With the 2016 budget now passed by the National Assembly and a N3trillion war chest, the government of President Muhammadu Buhari says it is set to take on the struggling Nigerian economy and is promising it will win.

Analysts said last night that the package and the stimulus budget would aid the growth in GDP that has been experiencing slow growth.

Bola Agbola, executive director, Cashcraft Asset Management limited, said: “The resumption of spending by the Federal Government eleven clear months after inauguration of the government and three months into the new year, should reactivate the economy all things being equal. The fundamental issues of sagging imports and fuel scarcity may dampen the impact of the reflationary spending .

“The much awaited new foreign exchange policy should be released without further delay, as the existing huge gap between official and parallel market rates is not only fueling inflation but might be creating a cesspool of corrupt practices in the opaque foreign exchange allocation chain, which may not boost the image of the government.”

Johnson Chukwu, managing director, chief executive, Cowry Asset Management Limited, had last week told BusinessDay that, “The expansionary nature of the budget and the package will offset the negative effect of the contractionary monetary policies,”

According to Chukwu, “In a situation of slowing economy, the emphasis should rather be on stimulating the economy and addressing the structural impediments that are triggering the inflationary pressure. It must also be noted that without addressing the current challenges in the foreign exchange market, increases in interest rates will not lure investors, particularly foreign portfolio investors back to the Nigerian market.”

The president who is planning a number of town hall meetings to make his case directly with the Nigerian people, has come under attack for failing to halt the economic slide and for his insistence on applying outdated solutions to some of the country’s economic challenges.

Emboldened by the N3trn stashed away in the TSA purse, the government has already announced it will immediately reflate the economy with about N350bn in payment to contractors and many say while this will be helpful in oiling the economy, concerns will still continue about how to expand productivity in the economy, so as not to push up inflation.

The economy is still better defined with its debilitating foreign exchange shortage which is leading to declining factory activities and resultant job losses, with even the local manufacturing which the government hopes to promote being some of the worst hit.

A large foam maker had to turn down a single order for over 3,000 mattresses because the company cannot get the required raw materials and even local cable making firms which are having increased demand from builders and construction firms, are finding they cannot meet the demand because of their inability to access the required raw materials.

Nigeria’s lawmakers passed the budget after months of political wrangling, pushing through record federal spending even as low oil prices have brought the worst economic slowdown in 15 years.

The Federal Government plans to spend a record breaking N1.8 trillion on capital projects, N1.5 trillion to service debts and N2.65 trillion on recurrent expenditures excluding debt, Senate President Bukola Saraki said in parliament in the capital, Abuja, on Wednesday.

“The budget reflects efficient and equitable allocation of resources,” Saraki said. “For once, there was no bickering over the benchmark oil price, but rather we all devoted time and energy to ensure that we have a budget that is implementable.”

The spending plan factored in oil at $38 per barrel and projected output of 2.2 million barrels a day.

“This budget empowers us to invest in the infrastructure needed to unlock our non-oil economy and reduce our vulnerability to the oil price”, Nigeria’s finance minister, Kemi Adeosun, told the Financial Times.

The prolonged and sometimes dramatic process which the budget has undergone at the parliament and the lack of speed by the government, fuelled concerns that Buhari’s government is not responding quickly enough to the economic problems caused by the collapse in oil prices.

Now that the budget has been passed, financing the high spending — and dealing with a deficit of N3tn ($15bn) — will be a challenge according to analysts. Nigeria’s government is in talks with the World Bank and the African Development Bank over $3.5bn in loans, but it is not clear where the rest of the funds needed will come from.

Buhari’s proposed budget in December included cautious expectations for oil revenues “but the problem at the time was there was not a great deal of detail about where the rest of revenues were going to come from”, said Razia Khan, chief Africa economist for Standard Chartered.

“Where that revenue comes from and what measures are going to be driving it are the key questions,” Khan added.

Nigeria’s economy grew about 2.8 per cent last year, its slowest rate since 1999, as lower crude prices took their toll.

Nigeria has traditionally earned 70 per cent of its revenue from crude exports and has few other sources of foreign exchange earnings.

The Buhari administration argues that heavy state spending is needed to cut oil dependency in the long term, adding that such a move has been put off for too long.

Despite the government’s optimism, many in the investor community remain worried about the success of the govenrment’s plan.

Matthew Page, of the Council on Foreign Relations wrote a piece in the FT in which he said

Africa’s largest economy will continue to struggle to find its feet as sliding oil prices threaten to derail Buhari’s efforts to put Nigeria’s public finances back in order, fund planned infrastructure spending, and field much-needed social programmes.

According to him, “until global crude prices rebound or he undertakes more ambitious reforms, Mr Buhari almost certainly will need to borrow just to make ends meet.

“The good news for Mr Buhari is Federal Government debt is relatively low, as a percentage of GDP, which was estimated at $488bn in 2013. In 2005, Nigeria struck a deal with Paris Club lenders to write off over half of the country’s $30bn debt. Since then, however, Nigeria’s debt profile has steadily grown. As of the end of last year, Abuja owed domestic and international creditors roughly $55bn.

