2016 FG's Budget - Budget Of Change, Hope & Economic Revival - Politics - Nairaland
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| 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:21pm On Dec 27, 2015 |
A lot has been said about the nation’s 2016 budget presented by PMB on Dec 22nd, 2015. Many of the analysts who have spoken about the budget have praised the president and his team for the effort at stimulating the economy in this critical time of our nation http://www.mynewswatchtimesng.com/lcci-praises-buhari-for-raising-2016-budget-capital-vote/ and http://www.vanguardngr.com/2015/12/buharis-2016-budget-nigerias-best-ever-says-opadokun/ . I equally read TonyeBacanista thread calling it a budget of burden just because Nigeria will borrow about N2tn to be able to realize the proposals in the budget. Another point he raised, just like FFK and PDP, is that the per-barrel crude bench mark of $38 is not feasible and the government should have used a much lower price since crude sells lesser than $38/barrel ($35/barrel as at Dec. 22nd, 2015). The irony of their criticism lies in the fact that had PMB and his team used a far lower benchmark price, say $20, they will surely have drawn out bigger daggers and accused the president of having intention to loot the excess through the backdoor. Such is their way of reasoning that the president can never please them no matter how lofty his intentions are! Instead of these destructive critics to join hands with well-meaning Nigerians to praise the president and his team for coming up with a budget that gives us a chance at reviving the battered economy in a time of low income from crude oil, they regrettably missed an opportunity to prove to us that they really mean well for the country. For crying out loud, PMB and his team have given us the biggest budget in the nation’s history despite the gloom pictures staring at all of us. Even if the budget performs at just 60% of its goals, PMB and his team will still need to be applauded. Well, what Barcanista, FFK, PDP and people who reason like them have failed to consider (or have deliberately chosen to ignore) in criticizing the budget is that oil-related income component of the budget is only N820bn (13.5%) of the proposed N6.08tn spending or 21% of projected revenue of N3.86tn. Compare this to the 2015’s revenue figure of N3.602 trillion made up of oil revenue of N1.918 trillion and non-oil revenues of N1.684 trillion (implying a ratio of 53% oil revenues to 47% non-oil) https://www.pwc.com/ng/en/assets/pdf/nigerias-2015-budget.pdf . So, with deep thinking and effort of the current regime, Nigeria’s revenue ratio has shifted from 53%:47% oil/non-oil revenue to 21%:79% oil/non-oil revenue and equally yielded a much bigger budget! Who would have thought that Nigeria could have a budget that is less dependent on income from oil? This is a testament to the generally held belief that there is a lot of syphoning of our common wealth through looting of income from Immigration, Customs, NPA, NNPC, NCC and other income-generating MDAs. Blocking loopholes and reducing wastages in those MDAs is the primary reason we are able to have a budget less dependent on crude earnings and even bigger in these hard times. Let’s even assume that oil price drops by a further 40% to $22.8 per barrel (worst case scenario in my opinion), it will not still have a huge impact on our projected revenue (around 8.91%) and surely not significant enough to make the overall budget fail (about 5.39% impacts). And as we speak right now, crude price has edged back up to $38.10 per barrel http://www.nasdaq.com/markets/crude-oil.aspx?timeframe=3m which means that should crude price continue to move up, government could be able to have good savings from such surplus which will help our foreign reserves and ease pressure on Naira. A simple analogy of the crude price impact on our budget can be likened to a personal monthly budget of N100,000 to be financed by 80% from salary and 20% from other income. If other income projection of N20,000 is halved by 50% to become N10,000, such reduction will not have too much impact on your budget spending at the end of the month since you will still have N90,000 to work with. If the situation is now reversed such that your salary is responsible for just 20% of the N100,000 and other income responsible for 80% or N80,000, a 50% reduction in other income will leave you with just N60,000 at the end of the month (N20,000 salary + N40,000 other income). The 2nd instance is what past administrations did. The first instance is what Buhari is trying to achieve. 20 Likes 5 Shares |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:21pm On Dec 27, 2015 |
