Nairametrics|Minister of Budget and Planning, Udoma Udo Udoma told the National Assembly that a quick passage of the 2017 Budget will get Nigeria out of recession this statement, as he urged the National Assembly to expedite action on the budget, as it would lift the nation out of recession. His reasons? It is critical towards getting Nigeria out of recession.
“We are determined to get the economy out of recession before the end of this year and the 2017 budget is structured to do just that.
“That is why we are anxious to get the budget passed so that we can begin the implementation and begin to take all the steps we need to get the economy out of recession.” Udo Udoma
This statement is a tall dream, as the very assumptions underpinning the budget have not been achieved. For example, implementation reports of the 2016 budget is yet to be released by the government. This is far departure from prior government who release reports quarterly, albeit a quarter late. The current administration has only released the first and second quarter implementation report and we are in the third quarter already.
If Budget Implementation reports have not been released, upon what data did the government rely on in preparing its 2017 budget? And how do they expect the National Assembly to approve a budget where the prior year actual is yet to be analysed?
Be that as it may, a lot the budgetary assumptions are already being challenged by current events.
- The country is currently producing 1.875 million barrels of crude oil per day, due to the Shell shutting down Bonga. The budget is based on a production target of 2.2 million barrels per day.
- The nation is currently subsidizing petrol through the NNPC, which according to Minister of State for Petroleum Ibe Kachikwu has become too heavy to bear. The current budget has no provision for subsidy.
- The Central Bank of Nigeria (CBN) is also likely to implement a further devaluation before the year runs out. A situation that could lead to a further spike in inflation.
- We have also seen several portions of the budget that shows price disparities across MDAs , especially for items with the same specifications.
These factors could throw spanner in the 2017 budget projections and could likely change the outcome even if the often melodramatic legislators approve it without changing some of its underlying assumptions. The 2017 Budget may be a game changer in terms of its size and ambition but we are sure of one thing. If the economy does indeed come out of recession this year, it will not be because of the 2017 budget.