lawydewy:

Is it only crude oil that generate revenue for Nigeria? when
the past governments let us to believe in only crude oil.
what do you kwon about economy diversity?
solid mineral.
import/export duties.
tax.
tourism.
agriculture products & processing.
Petro chemistry products if our refineries are working.
standard education (foreign students pay)
power.
etc

greatiyk4u:
This is exactly why it is called a budget of change...................borrowing 2 fund capital projects is not a bad idea, these capital budgets are exactly the economy boaster that will in turn put enough return on investment

$38 oil bench mark is well calculated, since we are all assuming what the market will look like 2moro, there is also equal possibility of price rise.......................................

Our problem in Nigeria is not borrowing money but lack of judicious use of the borrowed fund......I can deduce from ur write-up that u are using the previous govt of corruption as a yard stick 2 judge this govt of change,.................remb, more of the revenue target is on non-oil, with sincere implementation of this budget, Nigeria will surely experience a positive change.

arresa:
1. We are too far down the hole and the only way out is to increase spending in critical areas to get more Nigerians working and generate needed steam in our economy.

2. In struggling economies all over the world, it's either they you introduce severe austerity and massive lay offs or increased infrastructure spending to stimulate the economy via job creation..

3. Austerity can not help us today because we are too battered and depleted to the bone

4. Lay offs spells the same doom for our already bad economic and employment situation.

5. There's no reason to stay down when you are down, else you remain down, it's either you spend big to get up or close up shop for good.

6. Our past budgets are mostly government salary and maintenance budgets still subject to looting and stealing with zero reference to infrastructures and Nigerians beyond the seat of power.

7. Today's budget addressed our poor economy = Improved Economy means improved government revenue

8. It addressed our hopeless unemployment situation = Improved job situation means improved government revenue via taxes

9. It addressed our crumbling infrastructure = Improved infrastructure spending means more construction jobs from unskilled labor to skilled labor like engineers and so on which again means improved government revenue via taxes

10. It addressed our untapped resources and capabilities = improved government revenue and national exports

11. When it's time to stimulate the economy in America where we copied our democracy from, they borrow money to increase infrastructure spending because it not only pumps money into the economy, it creates jobs and expand the government's tax base.

12. GEJ budgeted less than N50 billion for the most vital and critical sectors namely Works, Power and Housing. What can you buy with N50 billion? What can you build with that kind of money? How many people can you put to work with that kind of money? Even sadly, that little N50 billion was obviously looted since we didn't see anything they did with our money apart from Dasuki's sharing bonanza left and right.

13. Today, there's a clear difference between N50 billion and N433 billion for all 3 major job creating and infrastructure building sectors namely Works, Power and Housing


This budget is the best and the most realistic budget simply because it addressed and acknowledge our present situation.

When Nigeria was under the looting and stealing assault that go us to this precarious situation, we didn't see you and your kind crying over the sad burden they saddled us with,we didn't read any of your daily roadside and uninformed analysis, but all of a sudden, we see deceptive and mentally crooked people like you everyday preaching and crying over nothing. Sadly, your cries and daily gyrations has nothing to do with what's best for Nigeria hence this mindless, thoughtless and upside down thinking basement faculty post.


You have the capacity to reason intelligently and educate your many ignorant and unexposed followers on NL, but you always manage to expose and bore us with your own aimless, elementary and half baked thoughts.

Bevista:
So much partisanship in the comments, with very little intellectual input.
---
Nigeria is on the brink of a recession. During times like this, it is standard economic practice to STIMULATE the economy through expansionary fiscal/monetary policies. Any attempt to do the contrary will lead to what is called the AUSTERITY TRAP - i.e. cutting spending during recessions simply deepen the recession. It is standard fiscal policy for deficit to increase during recessions.

So much concerns has been raised - rightly so - about the benchmark oil price used in the budget. But a look at the proposed N6.08tn budget puts oil revenue at N820bn out of a total revenue expectation of N3.8tn. This means that oil revenue is expected to account for only 22% of total revenue and 14% of total budget. A further drop in oil price by 20% will only have a 5% & 3% impact on revenue and total budget respectively. Of course, this is a simplistic analysis, as the FX shortfall from lower oil prices may have other consequences.
---
In summary, what Nigeria needs right now is STIMULUS - which is exactly what the budget seeks to achieve (as long as the funds don't go the Dasuki way). The Oil price is fair at the moment; the government might adjust its MTEF if the realities change - the budget is not sacrosanct or cast-in-stone.