“The bad news facing Mr Buhari is that a disproportionate amount of government borrowing is in the form of high interest loans from domestic banks. Fiscal federalism means that federal government liabilities could balloon suddenly if Nigeria’s 36 states begin defaulting on their debts.”

Oluseun Onigbinde, co-founder of the Nigerian civil society organisation BudgIT, said the budget showed that there was still a long way to go.

The National Assembly, comprising the Senate and the House of Representatives, was allocated the equivalent of $600m — higher than Nigeria’s expenditure on its universities, said Mr Onigbinde.

Nigerian lawmakers may be the highest paid in the world, according to BudgIT, which has lobbied lawmakers to release the breakdown of how that money will be spent. It says their annual salary is the equivalent of $150,000 to $190,000, or about 50 times gross domestic product per capita.

http://www.financialwatchngr.com/2016/03/29/rays-of-hope-for-economy-as-fg-fights-back-with-n3trn-tsa-fund/

Nigerians what do have to say regarding that quote

The spending plan factored in oil at $38 per barrel and projected output of 2.2 million barrels a day.

If this Ray doesn't show itself in 3 days, more people will die.

D ray should quickly visit all our filling stations and reduce this long que.
D ray should also provide employment.
It should also keep d electoral promises

There's always a Ray of light at the end of the tunnel
Let's see how buhari plans to turn things around especially this Forex imbalance
This will be a larger determinant index of the economy performance

Emboldened by the N3trn stashed away in the TSA purse, the government has already announced it will immediately reflate the economy with about N350bn in payment to contractors and many say while this will be helpful in oiling the economy,

They should stop talking & get this done as quickly as possible...

The National Assembly, comprising the Senate and the House of Representatives, was allocated the equivalent of $600m — higher than Nigeria’s expenditure on its universities, said Mr Onigbinde.

Nigerian lawmakers may be the highest paid in the world, according to BudgIT, which has lobbied lawmakers to release the breakdown of how that money will be spent. It says their annual salary is the equivalent of $150,000 to $190,000, or about 50 times gross domestic product per capita..

471 people allocated more than what accrues to university education funding to themselves & we expect magic to happen in our schools..

10 months in Saraki is still promising to open NASS' budget & expenditure almost on a daily basis with nothing being done & everyone acts like all is Uhuru.

We the citizens leave the main battle to be fought, to chase Lizards around!!

God bless Nigeria

“The much awaited new foreign exchange policy should be released without further delay, as the existing huge gap between official and parallel market rates is not only fueling inflation but might be creating a cesspool of corrupt practices in the opaque foreign exchange allocation chain, which may not boost the image of the government.”

The amount of corruption committed in CBN under this regime is mind blowing! Under the change administration,Mrs aisha buhari became the largest single BDC in africa engaging in sizzling grand round tripping.

The image of this government is already gone to the dogs no need of boosting it. All we demand is the total fulfilment of all campaign promises. no more excuses since their budget of shame has been passed.

In Buhari we trust, in Buhari we believe. At least we are assured that the pifering of our finances will stop and when huge finances are pumped into the economy, we will have reason to smile.

orisa37:
If this Ray doesn't show itself in 3 days, more people will die.

You mean you family and your clan will die?Na wa ooo.

MaziOmenuko:
In Buhari we trust, in Buhari we believe. At least we are assured that the pifering of our finances will stop and we when huge finances are pumped into the economy, we will have reason to smile.

U wish.
It will soon be December and I will remind u this govt is just hot air. TSA cash is imaginary and deliberately being misrepresented to deceive Nigerians.

tuniski:

U wish.
It will soon be December and I will remind u this govt is just hot air. TSA cash is imaginary and deliberately being misrepresented to deceive Nigerians.

To deceive Nigerians into doing what exactly? You guys act as if the economy was all flourishing before the change in administration.

Calm down and watch as the 'imaginary' money gets the economy reshaped for good.

tuniski:

U wish.
It will soon be December and I will remind u this govt is just hot air. TSA cash is imaginary and deliberately being misrepresented to deceive Nigerians.

You dey mind them? The government is clueless and throwing all manner of dangerous hope to give them something to look forward to. Naturally, Abacha returned loot, tsa money, acclaimed $300 billion so far recovered or returned from corruption war is more than enough to shoot the economy to best in Africa.

tuniski:

U wish.
It will soon be December and I will remind u this govt is just hot air. TSA cash is imaginary and deliberately being misrepresented to deceive Nigerians.

& you know this for a fact? Or it's the little wailer inside of you that is hoping & praying for things to do a major "humpty dumpty" that is speaking through you? Hero IB is gone, no amount of ill will against Nigeria will change that fact..

December will soon be here & all well meaning citizens are working, hoping & looking forward to a better nation, your wish will never happen!!

MaziOmenuko:


To deceive Nigerians into doing what exactly? You guys act as if the economy was all flourishing before the change in administration.

