Budget presentation: Read Full text of Buhari's speech at the NASS
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I am honoured and privileged to present the 2016 Budget proposal. This
is my first address before this joint session of the National Assembly. I
have come here today, not only to address members of the National
Assembly, but also to speak directly to the men and women who placed us
here.
2.
I know the state of our economy is a source of concern for many. This
has been further worsened by the unbridled corruption and security
challenges we have faced in the last few years. From those who have lost
their jobs, to those young people who have never had a job, to the
people in the North East whose families and businesses were destroyed by
insurgents, this has been a difficult period in our nation’s history,
lessons that we must not forget or ignore, as we plan for the future.
3.
By June 2014, oil prices averaged $112 per barrel. But as at today, the
price is under $39 per barrel. This huge decline is having a painful
effect on our economy. Consumption has declined at all levels. In both
the private and public sectors, employers have struggled to meet their
salary and other employee related obligations. The small business owners
and traders have been particularly hard hit by this state of affairs.
4.
Fellow Nigerians, the confidence of many might be shaken. However, I
stand before you today promising that we will secure our country,
rebuild our economy, and make the Federal Republic of Nigeria stronger
than it has ever been.
5.
The answers to our problems are not beyond us. They exist on our
farmlands; our corporations; in the universities in the hearts and minds
of our entrepreneurs; through the gallantry of our Armed Forces; and
the resolute spirit of Nigerians, especially the youth, who have refused
to give up despite all the obstacles confronting them.
6.
This Budget proposal, the first by our Government, seeks to stimulate
the economy, making it more competitive by focusing on infrastructural
development; delivering inclusive growth; and prioritizing the welfare
of Nigerians. We believe that this budget, while helping industry,
commerce and investment to pick up, will as a matter of urgency, address
the immediate problems of youth unemployment and the terrible living
conditions of the extremely poor and vulnerable Nigerians.
7.
In the medium to longer term, we remain committed to economic
diversification through import substitution and export promotion. This
will build resilience in our economy. It will guarantee that the
problems we have today, will not confront our children and their
children. This shall be our legacy for generations to come.
2015: A Year of Global and Domestic Challenges
8.
Today, it is widely acknowledged that the global economy has slowed
down. This is particularly the case with emerging markets such as
Nigeria. However, despite the weak emerging market growth rates, our
domestic security challenges, declining oil prices, and the attendant
difficulties in providing foreign exchange to meet market demands, the
Nigerian economy grew by 2.84% in the third quarter of 2015.
9.
We have, and will continue to implement strategies that will maintain
macroeconomic stability and manage the oil price shocks we are
experiencing.
10.
Upon the inauguration of this administration on 29th May 2015, we
engaged key stakeholders from various sectors of our economy and
interfaced with the heads of Ministries, Departments and Agencies (MDAs)
in order to understand the true state of our nation. What we found
prompted us to take certain strategic decisions.
11.
On the economy, we injected new leadership at the helm of our revenue
generating agencies including the Federal Inland Revenue Service (FIRS),
Nigerian National Petroleum Corporation (NNPC), Nigerian Communications
Commission (NCC), and the Nigerian Customs Service (NCS). We
implemented the Treasury Single Account (TSA) which, so far, has
provided greater visibility of Government revenues and cash flows. We
intervened to support States to navigate their fiscal challenges by
restructuring their commercial bank loans and by providing facilities to
enable them to pay salary arrears.
12.
We have demonstrated a strong will to fight corruption. I am sure you
will agree that the sheer scale of corruption and impunity of the past
explains in part, the economic challenges we now face. On these
initiatives, and the many more to come, we shall not be deterred. We
will pursue the recovery of everything that belongs to the people of
Nigeria. No matter where it is hidden. No matter how long it will take.
2015 Budget Performance
13.
Distinguished and honourable members of the National Assembly, I now
present a review of the 2015 Budget. That Budget was based on a
benchmark oil price of $53 per barrel, oil production of 2.28 million
barrels per day and an exchange rate of N190 to the US$.
14.
