma, explained that the federal government pegged the crude oil benchmark at $38 because it considered it to be very conservative because of the uncertainty in crude oil price.

According to him, the federal government is proposing a N6 trillion budget for 2016 – N1 trillion above the 2015 budget, taking into account the just passed supplementary bill by the National Assembly.

The minister noted that the increase in the budget would be spent on capital projects, adding that there is a need to address the infrastructure deficit in the country.

The increase in the budget, according to the minister, will be sourced from increase in non-oil revenues, monies from government agencies and a reduction in recurrent spending. He also hinted that the government may borrow to make up for the increase.

Udoma also revealed that the government expected to generate 2.2 million barrels of crude oil per day, just as he affirmed that the government wanted a prudent and credible budget.

He said: “At today’s Council, the Council approved the Medium Term Expenditure Framework which sets out the policies of government over the next years; it sets out the fundamental economic underpinning of the budget.

“The highlights are as follows: we project and we are working with $38 crude oil price; we consider that to be very conservative but because of the uncertainty, we fell that we should start with a conservative crude oil price.

“We are also working with 2.2 million barrels a day production. It is achievable, particularly because with the passage of the Petroleum Industry Bill ( PIB) – which we are working to achieve, we believe that, that is a modest figure, (and) that we should be able to produce something higher than that.”

Udoma continued: “So next year, we are looking at an expansionist budget; we are looking at a budget that will be N1 trillion more than last year, so we are looking at a budget of about N6 trillion. Last year’s budget, including the supplementary budget, was about N5 trillion, so we are looking at a N6 trillion budget.

“All the increases actually will be spent on capital (goods), because there is the need to increase the capital because of the infrastructure issues that we have to address.

“We will get the funding from two sources. We are looking at trying to increasing 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 FIRS, in terms of company income tax, in terms of 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% of the GDP, because we want a prudent budget, we want a credible budget, so we are working on that now.”

The minister further explained that, flowing from this, the MTEF will be submitted to the National Assembly lawmakers, and the executive expects a feedback from them. Thereafter, the executive will be working to try and get the budget finalised, and when the budget is finalised, then Nigerians will get to know the details of what the government intends to do.

On the exchange rate, he said: “We are working on the exchange rate that the Central Bank of Nigeria has given us; that is the rate we are working on.”

On the whether oil subsidy will be retained in the 2016 budget, he stated that the government was looking into the matter.

The national planning minister also contended that the government was projecting almost 30% capital projects, up from the 15% or so that it is currently.

“We are projecting about 30% (capital expenditure). We will try and reduce overheads, but keep personnel cost. We are not going to adjust it by much, but we are expecting some savings from the IPPIS system which we are using. So we are not cutting anybody’s salary; everybody will get their salaries.” (LEADERSHIP)

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