They also criticize FG's Plan to Borrow In as much as it is desirable not to need to borrow to finance a country’s budget, managing business affairs of government often relies on borrowing especially during economic downturn as we’re witnessing in Nigeria now. What is most important is the debt burden to GDP ratio. The deficit of 2016 budget represents 2.16% of GDP and it takes our total debt profile to 14% of GDP. By whatever parameter or school of thought one uses to examine it, Nigeria at 14% debt-to-GDP is not in any debt crisis; she is not even near a crisis at all. Another important aspect of a country’s debt management is the ability to service current debt conveniently without needing to borrow to finance such obligations. In 2016 budget, provision is made to pay-off maturing loan (N113bn) as well as for servicing other debts (N1.36tn). By 2007, Nigeria was virtually debt-free and one would have thought that given what the country has earned since then, the country would have been recording one budget surplus after another one since then. But, as well said by a Twitter user "PDP is like a grandfather who gambled away his family fortune but also shamelessly asks why the family is broke". What Nigeria made between 2010 and 2015 was enough to build a new country to international standard from scratch! Yet the party that wasted those earnings are the one complaining and criticizing destructively at efforts to clear its mess. We are where we are due to poor management of our resources by past administrations and not because of Buhari who is working to revive the economy. Failure to borrow to spend heavily will leave us with the only option of embarking on spending cut which would have plunged the nation more into economic woes. Is that what TonyeBarcanista and his fellow think-alikes would have preferred? We await their answer. Please read below to understand the need to borrow at this time and pay attention to the last paragraph. DEFINITION of 'Debt-To-GDP Ratio' The ratio of a country's national debt to its gross domestic product (GDP). By comparing what a country owes to what it produces, the debt-to-GDP ratio indicates the country's ability to pay back its debt. Often expressed as a percentage, the ratio can be interpreted as the number of years needed to pay back debt if GDP is dedicated entirely to debt repayment. BREAKING DOWN 'Debt-To-GDP Ratio' Economists have not identified a specific debt-to-GDP ratio as being ideal, and instead focus on the sustainability of certain debt levels. If a country can continue to pay interest on its debt without refinancing or harming economic growth, it is generally considered to be stable. A high debt-to-GDP ratio may make it more difficult for a country to pay external debts, and may lead creditors to seek higher interest rates when lending. If a country were unable to pay its debt, it would default, which could cause a panic in the domestic and international markets. The higher the debt-to-GDP ratio, the less likely the country will pay its debt back, and the higher its risk of default. While governments may strive to have low debt-to-GDP ratios, government borrowing may increase in times of war or recession - a macroeconomic strategy attributed to Keynesian economics. http://www.investopedia.com/terms/d/debtgdpratio.asp Another key aspect of the budget is the increase in capital spending. [s]Never in the history of Nigeria have we had anything close to 30% of the budget earmarked for capital spending[/s] (My error. we had 32.5% for capital expenditure in 2013). We had the best opportunity to massively build infrastructures during GEJ’s era but we bungled that chance. And now that we are blessed with a selfless leader who is ready to do it by mere blocking loopholes, reducing wastages and fight corruption, we need to support him and his team to deliver the goods. Nigeria may be bleeding today but with Buhari and his team at the helm of our affairs managing our resources prudently, we shall be great again. I have no doubt. Even with just 70% performance for the budget, we are on the right path. May God continue to guide our President to do the right thing. May God bless Nigeria Your comments are welcome and thanks for reading. Key Components of the budget Proposed spending = N6.08tn Revenue projections = N3.86tn Breakdown of projected revenue = (oil-related N820bn, 13.6% of budget), (Tax and levies N1.45tn, 23.85% of budget), Independent revenue N1.51tn, 24.84% of budget) Deficit = N2.2tn (2.16% of GDP. Total debt profile 14% of GDP) Expenditure Capital expenditure = N1.8tn (30% of budget. An increase of 223% on 2015’s N557bn) Non-debt recurrent expenditure = N2.35tn (reduced from N2.59tn of 2015) Special intervention program = N300bn Recurrent on Education = N369.6bn Recurrent on Defence =N294.5bn, Health =N221.7bn, Interior = N145.3bn Sinking Fund for maturing loans = N113bn, Debt Servicing = N1.36tn 18 Likes 4 Shares |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Nobody: 6:23pm On Dec 27, 2015 |
Reading... |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Descartes: 6:23pm On Dec 27, 2015 |
Have heard it before. Next  |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Descartes: 6:24pm On Dec 27, 2015 |
You mean the bogus and inflated budget designed to empower cabals in the APC administration to loot conspicuously without blinking an eye? Also 1 Like |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:29pm On Dec 27, 2015 |
