49cents:


You nailed it @ bolded!!!

That's the APC style: they borrow monies and do signature projects to score cheap political points, they even do so at inflated amounts (cf, Fashola's website and Borehole)

While they use IGR for themselves leaving the next government to pay thier debts which projects they took credit for

49cents:


The revenue is more than oil because oil revenue plummeted and not that non-oil revenue really grew
Spot the diff

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

Reski:
Yes at least we have a realistic budget. Lets give kudo's to the minster of national planning and let buhari and his team focus on implementation of the budget. Except you want them to peg the price of oil at $15 per barrel.

anonimi:


Is this an admission of your dull chief being too daft to know what to do hence you are using style to ask for ideas and solutions

You should just ask straight up instead of trying to be clever-by-half.
Solutions ko, problems ni!
Did your megida not know what he was getting into when he applied and FAILED in 2003, 2007 and 2011 before he teamed up with Ogbeni Ojuyobo to finally succeed in 2015
It is not too late sha oh, he can resign honourably if he is too daft to perform and deliver on his promise.



www.nairaland.com/attachments/2236329_fbimg1426964019374_jpegf0426a8233bbbeb8b2d08838e693f36e



www.nairaland.com/attachments/3054865_vp_jpeg444345bcdcb410269d58d4e2bb72121a


www.nairaland.com/attachments/3041343_resize_jpeg_jpeg384963ae8ea3da4721c0ff0a90d0291d

NavierStokes:
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"

NavierStokes:
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"

[size=28pt]We ignored his prediction of Jonathan's victory. And we were right!
[/size]

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!

49cents:


You nailed it @ bolded!!!

That's the APC style: they borrow monies and do signature projects to score cheap political points, they even do so at inflated amounts (cf, Fashola's website and Borehole)

While they use IGR for themselves leaving the next government to pay thier debts which projects they took credit for

oromidas231:

I think the APC's economic team just put the benchmark as $38/brl per say....I believe the economy would be hugely diversified in 2016 and a huge chunk of funds to service the budget would come from non- oil sources for the first time in a long while in our nations history. I believe the statement PMB made that "its time for us to farm our lands and explore our solid minerals" was no fluke....let's just be patient as Nigerians and stop judging d APC government like its PDP-run affair!
I think the APC's economic team just put the benchmark as $38/brl per say....I believe the economy would be hugely diversified in 2016 and a huge chunk of funds to service the budget would come from non- oil sources for the first time in a long while in our nations history. I believe the statement PMB made that "its time for us to farm our lands and explore our solid minerals" was no fluke....let's just be patient as Nigerians and stop judging d APC government like its PDP-run affair!

49cents:


The bench mark for crude oil is not realistic based on emerging global realities: a $20 mark is more realistic, if it doesn't plummet we have the balance in an excess crude account

Like someone said even if you must borrow it should be for welfarism which on your IGR you can't support for now

It

Demdem2:


Only if Jonah-daft ur brother had better managed the economy when oil was far more than $100 per barrel. No other leader in our history had so much income accessible to the drunkard, yet he squandered it all.
Even the 1 billion dollars the bastard borrowed to purchase arms, na Dasuki shared the money for their cohorts.
This budget is right on point. This govt should remain focus. We will go through pains no doubt but the end result is surely positive.

sainty2k3:


be sincere Sir, if he had tolled the conservative ways. cut down workers wages , sack some people, remove subsidy outrightly,increase tax, make no provision for cspital project,will u complain or not, will u hail him for doing so?

Johnnyessence:
i heard u it's better u change ur mind for good. osun state u said his running to debt is the least state collecting lowest allocation from the federal government and since that time till this moment it's d least state collecting fg allocation.first and foremost economic meltdown happening in all the state in the federation affect the infrastructure in their various state.if u hear the debt of some state u will be feeling sorry for some states cos' their debt is huge. and pls i want to clarify something here the debt in the state is not huge as what u think.if our economy av been diversify 8 or 10 years ago from oil sector to other area,this country would leave the position he is today. if we av diversify our economy to agriculture and mineral resources in which other state where mineral resources is more abundant should be generating their revenues from it since we won't be complain like this ooo.we should change our mindset in this country. God bless nigeria.

