Buhari Seeks N’Assembly’s Approval for 2018-2020 MTEF

• Oil benchmark set at $45/bl, targets crude output of 2.3mbpd
• Reject president’s $5.5bn loan request, PDP tells legislature

Onyebuchi Ezigbo and James Emejo in Abuja

Preparatory to the presentation of the 2018 budget to the National Assembly, President Muhammadu Buhari Tuesday transmitted the 2018-2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the legislature.

In a letter addressed to the Speaker of the House of Representatives, Hon. Yakubu Dogara, the president also noted that pursuant to the provisions of the Fiscal Responsibility Act, the preparation for the eventual submission of the 2018 budget to the National Assembly was “progressing well”.

Under the MTEF, the executive is proposing an oil benchmark of $45 per barrel for the 2018 budget, a production target of 2.3 million barrels per day (mbpd), and an exchange rate of $305 to the dollar.
The presentation of the MTEF came on the heels of the plea made by the opposition Peoples Democratic Party (PDP) to the National Assembly to consider the plight of Nigeria’s unborn children and reject the president’s request for approval of $5.5 billion external loans.

Buhari, in the covering letter for the MTEF, said the document had been prepared against the backdrop of generally adverse global economic uncertainty as well as fiscal challenges and recovery in the domestic economy to ensure that planned spending is set at prudent and sustainable levels and consistent with government’s overall developmental objectives and inclusive growth.
Buhari further sought the consideration and expeditious approval of the MTEF and FSP “to bring the 2018 FGN Budget preparation process to a timely closure”.

The speaker referred the letter to the House Committees on Appropriation, Finance, Debts, Loans and Services, and Legislative Budget for consideration.
But the president’s correspondence to the House failed to provide a summary of the MTEF in terms of the budgetary parameters for the three-year period.
Efforts by reporters to access the draft document proved abortive, fuelling speculations that Buhari’s letter might not have been accompanied by the relevant details.

However, sources in the Ministry of Budget and Planning informed THISDAY that the executive had premised the 2018 budget under the MTEF on an oil benchmark of $45 per barrel, with an oil production target of 2.3mbpd and an exchange rate of N305 to the dollar.
The source assured THISDAY that more details of the three-year MTEF would be made public soon.

The House Tuesday also commenced legislative work on the general principles of a bill seeking to authorise funds from the Consolidated Revenue Account of the Federation for the Federal Capital Territory Administration (FCTA) amid some contentious issues.

The Bill for an Act to Authorise the issue from the Federal Capital Territory Administration Statutory Revenue Fund of the Federal Capital Territory Administration Account, the total sum of N222,360,551,512 was presented by the House Majority Leader, Hon. Femi Gbajabiamila (APC, Lagos).

He said out of the sum, N52,574,479,667 was for personnel costs while N41,294,590,480 was for overhead costs, leaving a balance of N128,491,481,366 for capital projects for the service of the Federal Capital Territory (FCT) for the financial year commencing from January 1 and ending on December 31.
In his lead debate, Gbajabiamila said critical sectors of the FCT economy would receive adequate attention.

He said: “Mr. Speaker, my honourable colleagues, despite the delay experienced in the presentation of this budget, I’m glad to inform this House that serious attention is being given to infrastructure in satellite towns with N50 billion allocated to rural roads and electrification projects.

“Health, education and water have also been adequately captured in this budget with huge sums of money allocated as an indication of this administration’s willingness to make life comfortable for citizens within the FCT.”
But Hon. Kingsley Chinda (PDP, Rivers), citing Section 122 of the constitution, argued that the presentation of the FCT money bill had gone past the six months threshold provided by the constitution and therefore rendered it unconstitutional for deliberation.

According to him, the budget had less than three months to the end of the fiscal year as prescribed by the constitution, and should be withdrawn and sent back to the FCT Committee, which should in turn revert back to the appropriation of the previous year as damage control.
But Pally Iriase (APC, Edo) countered Chinda, insisting that the 2016 budget of the FCT was passed in September last year.
Iriase said the House has a tradition of putting a clause in any money bill to the effect that its lifespan is 12 months, making the time quoted by Chinda untenable.

He said if the life of the 2016 budget ended in September, then it was less than a month since the end of the previous financial year of the FCT.
Further reacting to the opposition by Chinda, Gbajabiamila argued that the section of the constitution referred to only applied to the recurrent expenditure necessary for the running of governance and not capital expenditure.He said: “The FCT budget as presented before the House has as its main components – capital allocations necessary for the provision of infrastructure within the territory.”
Dogara at this point asked Chinda to tell the House when the 2016 FCT budget was passed by the House.