The projected revenue was N3.45 trillion, with an outlay of N4.49
trillion, implying a deficit of N1.04 trillion. Due largely to
under-provisioning by the previous administration for fuel subsidy and
the costs required to support the military operations in the North East,
the Government had to obtain National Assembly’s approval for a
supplementary budget of N575.5 billion. I take this opportunity to thank
all members of the National Assembly for the prompt passage of that
Bill.
2016: Budget Assumptions
15.
After reviewing the trends in the global oil industry, we have set a
benchmark price of $38 per barrel and a production estimate of 2.2
million barrels per day for 2016. We have focused on non-oil revenues by
broadening our tax base and improving the effectiveness of our revenue
collecting agencies.
16.
Also, with the full implementation of the Treasury Single Account, we
expect significant improvements in the collection and remittance of
independent revenues. To further support the drive for increased
remittances, we will ensure that all MDAs present their budgets in
advance, and remit their operating surpluses as required by section 22
of the Fiscal Responsibility Act.
17.
We are determined to ensure that our resources are managed prudently
and utilized solely for the public good. To set the proper tone, one of
our early decisions was the adoption of a zero based budgeting approach,
which ensures that resources are aligned with Government’s priorities
and allocated efficiently. This budgeting method, a clear departure from
previous budgeting activities, will optimize the impact of public
expenditure.
18.
In addition to the proper linkage of budgeting to strategic planning,
we are enhancing the utilization of the Government Integrated Financial
Management Information Systems (GIFMIS) to improve financial management.
The recently established Efficiency Unit is working across MDAs to
identify and eliminate wasteful spending, duplication and other
inefficiencies. We engaged costing experts to scrutinize the 2016 budget
proposals. They have already identified certain cost areas that can be
centralized for economies to be made.
19.
We have directed the extension of the Integrated Personnel Payroll
Information System (IPPIS) to all MDAs to reap its full benefits. We
will also strengthen the controls over our personnel and pension costs
with the imminent introduction of the Continuous Audit Process (CAP).
These initiatives will ensure personnel costs are reduced. Our
commitment to a lean and cost effective government remains a priority,
and the initiatives we are introducing will signal a fundamental change
in how Government spends public revenue.
2016: Laying the Foundation for Sustainable Growth
20.
The 2016 budget, as outlined, is designed to ensure that we revive our
economy, deliver inclusive growth to Nigerians and create a significant
number of jobs.
21.
We aim to ensure macroeconomic stability by achieving a real GDP
growth rate of 4.37% and managing inflation. To achieve this, we will
ensure the aligning of fiscal, monetary, trade and industrial policies.
22.
As we focus on inclusive growth, we are conscious of the current rate
of unemployment and underemployment. This is a challenge we are
determined to meet; and this budget is the platform for putting more
Nigerians to work. I can assure you that this administration will have a
job creation focus in every aspect of the execution of this budget.
Nigeria’s job creation drive will be private sector led. We will
encourage this by a reduction in tax rates for smaller businesses as
well as subsidized funding for priority sectors such as agriculture and
solid minerals.
23. As an emergency
measure, to address the chronic shortage of teachers in public schools
across the country, we also will partner with State and Local
Governments to recruit, train and deploy 500,000 unemployed graduates
and NCE holders. These graduate teachers will be deployed to primary
schools, thereby, enhancing the provision of basic education especially
in our rural areas.
24.
We also intend to partner with State and Local Governments to provide
financial training and loans to market women, traders and artisans,
through their cooperative societies. We believe that this segment of our
society is not only critical to our plan for growing small businesses,
but it is also an important platform to create jobs and provide
opportunities for entrepreneurs.
25.
Furthermore, through the office of the Vice President, we are working
with various development partners to design an implementable and
transparent conditional cash transfer program for the poorest and most
vulnerable. This program will be implemented in phases. Already, the
compilation of registers of the poorest persons is ongoing. In the
coming weeks, we will present the full programme, which will include our
home-grown public primary school feeding and free education for
science, technology and education students in our tertiary institutions.
