Earlier today(Tuesday) President Muhammadu Buhari presented the 2016 budget before the joint session of the National Assembly. The budget he tagged "Budget of Change". While commending President Buhari for personally presenting the budget, it is important to ask the kind of change that the budget reflect.

What Is The Rationale Behind $38 Oil Benchmark?
In the budget, the government pegged oil benchmark at $38 per barrel. The problem here is that since the beginning of the second half of 2014, crude oil price has been on a free fall. In December 2014, it stood at $61 per barrel. As at today, the price of crude oil has dropped to $36 per barrel. Note that the price of crude as at june 2014 was $117 per barrel. With Iran poised to resume supply in 2016, Russia and USA entering the market, it means that the price of the product may go lower in 2016. What then is the rationale behind pegging the price of crude at $38 per barrel for 2016 budget? How will Nigeria meet up with its attendant deficit in revenue?

2. According to the 2016 Budget, Nigeria's projected revenue for 2016 is N3.86 trillion and deficit of N2.22 trillion with oil benchmark at $38 dollar per barrel. The government dedicated N1.8 trillion ie 30% set aside for capital expenditure, and projected to incur loan of N1.84 trillion.

The above means that the government plan to incur loan to finance capital project and use the leftover for recurrent expenditure. Which country in the world can survive on such arrangement? Considering that oil price is sinking deeper, it means even the projected revenue may not be met and government could be forced to take more loans to meet up the deficit. Where is the wisdom here?

More Debt?
As at June 30, 2015 the former permanent secretary of the finance ministry put the debt owed by the FG alone at N8.396 trillion and $7.74 (N1.4trillion) for local and external debt respectively. With the government proposing to borrow another N1.84trillion to finance 2016 budget, this will mean more money to finance these huge debts. Considering that we will likely borrow more due to oil decline, I don't think there is any wisdom in this. Are we going back to pre-1999?

Will Government Ever Learn?
When the last administration presented the 2015 budget, they pegged crude oil price at $65 per barrel. As at time of presenting the budget, the crude oil price stood at $61 per barrel. The effect was what we witnessed in 2015 where the government had to resort to borrowing because they couldn't meet revenue expectation. President Buhari is now following the same route. Pegging crude oil price at $38 per barrel when the price at present is lower. That means there will be increased borrowing should the crude oil price fail to rise at the benchmark.

I believe Nigeria should learn from Greece and not go down same lane. Already, we have serious problem of depleting customers for our major export(oil) and also we face challenge of competing with more entrants(USA, Russia and Iran) in the market. Government budget should reflect on the reality and not hinged on political correctness. Honestly, I see no positive change in this budget, all I see is burden on Nigerians.



May God Bless Nigeria

Resources...
www.premiumtimesng.com/news/headlines/173682-budgit-analysis-2015-budget-shows-nigerian-govt-not-committed-austerity-measures-oil-price-falls.html

www.bbc.com/news/business-35152037

allafrica.com/stories/201509170055.html

I don't know what to say because

1. I respect tonyback-ass-nista Weller and ashame of him.

2. Bura-ri is nt my guy but his budget is my life...

And come 2016... The oil price is predicted to reduce to $15 per barrel and this will be very difficult for Nigeria with the said debt (loan) that Buhari will incur upon Nigeria...with the hope of paying back using "OIL" as our ONLY source of revenue.

This will reflect exactly what Venezuela is passing through right now.....

How can a President who took an oat to protect the people and make life easy for them, tell the people that NIGERIANS WILL EXPERIENCE HARDSHIP COME 2016. It shows that, this administration has NO economical plan(s) or whatsoever to redeem us from any hardship...

No jobs anymore, the little companies around have been reducing their staffs and even federal/state government staffs are owed. What is going on?

Typing... in other news,when will Ed-wood sack Vangal plss

A masterpiece to be frank .. Barcanista is a rare gem, ignore him at your own peril ..


The JAMB question remains " What is the rationale behind $38 oil benchmark ..

..when Iran and the giant USA is planning to SELL OIL TO NIGERIA!