Calm down and watch as the 'imaginary' money gets the economy reshaped for good.

You mind putting a time frame to when this imaginary money will reshape the economy? I want to visit the marketmen and women bearing the blunt of policy somersault of this administration and explain to them. They are the ones that paid for my data. I've been telling them to hold on since cos budget was yet to be passed.

I really pray the government finds the right magic to get the economy back up. I am cautiously optimistic about the #3trillion that was said to have been saved through the TSA. The bane of our budgets over the years has been their implementation. If the government can achieve seventy percent implementation, I believe the economy can get back to life.

SleekAboki:

You mind putting a time frame to when this imaginary money will reshape the economy? I want to visit the marketmen and women bearing the blunt of policy somersault of this administration and explain to them. They are the ones that paid for my data. I've been telling them to hold on since cos budget was yet to be passed.

Check back by 29th of February, 2017

Nice. My only fear is, do we have sufficient forex to finance the imports we need?? Especially those meant for small businesses.

If they truly have 3trn in savings from TSA, why are they still collecting N50 from Bank transactions, and why increase tax on communication tarriff? I thought these measures were put in place to bail out a broke gvt, if we have saved 3trn, why are they still robbing ordinary Nigerians.

If Jonathan had thought this way, things would have been different by now.

Jonathan and his cabinet sef

Hhh

modath:


& you know this for a fact? Or it's the little wailer inside of you that is hoping & praying for things to do a major "humpty dumpty" that is speaking through you? Hero IB is gone, no amount of ill will against Nigeria will change that fact..

December will soon be here & all well meaning citizens are working, hoping & looking forward to a better nation, your wish will never happen!!

Get real and stop hoping simply becos u are buharist. Everyone is hoping the religious way but, that hope must be anchored on actions. The govt is just decieving itself. FAAC monthly allocations are shrinking and one yeye govt is telling u they have 3trilllion in TSA. Well, I guess u know TSA is just an audit tool. Mark my word it is an imaginary money and time will tell

Pidggin:
If they truly have 3trn in savings from TSA, why are they still collecting N50 from Bank transactions, and why increase tax on communication tarriff? I thought these measures were put in place to bail out a broke gvt, if we have saved 3trn, why are they still robbing ordinary Nigerians.

Ur reasoning is shallow. So U expect then to deep hands in the 3trillion without looking for ways to replenish Things don't work like that. Dis is buhari not Jonathan. He sees ahead.

SleekAboki:

The amount of corruption committed in CBN under this regime is mind blowing! Under the change administration,Mrs aisha buhari became the largest single BDC in africa engaging in sizzling grand round tripping.

The image of this government is already gone to the dogs no need of boosting it. All we demand is the total fulfilment of all campaign promises. no more excuses since their budget of shame has been passed.

Stop misinforming the public. The CBN only sells dollars to banks and not to individuals and companies, this is not the regime of the ineffectual buffoon where everything goes.

Honestly, I have never seen a more surreal situation in Nigeria like this. I think it's time to stop pretending that there is a symmetry between the dishonesty of the PDP and APC.

Guys, there is no additional 3 trillion Naira stashed away in the TSA accounts. Think of it - the budget is circa 6 trillion Naira of which the government plans to borrow 3 trlllion whilst around 3 trillion will be realised in 2016 tax revenues. Where then does an additional 3 trillion come into play?

Boscojugunu:
Ur reasoning is shallow. So U expect then to deep hands in the 3trillion without looking for ways to replenish Things don't work like that. Dis is buhari not Jonathan. He sees ahead.

Nigerians are suffering and you are saying he sees ahead, if he sees ahead these crisis in his govt should have been abated.

SleekAboki:

You dey mind them? The government is clueless and throwing all manner of dangerous hope to give them something to look forward to. Naturally, Abacha returned loot, tsa money, acclaimed $300 billion so far recovered or returned from corruption war is more than enough to shoot the economy to best in Africa.

Amen even though facts don't support the figures u are quoting. We don't have money.

agabusta:


Stop misinforming the public. The CBN only sells dollars to banks and not to individuals and companies, this is not the regime of the ineffectual buffoon where everything goes.

It's not as if what I'm saying is occult. This is well known in offices in Abuja and discussed in hushed tones. Even CBN staffs are quite aware of this. I can understand the compromised media is scared to run the full scale story cos of Efcc and Dss bullies.

This is not the first time we had heard such mind blowing hope but at the end nothing comes out of it. Alert me when $1 dollar is equals to #1, fuel #40 per liter just this two.

Government should please address as a matter of urgency the problem of fuel scarcity. It is biting hard on most Nigerians. We need the rays of hope in that aspect.

tuniski:

Amen even though facts don't support the figures u are quoting. We don't have money.

No money, not credit worthy. Way of escape...... think....... clue..... zero interest loan Saudi MOU? Shiite massacre? El zakzaky?

Where was the TSA when things were getting really worse over the last few months.