APCLyingBastard:
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

TonyeBarcanista:
So the $38 dollar oil benchmark is 'well calculated' because of your assumption? Have you considered whether indices on ground supports such assumption? Have you checked the market forecast? I also pray for oil price to exceed $38 per barrel but we can't plan budget on our wish alone

Bevista:
So much partisanship in the comments, with very little intellectual input.
---
Nigeria is on the brink of a recession. During times like this, it is standard economic practice to STIMULATE the economy through expansionary fiscal/monetary policies. Any attempt to do the contrary will lead to what is called the AUSTERITY TRAP - i.e. cutting spending during recessions simply deepen the recession. It is standard fiscal policy for deficit to increase during recessions.

So much concerns has been raised - rightly so - about the benchmark oil price used in the budget. But a look at the proposed N6.08tn budget puts oil revenue at N820bn out of a total revenue expectation of N3.8tn. This means that oil revenue is expected to account for only 22% of total revenue and 14% of total budget. A further drop in oil price by 20% will only have a 5% & 3% impact on revenue and total budget respectively. Of course, this is a simplistic analysis, as the FX shortfall from lower oil prices may have other consequences.
---
In summary, what Nigeria needs right now is STIMULUS - which is exactly what the budget seeks to achieve (as long as the funds don't go the Dasuki way). The Oil price is fair at the moment; the government might adjust its MTEF if the realities change - the budget is not sacrosanct or cast-in-stone.

modath:
@ TonyeBarcanista ,

Minus borrowing, what other options are there?

Furthermore, i won't make any comment cos my submission will come across as partisan & considering this article of yours would have been a non starter if thr shoe were to be on the other foot....

*The oil benchmark is idealistic though.*




@ provocateur,

That PIB will only take a miracle to be passed....

*sidebar*

On the point about Socialism vs Capitalism, would have agreed with you if Nigerians aren't / weren't peculiar people, who are also blood suckers & will capitalize (pun intended) on the free hand given to make life miserable for the ordinary Joe / Jane.

[b]Most people who make reference to what we have in TELCO today weren't fully aware of life / living in the years 2001-2003 that Econet & MTN robbed us blind till Globacom came to the rescue .... Read about Strive Mayiwa, serious eye opener..

Babe, give or take inflation , 50 naira then is about 200 or thereabout while 15 for sms should be in the region of 70-80 & they insisted anything short of per min billing would crash their systems ..

My story presents a contradiction i know , cos competition forced the price lower but we can all remember that Glo didn't start ops the same period as these two, Glo had no choice but to introduced Per Sec.


When Etisalat got into the market in '08, the task of providing call centre agents was given to my cousin's firm & he claimed Eti was planning to pay these staff 200k with a meal at work & tea break....

He told me the Nigerian patners (not shareholders, zero investments, just Biz Facilitators) were ridiculing Etisalat Mgt for being " wasteful learners" cos as they insisted, 50kwas more than good enough especially in a job where they aren't stressed, cos they are in AC all day.

Eventually after much back & forth Etisalat decided they weren't savages & settled on 110k or 120k,& insisted the meal will stay as well, can't remember how medical benefits was settled cos my cousin said the Nigerian folks were against that as well!!. ...

Are these the kind of people that should be left alone to manage the affairs of the country?? [/b]


*a don finish you with epistle*

TonyeBarcanista:

I think you are sounding like the Greeks. You know they sounded same way and got their country into mess.

While we need the country to be stimulated with cash, we can't lean towards more loan that will further force us to spend more to finance the loan as well as place more burden on the country. If you look at 2015 Budget, proposed loan was pegged at about N800 billion but the government had to borrow more and even dipped their hands into the ECA to withdraw $2.2 billion. Have you asked yourself "what happens in 2017" after borrowing about N3trillion to finance 2016 budget? Are we also going to borrow more to finance 2017 budget? What happens if crude oil price drop to $25 per barrel with the coming of the USA, Russia and Iran into the market and Saudi Arabia not planning to stop pumping anytime soon? Does that mean we'll borrow 4trillion naira?