Lalasticlala Seun Dominique






PS: Intelligent contribution or criticism will be appreciated

I also do not support the idea of using $38 as the benchmark when we know that it's not likely for the oil price to go up, I hope the National Assembly can correct that mistake.
Be that as it may though, I don't think drop in fuel price will have major effects on the budget considering the fact that the bulk of the revenue projection is not from oil unlike what used to obtain in the past.
As regards borrowing, except if we don't want to be realistic, the govt doesn't have any option than to borrow at this stage of our economy, I personally think we should even commend the administration for the wisdom applied cos it's obvious that the borrowed will be used to service capital expenditures and not recurrent expenditure

Sai tonye barcanista barcelona.






Nice point there,I question the intelligence of















Not buhari,he only read a book hje had no idea about.














But kemi adeosun,how can someone without any advance degree in economic be our finance minister.

How can someone that just left as commisioner of finanace ogun state,the the state has to beg for money through bailout to pay salary be good enough to be our finance minister.






Sai nonsense aka blamegej for everything

I can only point out a socialist budget where the central govt controls the economy while capitalism is relegated to the background. The welfarism in this budget will put a burden on the FG to borrow more and spend on its recurrent expenditures which will invariably put a dire strain on a weak naira.

This is the worst budget in the history of Nigeria why will you borrow to service charitable budget

Expecting the best from Buhari and his team of mediocre economists is like waiting on rain in the desert!

After reading through the complete breakdown of the budget, I'm pretty disappointed! Yes, Funds for Capital expenditure increased but not to the level this government initially promised!

The most mind boggling is this gov't plans to borrow heavily and summarily dash a big chunk out of it to fulfil ambiguous campaign promises!

Why peg the benchmark at $38 when the current price is $36?

As FFK said: Illusion of change!

I personally do not understand the rationale behind the $38 benchmark.

segalex:
I also do not support the idea of using $38 as the benchmark when we know that it's not likely for the oil price to go up, I hope the National Assembly can correct that mistake.
Be that as it may though, I don't think drop in fuel price will have major effects on the budget considering the fact that the bulk of the revenue projection is not from oil unlike what used to obtain in the past.
As regards borrowing, except if we don't want to be realistic, the govt doesn't have any option than to borrow at this stage of our economy, I personally think we should even commend the administration for the wisdom applied cos it's obvious that the borrowed will be used to service capital expenditures and not recurrent expenditure

this is a b budget that will plunge the country into marathon borrowing to fund the huge deficit that will accrue to it. Private investments is on a downward spiral and the non passage of PIB will affect the oil sector which will hit the projected revenue

segalex:
I also do not support the idea of using $38 as the benchmark when we know that it's not likely for the oil price to go up, I hope the National Assembly can correct that mistake.
Be that as it may though, I don't think drop in fuel price will have major effects on the budget considering the fact that the bulk of the revenue projection is not from oil unlike what used to obtain in the past.
As regards borrowing, except if we don't want to be realistic, the govt doesn't have any option than to borrow at this stage of our economy, I personally think we should even commend the administration for the wisdom applied cos it's obvious that the borrowed will be used to service capital expenditures and not recurrent expenditure

I don't see any wisdom in the borrowing of N2trillion(and even more) considering that such action is not different from that taken by the past administration... 'Let's borrow to fund capital project', whereas, the unrealistic 2015 budget couldn't meet 80% of anticipated revenue that we also had to borrow to pay civil servants.

I agree with you that Nigeria isn't rich but I don't think indebting us into more financial burden is the way forward. This is like towing the path of Greece and Osun state. We are all seeing the consequence.

My take on this budget is that it is a budget of Burden which is only achievable with Zimbabwe dollars

A budget of shameless almajiri borrow borrow and begging

wailers ... am neither q PDP or APC fan.. wenti i 1 even comment self..
sip my drink..

AK481:
Sai tonye barcanista barcelona.

Nice point there,I question the intelligence of

Not buhari,he only read a book hje had no idea about.

But kemi adeosun,how can someone without any advance degree in economic be our finance minister.

