₦airaland Forum

texazzpete:
Were you under a rock when Okonjo Iweala told us last year that we would face austerity measures in 2015? You said nothing then, you bloody hypocrite!

We are getting much needed honesty from a president telling us to prepare for tough times. Seems you prefer the days when the clueless one was lying to us that the economy was sound, even as our excess crude account buffer was shared and eaten.

onatisi:
so Nigeria shouldn't tigten their belt?we should borrow now to live as if there is no problem only to suffer tomorrow?what happens if the price of crude oil falls below the 30$ mark by July?have you thought about that?

Johnnyessence:
i know u tonye barcanista abi wetin u called yourself hmmm. ever since i know u on nairaland u are always criticise apc government, u will be surprise when buhari achieving what he proposed this year at 80% performance. imagine saying budget of burden,ur point are not concrete here u are just to abuse the state in the south west because they vote out ur clueless leader as president that said stealing is not corruption. please and please Tonye barcanista u should pray for buhari for successful year 2016 cos' dead pdp want buhari failed by all means and almighty God won't allow that.ince aregbesola the governor of the state of osun assume the leadership 5 years ago the state av been doing well in terms of creation of wealth to the people when u are arguing don't include aregbe in ur argument cos' he has achieved more than his predecessor in d state of osun. God bless nigeria. as far as osun state is concern pdp is dead.

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?

yanabasee:
Are you seriously thinking or you're naturally below the thinking age?

Between this administration and the previous one... Which of them lies most? Or you want a comprehensive lesson on whose been lying?

Again, Iweala did say exactly what you've stated and she told Nigerians what could be done to curtail the hardship... Unlike what Buhari said... He didn't tell us how to go about it... What plans the country have got to raise hopes for better days...

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

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.

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!

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?

texazzpete:
Stop moving goalposts, hypocrite.
This is not a discussion about who lies most, even though I personally think the APC has a long way to go to reach the heights PDP reached in lying.

This discussion is about the propriety of forewarning Nigerians about impending austerity. The last administration did it through NOI, buhari is doing it today.

You cannot be an acolyte of the previous govt and condemn this one for doing something similar.

Face issues and leave your childish insults aside. Discuss like an educated adult and not this childish display of petulance.

olakan22:
let me ask you, why did u vote in Buhari? I don't care if he went to school or not. In-as-much-as he has decided to be (and he is) our president, it is his responsibility to solve problems like this. Now, does he have sack workers and cut their pay? Why not cut capital expenditure and government costs? When workers get paid well and regularly, the masses survive. Although it would amount to low economic growth, that's what baba should have done pending the time his economic team will prepare a feasible plan which tap into other resources nature has blessed us with...till then

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.

onatisi:
yes definitely some people will cry and complain but the end justifies the means . The opposition will call him all sort of names but it wont last long. Right now he is making the same mistakes gej made and that is trying to please everybody. What we need now is tight fiscal control,cut in spendings, massive injection of funds into agriculture and power . If all these is done within 24months the nation will thank him,but borrowing 2trillion naira and earmarking large amount for a so called social welfare programme is wasteful at this time. The maximum amount this gov should borrow at this time shouldn't be more that 500billion to 1 trillion. Don't forget that oil prices is on the decline and the buyers aren't even there again like before.

IzonOwei:
TonyeBarcanista ....so what is the way forward my brother..We are in deep soup...what do we do.....

My fear we might be taxed to death from next year if the government seeks a fast way to compensate for the budget deficit..and na there we go mad for this country..

I am just tired...

TonyeBarcanista:
Lalasticlala Seun Dominique





PS: Intelligent contribution or criticism will be appreciated

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.

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"

Reski:
Tonye barcanista and his fairytale economics. Seriously I expected better. Or are you too blind to see the fact that for the first time in 45year's of our existance as a nation projected revenue from other sources is more than that of oil.