TonyeBarcanista:

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

teamchocolate:
Pls always read to comprehend.. you always have to look at context.. at least that immediate is now in 2016 in their very first budget..

Ur clueless hero had done 2015 budget before buhari and osinbajo stepped in

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?

kasay:
I hardly comment on economic analysis on Nairaland because I find a lot of pedestrian and ignorant perspective here. However, let me respond to the narrow and perverted views of my good friend and self -anointed nairaland columnist. Barcanista writeup is centred on oil price benchmark for the budget and borrowing to finance capital expenditure components of the same budget. Barcanista is wrongly worried about oil prices fluctuation and borrowing without undertaking serious scientific and strategic analysis of the budget. He sounds and write like a cartoon version of Olisa Metuh who craft senseless press releases before engaging in sensible thinking. Now, it's common knowledge that global forecast indicated that oil prices will shore up and stabilised in 2016. This is further strengthen by strategic actions of OPEC and supply management. However, even if this doesn't happen and prices further plummet by 60%, they exist several other non-budgetry and development financing options to address anticipated deficit. On borrowing, there is nothing wrong with borrowing to finance investment with high return and regenerative value. American and other developed economies still borrow to fund their needs inspite of their huge reserves and strong economy. The common sense theory of operating with OPM in business applies to government too. Strategic borrowing to finance critical infrastructure like power, transport, works, railways etc and vital social services like education and healthcare will positively impact on inclusive growth and economic development. It will enable shared prosperity while creating jobs and eradicating poverty. This will translate to better living conditions for citizens and increase productivity which will lead to higher government internal revenues and debt repayment capacity. Tonye Bastardnista, if you borrow 100m to invest in your business and properly utilised that loan for growing your business, it will translate to expansion of your business, value creation, providing more jobs and contributing higher taxes as well better life for you and your family. Even at 5tr borrowing, our debt to GDP ratio is still not up to 20% which is the global benchmark for performing loans and country credit worthiness. If previous corrupt PDP government could borrow during surplus to pay salaries, why won't a corrupt -free and well-intention APC government borrow to invest in regenerative and development oriented projects with high IRR? Borrowing is a key element of public financing strategy for all governments across all locations and era. Tonyebacanista, you may wish to consult with public sector economic experts to tutor you on the mechanics of budgeting and long term strategic outcomes of a well-thought-out budget like the budget of change, if not, your misrepresentation of the budget of change will increase the burden of Wailing imposed on you by YOU. Nice day brother.

TonyeBarcanista:
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

IzonOwei:
....you and Jonathan. ..hehehehe...guy jona was just like every other leader nigeria had...you should stop this blame game and we think of a way forward..The buhari we have now once ruled nigeria and nigeria didn't turn into dubai then...if we put our trust in our old leaders we would soon head for a rock...We must as youths and citizens influence their decisions for the benefit of all...

Actually we need to because he happened to be the worst leader in our history. Like u said earlier, which of our leaders had access to so much resources? Where u alive when Buhari came in first? Just like this scenario. He came in at a time Shagari and his cohorts bastardised the emerging things. He came in and restored order. Already, a solution has been proffered in form of the budget however knowing fully well how forgetful Nigerians are. There is a need to always remind us from where we were coming from especially when the curse was governing.

This government should not end up borrowing until we end up like Greece. ..

There is nothing wrong in borrowing however what are the terms of money being borrowed and what money borrowed is spent on should be of more importance.

I just hope they have considered all the odds..

Of cos they have. We have sincere set of people currently governing us.

I hope you you would be ready to vote out the apc if they end up a scam...because with Nigeria all scams are possible...

