The full and diligent implementation of the
2016 budget would help the federal
government achieve recovery of slowing
economic growth, to forestall the remote
possibility of recession, Minister of Finance,
Kemi Adeosun, said on Thursday.
The minister said the focus of the
Muhammadu Buhari administration was to
stimulate the economy and achieve real gross
domestic product, GDP, growth rate of 4.2 per
cent through the 2016 budget.
Mrs. Adeosun said the present administration
was equally determined to reduce the cost of
governance, extract efficiencies in public
service and enhance revenue collections.
“The administration plans to increase
government expenditure on infrastructure,
namely transport, roads, housing and power
with a view to achieving a substantial
increase in gross capital formation and to
fund the budget deficit and the negative
trade balance in a cost effective and efficient
manner,” the minister said.
“This will keep the government within the
acceptable debt sustainable ratio expected of
most emerging economies.”
The minister who presented a paper titled:
‘Nigeria’s Economy: The Road to Recovery’,
noted the impact of sliding crude oil prices on
the Nigerian economy, saying government’s
main macroeconomic objective in 2016 was to
combine an expenditure-led growth strategy
with a stimulant approach based on injections
of more efficiently collected revenues and
blocking of leakages.
“The combination of these fiscal injections
will have a catalytic multiplier effect on the
GDP growth rate,” she explained.
With budget deficit at N2.2 trillion, or 2.16
per cent of GDP based on an estimated
benchmark crude oil price of $38 per barrel,
the minister said present realities and
dynamics in the global oil markets, calls for
preparation for further decline in oil prices.
She said the government has developed a
“shadow budgeting process with tactical
responses to build in the flexibility in the
country’s borrowing needs”.
Mrs. Adeosun said the present administration
would go ahead with its robust commitments
on infrastructure development in spite of
dwindling crude oil price.
“For an economy dependent on crude oil for
70 per cent of government revenues, the 12-
year low in oil prices, the downward
revisions to the global outlook and the re-
ordering of the global economy, are ominous
signs,” she said.
“For years, oil prices were at historic highs,
and at US$114 per barrel, we spent,
government spent; people spent and our
economy seemingly ‘grew’. But, this growth
masked much vulnerability.
“There were consistent warnings about the
volatility of oil prices and the need to
diversify our economy to support our huge
population. Whilst we paid lip service to this
need and extolled the potentials of many
sectors, we did not plan adequately to ensure
that we worked towards this.”
She said as long as oil was available and the
dollars flowed, the country kept spending,
pointing out that even when prices fell, as in
2008 during the global slowdown, the
spending continued, through the cash
reserves in the hope of a future oil price
recovery.
Now crude oil prices have crashed, and the
outlook showed that prices would be “lower
for longer”, she said Nigerians have been
compelled to critically evaluate their
expenditure on oil proceeds.
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