Following the continued drop in oil price in international
market, the Federal government yesterday announced the
introduction of some austerity measures such as tax
introduction on luxury goods such as champagne, jets,
amongst other, to be implemented to reduce the effect of
the continued oil price decline on the Nigerian economy as
Nigeria is largely an oil dependent economy.

Addressing newsmen in Abuja yesterday November 16th,
Minister of Finance and Coordinating Minister of the
Economy, Dr Ngozi Okonjo Iweala, said as part of
measures to cushion the hardship that is to come due to the
continued drop of oil price in the international market,
government would henceforth collect “tax on luxurious
goods,” and that this was part of measures aimed at
increasing revenue from non-oil sectors
.
"We all know the definition of luxury goods, we are
still compiling the lists and one of the things we can
tax is champagne, alcoholic beverages, jets, luxury
cars- we will look at the engine capacity, and yachts.
We are putting the list together but we intend to do a
surcharge going forward on these items. The principle
is that those who are better off in the society and I
hope they won’t mind will be willing to share a bit
more in remitting a little bit more to the treasury than
what they normally do on these things.” she said
She revealed that another austerity measure being put in
place by the government is the reduction of international
travel within the public service
“We are not talking about (cutting) salaries and
benefits. We are talking of trainings and travels and
these will be only for critical and essential items
which will be pre-approved by the Head of Service
and the Director-General of the Budget Office and
then if someone invites you for overseas course, you
can go provided they pay for your training and your
stay and you have to furnish evidence that they are
paying before you will be allowed. The purpose of
this is to tell you what we are doing and this team is
calm and will be effective and we are working with
the monetary policy authorities and together we will
manage the economy in a transparent manner so that
people need not have any fear.” she said
The Minister said that after studying the trend in the drop
of oil price in the international market, the economic team
approved a $5 per barrel reduction in the 2015 budget
benchmark price for oil from $78 to $73 per barrel.
“As part of the response, the Medium Term
Expenditure Framework and the Budget 2015
proposal to the National Assembly have been revised.
Government is now proposing a benchmark of $73
dollars per barrel to the National Assembly compared
to the earlier proposed benchmark of $78. Given the
nature of the oil market, we needed to see the extent
and trend of the oil price in order to take the right
measures. Panic is not a strategy. It’s important that
our strategies are based on facts and a clear
understanding of both the strengths of the economy
and the challenges posed by the drop in oil prices
which is currently at $79 for our premium Bonny
Light Crude. The drop in oil prices is a serious
challenge which we must confront as a country. We
must be prepared to make sacrifices where necessary".
On the advise from some scholars to print more Naira notes
so as to reduce the effect of the oil price drop on Nigerians,
the Minister said such an action if implemented would be
disastrous to the nation as it would increase the inflation
rate of the economy
"Printing money without adequate revenue support
will lead to serious consequences for the country. It
will spur inflation as the experiences of Germany in
the early part of the last century and more recently,
Argentina and Zimbabwe demonstrate. This
prescription will victimise the poor and the middle
class that it is supposedly protecting.” she said
She said one of the best ways of managing the situation was
to create more jobs. She announced that President Jonathan
would today November 17th launch the 4th edition of the
You Win youth empowerment programme.
“To show how serious government is about job
creation, President Jonathan will tomorrow, (Monday)
November 17 launch the 4th edition of YouWin to
support another 1,500 entrepreneurs along with a
private equity fund for entrepreneurs. That is an
expression of government’s commitment and
seriousness to job creation.”
Dr Okonjo-Iweala said the reduction in price of the oil
prices in the international market may continue but that
government would do everything possible to make sure
Nigeria is not adversely affected.
She said from the $4.1bn (N656bn) in the Excess Crude
Account, the government would be withdrawing $2bn
(N320bn) between now and the end of this year to take care
of critical expenditure.
“We will work in such a way that we won’t deplete
the ECA because we have to leave something for next
year but we might go to tap about a half of it ($2bn)
or slightly less than half to be able to meet
expenditures that are crystalizing at the moment that
we need to make.” she said
She also stated that infrastructural expenditure would still
continue as the economy can only improve when
infrastructural development is in place.

Source:www.punchng.com/news/oil-slump-fg-unveils-austerity-measures/

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God will see us through in this difficult moments.

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