Why not. If they disappoint or perform far less than Jonah-daft, I will be the first to cast the first stone. It's for Nigeria good. This is the time to spend heavily to boost and energise the economy and not being conservative about it.

anonimi:



Do you know why your megida went for N413 billion supplementary BUDGET in order to keep paying the fuel subsidy CABAL that he said he is unaware of


https://www.nairaland.com/2742433/buhari-seeks-approval-pay-n413b

sainty2k3:
.
u are proposing a static period. that's not done, the country needs to grow, our capital expenditure is needed for economic growth if well have any. why don't u support cutting workers salary probably because that will affect u. lol what bihari did is what I called the needful

sainty2k3:
.
u are proposing a static period. that's not done, the country needs to grow, our capital expenditure is needed for economic growth if well have any. why don't u support cutting workers salary probably because that will affect u. lol what bihari did is what I called the needful

urshawmoore:
Are you ever going to give this administration a chance? In you own view, they seem not to do anything right. If you have the strategies on how to make Nigeria great again, why don't you work on making the world know, thru different platforms, instead of condeming everything this govt does on Nairaland. The people who prepared this budget aren't stupid. They are a group of professionals. They definately understand the plight of Nigerians & I'm sure they mean well for us. Besides, its no longer abt Oil Oil Oil like in the past.

SirDorianGray:



According to Moody's (And this is a Worldwide leading Financial Agency) crude oil will be between $33 - $46/barrel. To argue on this issue you need to understand the dynamics of the oil industry, which is one of the most capital intensive industries,where digging a well costs tens of millions of dollars and an offshore rig costs a million dollars a day. Such wild price swings from 147 dollars per barrel in 2007 to 36 dollars per barrel today completely obliterate any CAPEX spending strategies and no sane investors will touch the industry other than govts supporting their National Oil Companies which is bad news as the industry needs hundreds of billions in dollars a year just to MAiNTAIN existing production. Price of oil is low now and hedgers are hedging at lower prices but there will come a point where demand will rise above the level of supply and then Hedgers will start making huge profits cos the price will go up. Don't be surprised if in 2017 prices go back to $70+

Recovering oil prices lift European shares


http://www.reuters.com/article/us-global-markets-idUSKBN0U701620151224


Oil ends sharply higher as U.S. crude inventories decline


http://www.marketwatch.com/story/crude-prices-strengthen-on-us-export-hopes-2015-12-23

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

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.

coolitempa:
I consider this a budget for the short term future of Nigeria. Borrowing to finance the budget at a mere 1.2% of our GDP is negligible and very unlikely to have any significant effect on any future generation more particularly when you consider the fact that capital expenditure has increased in order to finance much needed infrastructural development.

Deficit financing through government borrowing is an oft employed mechanism to stimulate an economy which remains docile with due regards to Lord Maynard Keynes. And as regards the benchmark of $38.00, I will like to believe this was based on looking at the futures market for our type of crude. I also note that the budget showed for the first time ever that crude oil is actually not the dominant factor in budget financing - checkout the focus on taxation.

Personally, I think the government has been too conservative and should have been much more adventurous in getting the economy up in no time, deficit financing should be in the region of a minimum 10%. All in all, I call this a budget for the masses unlike the previous ones which have sought to cater for the more financially comfortable folks.

On the other hand, it is easy to spot that Mr Barcanista is not being true to himself and should never have left his heart...ie APC. You are always welcome to recant and come back to where your heart really dwells.

At the core of Keynesian economics is the idea that fiscal policy (government taxing and spending) should be used as a tool to control an economy.
It was a theory espoused by one of the 20th century's greatest thinkers, British economist John Maynard Keynes, whose ideas helped shape the modern world economy and are still widely respected and followed today.
Keynes's magnum opus – The General Theory of Employment, Interest and Money (1936) – was a direct response to the Great Depression. He argued that governments had a duty, one that had hitherto been neglected, to help keep the economy afloat in times of trauma. It was a rebuke to an idea from Frenchman Jean-Baptiste Say (1767–1832) that in the economy as a whole "supply creates its own demand", meaning that merely producing goods would create demand.
The assumption until the Great Depression had been that the economy was in large part self-regulated – that the invisible hand, left to itself, would automatically raise employment and economic output to optimal levels. Keynes strongly disagreed.
During a downturn, he said, the drop in demand for goods could cause a serious slump, causing the economy to contract and pushing up unemployment. It was the responsibility of government to kick-start the economy by borrowing cash and spending it, hiring public-sector staff and pouring cash into public infrastructure projects – for example, building roads and railways, hospitals and schools. Interest-rate cuts can go some way towards lifting an economy, but they are not the whole answer. - http://www.telegraph.co.uk/finance/comment/edmundconway/6127908/The-case-for-borrowing-is-born-out-of-the-Great-Depression.html