Financial
analysts have described the 2014 budget proposal sent to the National Assembly for
debate on Tuesday as dicey and unrealistic. The Federal Government has proposed
a budget of N4.495tn for the 2014 fiscal year that will be predicated on an oil
revenue benchmark of $74 per barrel.
The MTEF
and FSP are also proposing a reduction in the capital expenditure and a rise in
the recurrent expenditure in 2014. Capital expenditure has been pegged at 26
per cent, while recurrent expenditure is pegged at 74 per cent. In
the 2013 Appropriation Act, recurrent expenditure was 68 per cent,
while capital expenditure was put at 32 per cent. According to the expenditure
framework, the reduction in capital spending in 2014 is the fallout of the
government’s projected reduction in revenue in 2014. The document also stated
that expected revenue from non-oil sectors in 2014 would be benchmarked at 25
per cent of total revenue. Reacting to the budget proposal, an Associate of
Economics at the Ekiti State University, Dr. Abel Awe, said the expected
revenue from the non-oil sector benchmarked at 25 per cent of the total revenue
was not achievable since the government had yet to diversify the revenue base.
According
to him, it is unrealistic to expect one quarter of the total revenue from the non-oil
sector when the nation still has poor tax structure and lean agriculture and
solid mineral exports. He said, “For the 2.3 million barrels per day projected
oil production output, we just hope there will be peace in the Niger Delta,
considering the fact that 2014 is the year preceding the general election. Our
economy is vulnerable to shock in the domestic sector-drop in production
output; and shock from the international oil market-volatility of oil prices.
The fundamentals show that the 2014 budget proposal is dicey.” Another
financial analyst and Chief Executive Officer, Figures Only, a financial
advisory and research firm, Mr. ToluAdegbenga, faulted the 2014 budget proposal
on the ground that the size of the recurrent expenditure was too high. He said,
“The size of the recurrent expenditure is too high. It means the cost of
governance is too high. Government recently said it had yet to disburse 70 per
cent of what it budgeted for capital expenditure in 2013. How do you look at
that?”
While
noting that the capacity to monitor the budget on the part of the government was
too poor, Adegbenga said the government needed to consider the fact that 2014
was the year preceding election and, as such, there was likely going to be inflationary
pressures. The Senate has set next Tuesday for the debate on the MTEF. The
budget proposal also showed that the Federal Government had pegged oil price
for 2015 and 2016 fiscal years at $75 and $76 per barrel, respectively. It also
put the budget projections for 2015 and 2016 at N4.743tn and N4.839tn, respectively.
In arriving at the decision at $74 per barrel as the oil price benchmark for
2014, the government said it took cognisance of “the weakening future prices
occasioned by rising oil theft and unconventional oil supplies as well as slow
economic recovery.” The projected crude oil production of 2.383 million barrels
per day in 2014 is 143,000 barrels lower than the 2.526 million barrels per day
in the 2013 budget. The proposal also shows that the government is projecting a
6.75 per cent Gross Domestic Product growth in 2014, which indicates a slight
increase from 6.5 per cent in 2013. The GDP growth, the government stated,
would be driven by strong performance in agriculture, wholesale and retail,
construction and real estate sectors, among others.
Report from (The Punch)
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