The minister of budget and national planning, Senator Udoma Udo Udoma, yesterday gave the budget breakdown in Lagos, with analysts applauding the N6.04 billion budget as one that will tackle both economic and security challenges.
The analysts expressed satisfaction at over the N200 billion earmarked for pensions, as well as the N20 billion allocated to the amnesty programme.
They said it would adequately address the issue of insecurity and stimulate and tackle economic challenges facing the country.
According to them, the allocation of huge votes to the ministries of works, power and housing, education and defence is a step in the right direction, as they will create the much needed jobs and reduce idle hands that could worsen the issue of insecurity, with the education vote able to employ some 500,000 workers. They called it a budget for the sectors.
The chief executive, Financial Market Association of Nigeria (FMDA), Wale Abe, asserted that budget would bring lots of job creation in the works, power and housing sectors, while the one voted for defence will help the country’s armed forces go a long way in the fight against insurgency across the country.
Minister Udoma had earlier said that the 2016 budget was an indication that there was light at the end of the tunnel.
“The bottom line is to increase the investment on infrastructure as a way of reviving the nation’s economy. What it will eventually translate to is, ‘It’s an infrastructure and a job budget. We have also set aside money for social intervention as the president explained.”
This is evidence in the amount of money earmarked for critical sectors like works, power and housing. For the first time, N433.4 billion is being projected to be spent on that ministry. The amount is even higher than what has been earmarked for defence, which is put at N294.5 billion.
There are signs that the government may make good its intention to fulfil its electoral promises in the education sector, with as much as N369.6 billion proposed for the sector. This sector is expected to be another job creation one during the year.
Ecobank’s analyst, Olakunle Ezun, said: “The economy today is down because government has stopped spending in any economy;government is the largest spender so if government has said it is going to spend 30 percent of its budget in 2016, what this means is that once government starts spending, there will be activity in the system, we will see jobs being created and, once jobs are created, the government will begin to generate revenue which will help to stimulate the economy and get the system working together
“If government could follow the budget line by line, it will jumpstart the economy out of the current crisis that we find ourselves. The fact that we have special intervention lines that will help address the poverty in the country is something.”
The fiscal responsibility campaigner and lead director, Centre for Social Justice (CSJ), Eze Onyekpere, who lauded the proposed budget, described it as a mix of welfare and development plan.
He, however, expressed worry at the deficit of N2.22 trillion and the oil benchmark of $38 per barrel, saying since oil was already selling below that amount at the international market, “the implication is that the resources to finance the budget may not be fully available.
“The fact is that the country shall borrow about N1.84trillion to finance the deficit and also set aside N1.36 trillion for debt servicing. We are accumulating debts in geometric proportions whilst our ability to repay is not growing as fast,” he said
Chief executive of Financial Derivatives Company Ltd, Bismark Rewane, in his “Bi-monthly Economic and Business Update,” explained that the spending and revenue estimates was based on the Keynesian model of countercyclical spending to stimulate growth, as spending in real terms is up 20 per cent and the deficit is to expand to $11billion – 2.16 per cent of GDP.
According to him, for an austere and frugal leader, deficit financing – requiring an additional N1.84trillion – is a bitter pill to swallow, especially the reference to both domestic and, more importantly, international borrowing, adding that the Eurobond market would be a real test of Nigeria’s credit worthiness.
“The most notable shift in his economic ideology remains the mute but tacit acceptance of the adoption of a flexible exchange rate – a no go area up to a few days ago,” he said.