Oil price fall: Govt to inject N350bn to stabilise economy

…As N/Assembly passes budget today, approves N150bn for fuel subsidy
Oscarline Onwuemenyi
23 March 2016, Sweetcrude, Abuja – The Federal government has said that it will inject N350 billion budgeted expenditure to revamp the Nigerian economy in the next few months. It will equally work in collaboration with the state governments to adopt a plan for the gradual increase of value added tax (VAT) on goods and services.

*President Buhari speaking with some government officials at the National Executive Council retreat in Abuja.

*President Buhari speaking with some government officials at the National Executive Council retreat in Abuja.

These were some of the decisions taken at the end of a two-day retreat for governors of the 36 states of the federation and members of the National Economic Council (NEC) at the Presidential Villa in Abuja.

The Nigerian economy has been hit by dwindling crude oil prices, leading to a shortage of foreign exchange, a shrinking economy and spiraling inflation, which have all impacted on the standard of living and impeded the ability of several state governments to pay the salaries of their workers.

Briefing State House correspondents at the end of the retreat, the Minister of Finance, Mrs. Kemi Adeosun, who was joined by the Minister of Budget and National Planning, Senator Udoma Udo Udoma, Zamfara State Governor, Mr. Abdul’aziz Yari and his Anambra State counterpart, Mr. Willie Obiano, said part of the funds would assist in the payment of local contractors who had laid off their staff due to lack of funds.

Adeosun expressed the conviction that the money, which would be released by her ministry in the coming months, would restore significant economic activities in the country.
She said for contractors to benefit from the fund, they must show proof of the number of Nigerians that would be re-engaged

Adeosun said, “From the Federal Ministry of Finance, in anticipation of the approval of the budget, we have virtually lined up about N350 billion, which we would be pumping into the Nigerian economy in the coming months.

“We explained our rationale and the processes that we have put in place, safe guards to ensure that this money actually achieves the desired objective which is to stimulate the economy. We are already discussing with some of the contractors who would be paid these monies and the objective from the overall criteria is how many Nigerians would be re-engaged.

“We are specifically looking at contractors who have laid off staff and how many Nigerians are you going to put back to work as a result of this money that we are planning to release and we believe that this would bring significant economic activities.”

She said the retreat deliberated extensively on the drop in revenue and on how it affects the state governments and their ability to pay salaries and meet other obligations.

According to her, “The general resolve of the house was that there was a need to bring in more cost efficiency in their operations. In particular, to look at the setting up of Efficiency Units in the states, to rationalise expenditure and of course to increase internally generated revenue (IGR).

“To that end, there was a need to generate data because data are the basis of any revenue collecting efforts.”

Adeosun also said that the federal and states inland revenue services agreed to collaborate on joint audits on revenue, to invest in technologies and other efforts to improve collection.

According to her, there is a need to develop incentives for both federal and states revenue generating agencies to ensure that there is an alignment of interests.

She said the meeting also agreed to educate the masses on taxation in order to expand the tax base and ensure that there is a buy-in in the revenue collection agencies from the populace.

Adeosun said the meeting advised the state governors to rationalise the numbers of commissioners and general political appointees, where possible, in their states and to put in place cost control measures that would be identified and implemented on an on-going basis.

She said, “We also discussed the Universal Basic Education Fund and the need to get legislative approval to change the need for counterpart funding on the part of state governments which we feel is putting them further into debts.

“The goals are to reduce that requirement temporarily to 10 per cent from the current 50 per cent and that would release an estimated N58 billion that is currently un-accessed by the states.
“With that money, we could possibly address around 1,000 of the worst classrooms in each of the 36 states and rehabilitate them and of course this would also create jobs and stimulate economic activities.”

The end of the two-day NEC retreat coincided with revelations from the National Assembly that it will pass the 2016 budget today, following which the federal legislature would embark on a two-week Easter break.

The budget reportedly includes a provision of N150 billion for fuel subsidy and the withdrawal of N1.5 trillion revenue from the treasury single account (TSA).

The N150 billion fuel subsidy and N1.5 trillion TSA funds are contained in the report of Conference Committee of the Senate and House of Representatives on 2016-2018 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Policy (FSP), which was also presented to the Senate yesterday.

The Senate and House Committees on Appropriation had separately laid the 2016 budget before both legislative chambers for consideration and passage today.

While the report by the Senate Committee on Appropriation was laid by committee chairman, Senator Danjuma Goje, after a motion moved by the Senate Leader, Ali Ndume, that of the House of Representatives was laid by the House Committee Chairman on Appropriation, Hon. Abdulmumuni Jibrin.

The Senate also received the harmonised report of the Conference Committee on the 2016-2018 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Policy (FSP) as presented by the Chairman, Senate Committee on Finance, Senator John Eno. Both the budget and MTEF and FSP are expected to be passed today.

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