Descartes:Are you capable of reasoning and debating? If yes, bring your issues up and let's trash them once and for all. 18 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by LRNZH(m): 6:30pm On Dec 27, 2015 |
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| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Descartes: 6:31pm On Dec 27, 2015 |
PassingShot: Continue with your epistle, will get to you in the fullness of time 3 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by S123612(m): 6:33pm On Dec 27, 2015 |
Can someone please explain to me the rationale behind borrowing N2trn to finance budget? As it is, we have outstanding loan obligations to service (N1.8trn budgeted to service such in 2016). Does it not make economic sense to sit and agree with our current lenders to give us one year moratorium on our existing loans, and then we use the N1.8trn we intend to use to service our loans to part finance the capital expenditures. I am no economist though. 1 Like 1 Share |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Nobody: 6:36pm On Dec 27, 2015 |
Descartes:when will Nnamdi Kanu leave prison? It seems the dilector will be spending new year in jail sucking boko haram gays. @topic nice reasoning 12 Likes 1 Share |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Tunami(m): 6:36pm On Dec 27, 2015 |
i think apc and pdp have some some paid e-warriors in nairaland. 1 Like |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:39pm On Dec 27, 2015 |
S123612:You can't be an economist. If you are one, your lecturers can't be proud of you. The danger in asking your creditors for one year freeze on your loan lies in the fact that you've sent them a red signal about your inability to pay. Not only them but other potential creditors. As such, it's very difficult for you to get future loans and if you do get them, they come at higher interest rates than the market rate. Next? 12 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:43pm On Dec 27, 2015 |
Lalasticlala Seun Mynd44, can you please move this to the FP. It's a rejoinder to Barcanista's thread about the subject. MizMyColi, I see you and waiting for your comment. 2 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Nobody: 6:47pm On Dec 27, 2015 |
Passingshit has spilled another tiresome epistle as usual. 2016 is near - just 4 more days to go. Buhari should fasten his seat belt properly for the great work ahead - performing voodoo to make $1 = 1 naira. |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by MizMyColi(f): 6:49pm On Dec 27, 2015 |
If you notice, I've not said anything on this budget issue, more like forming an opinion. I am more interested in its implementation. Only then can I comfortably laud the president without worrying that I might have to chew my words tomorrow. I have seen enough from APC to know that they are very good at making promises on paper. Implementation however, is a different ball game. 3 Likes 1 Share |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:50pm On Dec 27, 2015 |
MelancholicGuy:This is not epistle. Just about 1,500 words. The good thing is the president has fastened his seat belt and laying solid foundations for 2016 and beyond. 2 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:52pm On Dec 27, 2015 |
MizMyColi:Hmmm! Well, we can as well talk about the prospects/potentials of the budget even before implementations. Though, I'm not sure but I thought you agreed with TonyeBarcanista with his thread the other time. 1 Like |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Built2last: 6:55pm On Dec 27, 2015 |
Too much noise on this budget. What I want is a better Nigeria in 2016. The common man cares less about budget figures or how much is to be borrowed. They voted for good electricity , good health care, education, portable water. Employment and enviable economy. The silly battle and war of words between APC nd PDP on this budget is meaningress. 2 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by Nobody: 6:57pm On Dec 27, 2015 |
PassingShot:Which president? Buhari, right? Continue putting hope on a man that lacks vision and a destination. He blamed his failure on GEJ this year. I wonder the stunt he would be pulling come 2016. "You guys shall live with the burden of voting the wrong farm boy as president." - Boko Haram. Lets see how it goes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 6:59pm On Dec 27, 2015 |
Built2last:Surprised you act as if you don't know importance of a good budget. Without a good budget, all the stuffs you mentioned will forever remain a mirage just as they've been since many decades back. Defending the 2016 budget may not have been necessary if some persons have not made an attempt to rubbish it despite that it remains the best ever in Nigeria's history. 1 Like |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by S123612(m): 7:00pm On Dec 27, 2015 |
