The Federal Executive Council yesterday approved the Medium Term Expenditure Framework (MTEFF) and Fiscal Strategy Paper (SFP) for 2017-2019, signalling the commencement of next year’s budget process.
The Minister of Budget and National Planning, Senator Udoma Udoma, disclosed this to State House reporters after a four-hour FEC meeting presided over by President Muhammadu Buhari.
“As you know, the Fiscal Responsibility Act requires the executive to prepare the MTEFF and send it on to the National Assembly for their consideration. And it is on the basis of the MTEFF that the next budget will be fashioned. So, in short, we’ve started the process of preparing the 2017 budget,” he said.
The minister noted that before the MTEFF was presented to the council for consideration, there was an extensive consultation with the private sector, governors and non-governmental organisations.
Giving an insight into the key parameters and assumptions of the MTEFF, he said while the government intended to use $42.50 oil benchmark “as a reference price” in 2017, it was projecting $45 in 2018 and $50 in 2019.
“So, we are keeping to the very conservative in terms of the reference price of crude oil even though we are expecting it to go higher than this. But we are keeping to an extremely conservative price scenario.
“In terms of oil production, we are keeping to the same level of this year for 2017 and that is 2.2m barrels per day. For 2018, 2.3m barrels per day; for 2019, 2.4 m barrels per day,” he said.
Asked why the government was still using oil price as a benchmark at a time it was talking about diversification, the minister responded: “Even though we want to diversify, we still have to use a particular number to plan in terms of revenue from crude oil. It doesn’t mean we don’t use numbers for other receipts. I was just reading the highlights.
“We’ve numbers for everything; we have numbers we expect to get from customs, VAT, independent revenue, etc. So, we have numbers for all the things we expect, but because oil is volatile and is an area that has caused us to be where we are today, we want to assure Nigerians we are not going backing to using high estimates even though we sense that prices may be moving towards $60 per barrel in the next year or so, we are still going to use conservative number.”
The minister further said in terms of growth rate, the government was targeting in 2017, a three percent growth rate; 2018, 4.26 percent and 2019, 4.04 percent.
“The reason 2019 is slightly lower than 2018 is because that is an election year and usually, in an election year because of the uncertainties, we have also made provision for that,” he said.
Udoma said the government would use N290 to $1 as exchange rate as it believed that the Naira would stabilise and that the rate was a fair estimate from the Central Bank of Nigeria.
He said the government intended to intensify efforts towards pursuing a manpower-driven economy.
“Our social intervention programmes is going to be sustained. We intend to devote even more resources to critical infrastructure projects just as we did this year. So, we will continue to spend more on roads, rails, transport infrastructure, ports and so on. We intend to focus on plain governance and security and we intend to maintain the zero-based budgetary approach,” he added.
On the level of implementation of the 2016 Appropriation Act, he said in terms of the capital budget, the government had so far released over N400bn and was “up to date in terms of the recurrent; all salaries have paid, overheads are released, statutory transfers are made.”
Asked whether the issue of the emergency powers which Buhari was reported to have sought from the National Assembly to reflate the economy came up at the meeting, Udoma said nothing like that was discussed.