Chinda said he could not specifically give the time, but was being guided by the provisions of the constitution.
Dogara again asked to know Chinda’s own definition of a financial year, to which he again responded that it covers the period of 12 months.
The speaker on this basis concluded that “the constitution does not insist that a financial year must be from January to December, but any period of 12 calendar months”.

He said though the House had wanted to beat the self-imposed deadline of passing the federal budget before January last year, but could not achieve that due to unforeseen circumstances, it did not mean that January must herald the financial year.
After the debate, the bill was read for the second time and passed before it was referred to the House Committee on the FCT for further consideration.

PDP: Reject Loan Request

But even as the National Assembly prepared to begin consideration of the 2018-2020 MTEF, the PDP Tuesday pleaded with it to reject the president’s request for approval of $5.5 billion external loans.
The opposition party said its fears about the unbridled borrowings by the federal government had been confirmed by the World Bank, which has issued a caveat to the government of the All Progressives Congress (APC) not to borrow and plunge the future of this country into uncertainty.

In a statement issued on Tuesday by its spokesman, Dayo Adeyeye, the PDP said the World Bank had stated clearly that the cost of borrowing or paying interest on Nigeria’s debt was not sustainable, as revenues to make such payment had dried up.
“In the light of this, we wish to reiterate our call and plea on the National Assembly to consider the plight of our unborn children and reject the request for the $5.5 billion loans by the administration. We owe our unborn children the duty not to cripple them before they are born,” he said.

While questioning the rationale for the proposed loan, the PDP spokesman accused the APC-led administration of stacking up debts for future generations without any corresponding infrastructure development in the country to justify the huge borrowings.

“PDP wishes to draw the attention of all Nigerians to the warning by the World Bank on the danger inherent in the continued unbridled borrowings by the President Muhammadu Buhari-led government under the guise of funding national expenditure instead of looking inwards and developing the nation’s resources for sustainable revenue flows.

“As a political party that was in power for 16 years; that worked assiduously to take the nation out of debt, we are appalled at the rate the government of the All Progressives Congres has been stacking up debts for future generations without any corresponding infrastructure development in the country to justify the huge borrowings,” the party said.
Referring to the World Bank’s warning, PDP said the country’s debt to revenue ratio, which stood at 35 per cent in 2015 had grown to 60 per cent by 2016.

“We wish to remind Nigerians that as a party with foresight, we raised the alarm against the plan by the President Muhammadu Buhari-led government to borrow another $5.5 billion for bogus infrastructure developmental projects, but the government considered our patriotic complaints as mere politicking.

“Not minding the genuineness of our advice to the government, the Minister for Finance, Kemi Adeosun speaking for President Buhari’s administration, insisted that the government must and will continue to borrow before it could fund projects listed in the budget.
“However, our altruistic position on the evil of unbridled borrowing by the government has been confirmed by the World Bank which has issued a caveat to the government of the APC not to borrow and plunge the future of this country into uncertainty.

“Issuing the warning through its Senior Economist, Mrs Gloria Joseph-Raji on Monday in Abuja, the World Bank stated clearly that the cost of borrowing or paying interest on Nigeria’s debt was not sustainable as revenues to make such payment had dried up.

“The World Bank stated unequivocally that the country’s debt to revenue ratio which stood at 35 per cent in 2015 has grown to 60 per cent by 2016, reflecting a reduction in government revenues and rising debt profile, thereby raising a question about the debt sustainability.
“What more can we say? We knew the situation was bleak under this APC administration and we made our worries public, but the nonchalant APC government has refused to see the danger ahead.

“We wish to refer all Nigerians to the debt profile of the nation under the President Buhari administration which has just been released. We are sure that nobody will agree that the government should borrow a kobo anymore in the name of funding the nation’s budget.
“We know that rather than heed our patriotic warning, the APC will as usual resort to the only thing they know how to do best – the blame game. In the absence of any coherent, logical, positive and purposeful policies, programmes and agenda, that is not entirely surprising,” PDP said.

Prior to the World Bank’s warning, the IMF had also cautioned the Nigerian government against unbridled borrowing.
The IMF had cautioned Nigeria and other low-income countries that greater reliance on foreign borrowing might at some point expose their economies to vulnerability arising from debt service burden, foreign exchange risk, and a sudden jump in long-term interest rates if the funds are not put to good use.

IMF made the statement a day after Buhari had sought the approval of the National Assembly for additional foreign borrowing of $3 billion to re-finance domestic maturing debts and the issuance of a $2.5 billion Eurobond/Diaspora Bond to fund the 2017 capital budget.