PassingShot: I disagree with you on this. Asking for moratorium doesn't signify potential default. It even means you are a good manager. There are a lot of other ways of analyzing the cash flow of an entity. And your creditors are not robots. In fact, the dwindling oil prices gives us the perfect excuse to request for moratorium. So as an Economist that I believe your lecturers are proud of, you believe we have the financial muscle to add to our existing loan obligation( at an interest) and still be servicing the existing ones (at an interest too). Does it make sense to you? Haba Mr. Economist. 1 Like |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by TonyeBarcanista(m): 7:01pm On Dec 27, 2015 |
Oga I still don't see your point o. Are you saying that it is wise for government to borrow 2trillion(potentially 3trillion) to add to our existing debt burden considering that the revenue is on f to slump in oil price? Are you saying that it is wise to peg crude oil at $38 pb when at present it is $35 pb and will most likely drop by 40-50 percent next june? Do you know that a slum in oil price will affect import, currency, tax revenue and other non oil sector? How do you reconcile this? Let's say we borrow 3trillion next year, are we also going to borrow such in 2017? What happens to our future? |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by MizMyColi(f): 7:02pm On Dec 27, 2015 |
PassingShot: I didn't perse because he was speaking from both sides of the mouth; like someone who didn't want to please and at the same time didn't want to displease. That said, when it comes to figures, I am not always quick to speak, because I am much more talented in words than figures. I'm looking forward to reviews from an expert opposition figure. Though going by how you held brief for the president, I'd say your article is well thought out and I cannot readily fault it. Btw, how can they budget 5 billion for National Population commission and just 280 million for the police service? Misplaced priorities? 1 Like |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 7:02pm On Dec 27, 2015 |
MelancholicGuy:Buhari's worst performance will be far better than GEJ's ten fold. He has a four year mandate and he has already shown that he will perform well. Getting out a budget of N6.08tn with just N820bn as income from crude is enough a proof of someone who knows what he's doing. 6 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 7:03pm On Dec 27, 2015 |
MizMyColi:What is the problem with N5bn for NPC? Is it too much or too small? |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by MizMyColi(f): 7:05pm On Dec 27, 2015 |
PassingShot: I just completed the post. |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by MizMyColi(f): 7:07pm On Dec 27, 2015 |
Built2last: I endorse this post 100% 2 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by fulanimafia: 7:08pm On Dec 27, 2015 |
Beautiful article, with points well elucidated. Kudos mate. 4 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 7:10pm On Dec 27, 2015 |
TonyeBarcanista:My points are well stated. 1. Nothing wrong in using $38 for benchmark. As we speak, crude price is $38.10 per barrel. 2. Our debt to GDP ratio is well within reasonable limit despite the borrowing. Besides, PMB is borrowing for capital projects unlike GEJ that borrowed for recurrent expenditures. I hope you know which makes economic sense. 3. The budget is not heavily relied upon crude sales. Crude income is just 13% of our budget now, unlike when it was 53% in 2015. Therefore further slump in crude will not result in failure of the budget. For the budget to fail, other factors other than crude will have to be responsible. 4. The president clearly said his team will work to reduce our debt to GDP to a single digit by 2018 (not sure of the exact % he said now). Read my article again and counter it or accept that you were wrong. 6 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 7:14pm On Dec 27, 2015 |
S123612:Without needing to go back and forth, the only parameter that settles your concern is the debt to GDP ratio. Is our debt profile at 14% of GDP too high or what? What is your point exactly. How the loans will be financed is clearly stated in the budget, yet you come up with question as this. Na wa for you ooo. 1 Like |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by PassingShot(m): 7:15pm On Dec 27, 2015 |
fulanimafia:Thanks. 2 Likes |
| Re: 2016 FG's Budget - Budget Of Change, Hope & Economic Revival by IsraeliAIRFORCE: 7:22pm On Dec 27, 2015 |
I am surprise how passingshot is brandishing stats made posssible by the administration he is quick to dismiss. Buhari be will judged by number of people his administration lifted from poverty and the number of enterpreneurs he made and encouraged. GEJ administration cut national poverty rate almost by half and I expect Buhari to reduce it to single digit in four years. #NB: I don't know what is happening, I just bought PMS N135 per litre 1 Like |
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