How do we sustain this loan in say 2, 3 or 5 years time? This isn't about politics. Remember that what was sustaining us over the years was interventions from ECA. At present that luxury is gone (no thanks to former administration and governors between 2007 and 2015)

dunkem21:
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!

yanabasee:
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?

PROVACATEUR:
I can only point out a socialist budget where the central govt controls the economy while capitalism is relegated to the background

WaffenSS:


Let's use you as a case study to answer your question:

You've a large family. You've got to feed them 3 times a day, pay school fees, utilities etc.

Let's say you earn 100k a month. but of this you can only save 1k every month after meeting your obligations.

But lately your employer is having some financial problems due to poor sales, and your salary is cut down to 30k.

Obviously this cannot even pay your transport to and from work.

Thus, you brainstorm on your fate, and hit the brilliant idea to farm the little piece of land in your compound and also open a small kiosk for your wife in order to supplement your income.

Now remember, you need farm implements, seeds, water hose etc. You also need to buy wood, aluminun, nails etc to construct the kiosk. Then you need to buy stock.

And all you've is 30k. And your family still needs to feed.

Therefore, the only option before you is to borrow enough to feed your brood, get your farm and shop going. Hopefully, both ventures would be successful enough that you won't need to bother much with your dwindling salary.

The above is a very crude and simple way of realizing that in order to develop other revenue streams to supplant oil, Nigeria must spend.

We don't have the cash to do much. Thus, we've to borrow.

Every one borrows, even the US. The problem was that all these years government was borrowing not ro invest in infrastructure, but to sponsor its gargantuan luxury hunger.

We borrow to consume. All those jets and yachts and cars and girls cost money.

Also, the amount PMB is borrowing is still many percentage points lower than the GDP. That's a healthy ratio.

Bevista:
Tonye, whether you choose Austerity or you choose Stimulus, the end result will largely depend on the sincerity and commitment of managers of the economy.

I am telling you that it is standard fiscal policy every where in the world for deficit to increase during recessions. In fact, in developed countries, they increase deficit just to pay unemployment & social security benefits. I expect you to tell me an alternative policy/strategy that the government should be deploying.

Go to the US, UK, Europe, Japan, etc and see how much government deficits and Central Bank balance sheets increased in the wake of the GFC. Companies leverage (borrow) all the time to finance projects for future cash flow

The key is not in the borrowing, but in what government intends to do with it and their commitment to getting it done. The govt has made it clear that all borrowing will be deployed to developing infrastructure, but we'll have to wait and see how it is implemented.

We are not over-leveraged. The US has a debt to GDP ratio of around 100%, Japan has a ratio of around 200%, South Africa has a of around 38%. Nigeria will have a ratio of around 13%.

WaffenSS:


Let's use you as a case study to answer your question:

You've a large family. You've got to feed them 3 times a day, pay school fees, utilities etc.

Let's say you earn 100k a month. but of this you can only save 1k every month after meeting your obligations.

But lately your employer is having some financial problems due to poor sales, and your salary is cut down to 30k.

Obviously this cannot even pay your transport to and from work.

Thus, you brainstorm on your fate, and hit the brilliant idea to farm the little piece of land in your compound and also open a small kiosk for your wife in order to supplement your income.

Now remember, you need farm implements, seeds, water hose etc. You also need to buy wood, aluminun, nails etc to construct the kiosk. Then you need to buy stock.

And all you've is 30k. And your family still needs to feed.

Therefore, the only option before you is to borrow enough to feed your brood, get your farm and shop going. Hopefully, both ventures would be successful enough that you won't need to bother much with your dwindling salary.

The above is a very crude and simple way of realizing that in order to develop other revenue streams to supplant oil, Nigeria must spend.

We don't have the cash to do much. Thus, we've to borrow.

Every one borrows, even the US. The problem was that all these years government was borrowing not ro invest in infrastructure, but to sponsor its gargantuan luxury hunger.

