24 November 2014, Lagos – To effectively cushion the adverse impact of the global fall in oil prices on Nigeria’s economy, the Lagos Chamber of Commerce and Industry on Sunday recommended a further scrutiny of the country’s annual budgets.
Specifically, the chamber outlined 10 items on the annual budget that should be examined by the Federal Government in addition to the austerity measures adopted two weeks ago.
The LCCI said, “There are several budget heads that need to be further scrutinised to ensure cost effectiveness and better transparency in the management of public finance. This includes the consolidated revenue fund charges, service-wide votes, presidential amnesty programmes, capital supplementation, debt service, refreshments and meals, foodstuffs and catering, honorarium and sitting allowance, welfare packages, repairs and maintenance.”
“All these budget heads have substantial amounts voted for them in the budget annually. Some of the provisions do not reflect the desired prudence in the management of public funds. Huge savings will be made if a proper scrutiny of these budget heads is made.”
Analysts had stated that the current global oil market developments called for drastic measures to keep the economy on a sustainable path.
According to them, the economic situation has again underlined the critical importance of economic diversifications, as a diversified economy has a better capacity to withstand shocks.
The Federal Government had two weeks ago reeled out some fiscal and monetary policy measures to be undertaken in order to stabilise the macroeconomic conditions and minimise dislocations.
Some of the measures are reduction in international travels and training by the Federal Government officials, tax on luxury items, review of oil price benchmark to $73 from $78 in the 2015 Medium Term Expenditure Framework; renewed commitment to fiscal prudence, upward revision of revenue target for the Federal Inland Revenue Service and the Nigeria Customs Service, among others.
On the monetary policy front, the LCCI noted that some items had been excluded from the official foreign exchange window and they included electronics, finished goods, Information Technology, generators, telecommunications equipment, and invisible transactions.
“The implication is that transactions involving these items will be funded at a higher exchange rate from either the interbank foreign exchange market or parallel market,” it added.
The chamber further stated that Nigeria’s tax drive should also reflect the pattern of income distribution.
It noted that in an economy where an estimated 60 per cent of the wealth was in the hands of 10 per cent of the population, the tax revenue drive should reflect this structure.
It said, “It stands to reason that 60 per cent of the tax should come from the 10 per cent of the population. But it requires strong political will to make this happen. It is important to make the tax systems truly progressive to make the rich support the poor.”
– The Punch