Indeed, this will mark a historic milestone for us as a nation.
The 2016 Budget
26.
Distinguished members of the National Assembly, I now present, the 2016
Budget proposals of the Federal Government. Based on the assumptions I
presented earlier, we have proposed a budget of N6.08 trillion with a
revenue projection of N3.86 trillion resulting in a deficit of N2.22
trillion.
27.
The deficit, which is equivalent to 2.16% of Nigeria’s GDP, will take
our overall debt profile to 14% of our GDP. This remains well within
acceptable fiscal limits. Our deficit will be financed by a combination
of domestic borrowing of N984 billion, and foreign borrowing of N900
billion totaling N1.84 trillion. Over the medium term, we expect to
increase revenues and reduce overheads, to bring the fiscal deficit down
to 1.3% of GDP by 2018.
28.
In 2016, oil related revenues are expected to contribute N820 billion.
Non-oil revenues, comprising Company Income Tax (CIT), Value Added Tax
(VAT), Customs and Excise duties, and Federation Account levies, will
contribute N1.45 trillion. Finally, by enforcing strict compliance with
the Fiscal Responsibility Act, 2007 and public expenditure reforms in
all MDAs, we have projected up to N1.51 trillion from independent
revenues.
29.
Although we are working to diversify our economy, we will not lose
sight of the need to restructure the oil and gas sector which has been
marred by corruption and plagued with inefficiencies. Accordingly, I
have directed the Petroleum Products Pricing Regulatory Agency (PPPRA)
to adjust its pricing template to reflect competitive and market driven
components. We believe this can lower input costs and attain efficiency
savings that will enable PPPRA to keep the selling price for all
marketers of petrol at N87 per liter for now.
30.
The current fuel scarcity with long queues at petrol stations all over
the country causing social dislocation is very unfortunate. Government
profoundly apologizes to Nigerians for this prolonged hardship and
misery. It is as a result of market speculators and resistance to change
by some stakeholders. Government is working very hard to end these
shortages and bring fuel to the pumps all over the country.
31.
I have also directed the NNPC to explore alternate funding models that
will enable us to honour our obligations in Joint Ventures (JVs) and
deep offshore fields. We are confident that these measures can be
achieved and will lower the burden that the traditional cash calls have
imposed on our budget and cash flows as well as contribute towards
shoring up our national reserves.
32.
To deliver our development objectives, we have increased the capital
expenditure portion of the budget from N557 billion in the 2015 budget
to N1.8 trillion, in the 2016 budget. Distinguished and honourable
members of the National Assembly, for the first time in many years,
capital expenditure will represent 30% of our total budget. In future
years we intend to raise the percentage allocation for capital
expenditure.
33.
This is a fulfillment of our promise to align expenditure to our
long-term objectives, and a sign of government’s commitment to
sustainable development. This increased capital expenditure commits
significant resources to critical sectors such as Works, Power and
Housing – N433.4 billion; Transport – N202.0 billion; Special
Intervention Programs – N200.0 billion; Defence – N134.6 billion; and
Interior – N53.1 billion. These investments in infrastructure and
security are meant to support our reforms in the Agriculture, Solid
Minerals and other core job creating sectors of our economy.
34. We will invest to safeguard lives and property.
35. We will invest in equipping our farmers with the right tools, technology and techniques.
36. We will invest in empowering and enabling our miners to operate in a safe, secure and humane environment.
37.
We will invest in training our youths, through the revival of our
technical and vocational institutions, to ensure they are competent
enough to seize the opportunities that will arise from this economic
revival.
38.
Indeed, the future looks bright. And I ask that we all work together to
make this vision a reality. The 223% year on year growth in capital
expenditure demonstrates our desire to make Nigeria more competitive,
and start the journey to deliver sustainable development in our country.
39.
In fulfillment of our promise to run a lean government, we have
proposed a 9% reduction in non-debt recurrent expenditure, from N2.59
trillion in the 2015 Budget to N2.35 trillion in 2016. Furthermore, we
have budgeted N300 billion for Special Intervention Programs, which
takes the total amount for non-debt recurrent expenditure to N2.65
trillion.
