The Federal Executive Council presided over by President Muhammadu Buhari on Monday approved the nation’s Medium Term Expenditure Framework in preparation for the presentation of the 2016 budget.
The framework sets up government’s economic plans for the next three years.
The Minister of Budget and National Planning, Senator Udo Udoma, explained this to State House correspondents at the end of the council’s emergency meeting also attended by Vice President Yemi Osinbajo.
Udoma was joined at the briefing by the Minister of Information and Culture, Lai Mohammed; and the Minister of State for Budget and National Planning, Zaynab Ahmed.
Giving some of the highlights of the approved MTEF, Udoma said the council agreed on $38 per barrel of oil as benchmark price for the budget, a figure he said the council considered to be very conservative.
He also said that the council also agreed to peg the production of crude oil at 2.2 million barrels per day for next year.
Udoma said after the approved MTEF would have been submitted to the National Assembly, the preparation of the 2016 budget would be finalised.
He, however, gave a hint that the 2016 budget would be around N6tn, about N1tn more than the current budget.
The minister said the increase in the budget figure would be devoted to capital expenditure.
Udoma said, “At today’s meeting, the Council approved the Medium Term Economic Framework, which sets out the policies of government over the next three years. It sets out the fundamental economic underpinning of the budget.
“The highlights are as follows: we project and we are working with $38 per barrel crude oil price. We consider that to be very conservative but because of the uncertainty, we felt that we should start with a conservative crude oil price.
“We are also working with 2.2 million barrels a day production, saying it is achievable, particularly with the passage of the Petroleum Industry Bill, which we are working to achieve. We believe that that is a modest figure and that we should be able to produce something higher than that.”
The minister explained further, “And so next year, we are looking at an expansionist budget. We are looking at a budget that will be N1tn more than last budget. So, we are looking at a budget of about N6tn.
“This year’s budget, including the supplementary, was about N5tn. So, we are looking at a N6tn budget. All the increases actually will be spent on capital projects, because there is the need to increase the capital expenditure because of the infrastructure issues that we have to address.
“Following from this, the MTEF will be submitted to the National Assembly and we expect a feedback from them; thereafter, we will be working to try and get the budget finalised. It is when the budget is finalised that you will really see the details of what we intend to do. This is just a medium term economic framework.”
When asked how the Federal Government intended to fund next year’s budget, Udoma said the government would increase non-oil revenue from its agencies and keep down the recurrent expenditure.
He added that the government would ensure efficiency from revenue generating agencies like the Federal Inland Revenue Service, especially in terms of company income taxes.
Udoma added that at the end, the balance would be sourced through borrowing and explained that the government desired a prudent and credible budget and was, therefore, projecting 30 per cent of the budget for capital expenditure.
He said, “We will get the funding from two sources. We are looking at trying to increasing our non-oil revenue and we are looking at trying to get more money from the various government agencies by policing their collection and trying to get more money from them.