How can someone that just left as commisioner of finanace ogun state,the the state has to beg for money through bailout to pay salary be good enough to be our finance minister.

Sai nonsense aka blamegej for everything

I think drafters of the budget put allowed the need to 'fulfil' some campaign promise to influence them. At first when the announcement of N6trillion budget was made, the comment I made was 'more borrowing"? It is better for us to tighten our belts than to enjoy today to suffer tomorrow. The government should reconsider the budget because should anything happen, we all will suffer together. This I don't pray for

TonyeBarcanista:

I don't see any wisdom in the borrowing of N2trillion(and even more) considering that such action is not different from that taken by the past administration... 'Let's borrow to fund capital project', whereas, the unrealistic 2015 budget couldn't meet 80% of anticipated revenue that we also had to borrow to pay civil servants.

I agree with you that Nigeria isn't rich but I don't think indebting us into more financial burden is the way forward. This is like towing the path of Greece and Osun state. We are all seeing the consequence.

plz don't mention Osun again because its more of a failed d state economically.
@topic, I'm still watching to see the financial institution that will buy our bonds when our Fitch ratings are on the negatives. We may recourse to taxation which will be fiercely resisted by Nigerians because of the hardships which the FG has bequeathed to them with their austerity measures

I can bet my left nut that this budget will rise to 9 trillion before the end of 2016.

A supplementary budget will be passed before June.

Mark my words

Goodboiyy:
wailers ... am neither q PDP or APC fan.. wenti i 1 even comment self..

sip my drink..

Oboy na serious matter be this and you de sip drink?

TonyeBarcanista:

Oboy na serious matter be this and you de sip drink?

Dem don dey deny change

obailala:
I personally do not understand the rationale behind the $38 benchmark.

A more realistic value ought to be $18.

We still need to fund the ECA to have room for savings and repayment.

Aregberascal allocation will drop to 20 million per month by next year

PROVACATEUR:
plz don't mention Osun again because its more of a failed d state economically.
@topic, I'm still watching to see the financial institution that will buy our bonds when our Fitch ratings are on the negatives. We may recourse to taxation which will be fiercely resisted by Nigerians because of the hardships which the FG has bequeathed to them with their austerity measures

As long as I am concern, the average Nigerian man and woman has been on austerity since Adam. However we can't allow things to get worse that it is. Tax increase may not work especially when you consider that the ruling party made some social promises(that is anyway unrealistic). Instead, Nigerians are expecting government free money. This is a big challenge.

I think the government should face reality and move to arrest the situation without putting our future into jeopardy like Aregbesola did to Osun.

I just came here to smoke igbo (ganja)

*puff*

*waiting for TonyeBarcanista masters to come and flog the hell out of him for posting this*

cc

gbawe
Omenka
Clerverly (ngeneukwenu)
Beremx

Hehehehehehehehehehe

APCLyingBastard:


A more realistic value ought to be $18.

We still need to fund the ECA to have room for savings and repayment.

Aregberascal allocation will drop to 20 million per month by next year

Unfortunately, the government don't have the luxury of ECA to dip their hands into. I wonder whether they are looking at MTN fine.

The guys who "tweak"the market (Goldmann Sachs) have already done a forecast for $20/bbl, our "inexperienced unqualified and cloutless" economic team have selected a benchmark of $38/bbl. This is almost like plunging our country into avoidable economic chaos. "Na Borrow-Pose budget naim we deg see so"

TonyeBarcanista:

Oboy na serious matter be this and you de sip drink?

osharey make I kill myself ?.. for money I nor go see chop ?.. omo no time.. I think ur Dullard presido tried in this yr budget.. abeg see truth talk..

TonyeBarcanista:

Unfortunately, the government don't have the luxury of ECA to dip their hands into. I wonder whether they are looking at MTN fine.

They warned them but they insisted on squandering it.

Even the LNG receipts were wasted as bailouts.

Nah Aregbe voodoo economics we dey practise now

TonyeBarcanista:

Unfortunately, the government don't have the luxury of ECA to dip their hands into. I wonder whether they are looking at MTN fine.

Chai .. I don pour Fanta inside soup think say na oil