39.
As I mentioned earlier, the Efficiency Unit set up by this
Administration together with effective implementation of GIFMIS and
IPPIS will drive a reduction of overheads by at least 7%, personnel
costs by 8% and other service wide votes by 19%. Distinguished and
honourable members, this budget will be executed to provide optimum
value by ensuring every naira spent by this Government, counts.
40.
We will devote a significant portion of our recurrent expenditure to
institutions that provide critical government services. We will spend
N369.6 billion in Education; N294.5 billion in Defence; N221.7 billion
in Health and N145.3 billion in the Ministry of Interior. This will
ensure our teachers, armed forces personnel, doctors, nurses, police
men, fire fighters, prison service officers and many more critical
service providers are paid competitively and on time.
41.
Distinguished and honourable members of the National Assembly, our
2016 borrowings will be principally directed to fund our capital
projects. Furthermore, the sum of N113 billion will be set aside for a
Sinking Fund towards the retirement of maturing loans; while N1.36
trillion has been provided for foreign and domestic debt service. This
calls for prudent management on our part, both of the debt portfolio and
the deployment of our hard earned foreign exchange earnings.
42.
I am aware of the problems many Nigerians currently have in accessing
foreign exchange for their various purposes – from our traders and
business operators who rely on imported inputs; to manufacturers needing
to import sophisticated equipment and spare parts; to our airlines
operators who need foreign exchange to meet their international
regulatory obligations; to the financial services sector and capital
markets who are key actors in the global arena.
43.
These are clearly due to the current inadequacies in the supply of
foreign exchange to Nigerians who need it. I am however assured by the
Governor of Central Bank that the Bank is currently fine-tuning its
foreign exchange management to introduce some flexibility and encourage
additional inflow of foreign currency to help ease the pressure.
44.
We are carefully assessing our exchange rate regime keeping in mind
our willingness to attract foreign investors but at the same time,
managing and controlling inflation to level that will not harm the
average Nigerians. Nigeria is open for business. But the interest of all
Nigerians must be protected. Indeed, tough decisions will have to be
made. But this does not necessarily mean increasing the level of pain
already being experienced by most Nigerians.
45.
So to the investors, business owners and industrialists, we are aware
of your pains. To the farmers, traders and entrepreneurs, we also hear
you. The status quo cannot continue. The rent seeking will stop. The
artificial current demand will end. Our monetary, fiscal and social
development policies are aligned.
Conclusion
46.
Mr. Senate President, Mr. Speaker, distinguished members of the
National Assembly, in spite of the global economic uncertainties; we
must remain steadfast in our commitment to steer this country back to
greatness.
47.
The Nigerian economy needs to move away from dependency on oil. Our
growth must be inclusive. Nigerians must be part of the growth story. As
a Government, we shall deliver security, jobs and infrastructure. This
is the right of all Nigerians.
48.
I know many people will say “I have heard this before”. Indeed, trust
in Government, due to the abuse and negligence of the past, is at an
all-time low. This means we must go back to basics. Our actions will
speak for us. My team of dedicated, committed and patriotic Nigerians is
well aware of the task ahead and I can assure you that we are taking on
the challenge.
49. We will not betray the trust reposed in us.
50. We will welcome and be responsive to your feedback and criticisms.
51. We are here to serve. And indeed, Nigerians will get the service they have longed for and which they rightly deserve.
52.
We as a Government cannot do it alone. We will require the support of
all civil servants, the organized labour, industry groups, the press and
of course, our religious and traditional institutions. This is a call
for all of us to stand and serve our country.
53.
This Budget represents a major step in delivering a new opportunity for
Nigeria. It demonstrates our confident optimism that despite the
challenging times, we have the will, resourcefulness and commitment to
deliver prosperity to our people. And by the Grace of Almighty God and
the sheer will and determination of the Nigerian people, we will come
out stronger and more united than ever.
54. Thank you and God bless the Federal Republic of Nigeria.