We borrow to consume. All those jets and yachts and cars and girls cost money.

Also, the amount PMB is borrowing is still many percentage points lower than the GDP. That's a healthy ratio.

greatiyk4u:


Some oil and gas experts including our state Minister for petroleum predicted a slight rise of oil prize next year,..........I don't think the idea of $38 is dat bad, since govt is already exploring other revenue generating options, let's keep our fingers crossed and watch out the outcome of the oil market coming year...........................prudence in execution of projects is one of the most important virtues lacking in our previous govt, of which we hope Buhari will be different.

It is 50-50 situation, if the prize improves we gain, if it reduces, we adjust....situations like this is where the excess crude fund is needed, unfortunately extravagance and corruption cost us that opportunity.......4 now nothing spoil yet

Thanks

TonyeBarcanista:

The argument is not just about economic diversification, it is about how government plans to raise funds for 2016 while putting our future on the line. $38 oil benchmark, N6trillion budget, to borrow at least N2trillion (borrowing will be more than N2trillion though)

TonyeBarcanista:
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

yanabasee:



From your analysis, you didn't consider TIME.. How long will it take Buhari to smoothen every hardship?

yanabasee:

Venezuela borrowed about $1.5billion and was said to pay back in 2016 using OIL. But as the oil price is decreasing it's going to be very difficult for Venezuela to meet up with it's debts.

yanabasee:

The (to be) loan cash is not going to be used to invest on other section of the country's economy....

Jazzlite:
modath sorry I DON'T see Nigeria developing at any time soon not in this generation.... unless managed by foreigners in a caretaker govt.

TonyeBarcanista:

The argument is not just about economic diversification, it is about how government plans to raise funds for 2016 while putting our future on the line. $38 oil benchmark, N6trillion budget, to borrow at least N2trillion (borrowing will be more than N2trillion though)

TonyeBarcanista:

The argument is not just about economic diversification, it is about how government plans to raise funds for 2016 while putting our future on the line. $38 oil benchmark, N6trillion budget, to borrow at least N2trillion (borrowing will be more than N2trillion though)

Bevista:
Tonye, whether you choose Austerity or you choose Stimulus, the end result will largely depend on the sincerity and commitment of managers of the economy.

I am telling you that it is standard fiscal policy every where in the world for deficit to increase during recessions. In fact, in developed countries, they increase deficit just to pay unemployment & social security benefits. I expect you to tell me an alternative policy/strategy that the government should be deploying.

Go to the US, UK, Europe, Japan, etc and see how much government deficits and Central Bank balance sheets increased in the wake of the GFC. Companies leverage (borrow) all the time to finance projects for future cash flow

The key is not in the borrowing, but in what government intends to do with it and their commitment to getting it done. The govt has made it clear that all borrowing will be deployed to developing infrastructure, which should promote economic growth and subsequently lead to increased Tax Revenue for government. But we'll have to wait and see how it is implemented.

We are not over-leveraged. The US has a debt to GDP ratio of around 100%, Japan has a ratio of around 200%, South Africa has a of around 38%. Nigeria will have a ratio of around 13%. The government has made it clear that they will have a Sinking Fund as forward planning towards eventual retirement of the debt.

sweetgala:


Socialist budget ! You must not have read the part where the growth of enterprise through provision of busary for science and technology students is encouraged, one where tax incentives are given to investors in the areas of agriculture and solid minera

arresa:



He was basically saying the government should either sit down and do nothing while we sink deeper into economic coma and or order austerity measures to render the populace hungry and helpless.

TonyeBarcanista:

My brother, our situation can be likened to a family that is to choose between enduring hardship while planning for better days ahead and borrowing more money to satisfy the present but endanger the future. Left for me, I'd have preferred austerity that may last between two to three years than a stimulus arrangement that may subject us into more burden in the future.

yanabasee:



From your analysis, you didn't consider TIME.. How long will it take Buhari to smoothen every hardship?

Venezuela borrowed about $1.5billion and was said to pay back in 2016 using OIL. But as the oil price is decreasing it's going to be very difficult for Venezuela to meet up with it's debts.

The (to be) loan cash is not going to be used to invest on other section of the country's economy....