The rates at the interbank market are currently bordering on N200 to the dollar without the likelihood of the rate dropping considerably below this rate in 2015. What has been the experience is that exchange rates in the country are sticky going southwards. Soon after this development, it was reported in the media that using N190 as the rate of the exchange would add N1.2 trillion to the Federation Account and result in making available more naira for the fiscal authorities to meet their obligations, particularly the payment of salary to workers, even if with the distinct possibility of a diminution in value as inflation takes its toll.
In the 2015 budget estimates prepared by the executive, the capital budget was actually reduced by a massive 42.4 percent from N1,100.61 trillion in 2014 to N634.6 billion, which is a measure of the challenge the fiscal authorities have encountered with the preparation of Budget 2015. Capital budget is relatively very important in fostering badly needed growth of the economy as well as for growing badly needed job opportunities. But we must rise to the challenge of meeting the recurrent expenditure budget if only in the interest of industrial peace and harmony. The legislature has now increased this provision to N700.78 billion. It will be interesting to determine the details of the capital programmes that have been added to ensure that it is all altruistic as the legislature has constituency budget to cater for the personal interests of its membership. But the fact remains that this country in the recent past has not recorded anything more than the current provision by way of capital budget implementation in any one year. And considering that the prevalent uncertain scenario is hardly conducive, we give the verdict that this extent of provision is reasonable. It would be interesting to note with the benefit of hindsight what success we would record with implementation in this regard. But what is informative in this connection is to note that a deficit of N756 billion is in Budget 2015, down from N911.91 billion in 2014, representing a drop of about 17.1 percent. Therefore, if the capital budget as indicated herein is about N700 billion, it then implies that we are actually going to borrow to fund recurrent expenditure, which is not consistent with best practice in this regard. Going forward, we must endeavour not to be caught committing this offense.
It is important in this regard that we target generating from taxes and tariffs the revenue for the funding of recurrent expenditure. Despite recent celebrated success recorded with the attempt to grow revenue from taxation, it remains a sobering fact that the performance of the country still falls short in this connection. Taxation and related collections in the country today are estimated at 7.8 percent of GDP, which compares unfavourably with 45 percent in France, 39 percent in Britain, 27 percent in America, and even 12 percent in Tanzania which is within the sub-region. It should, therefore, be clear to all that we have some catching-up to do in this regard and must, therefore, gear efforts through ensuring that we broaden the tax base to make those who have been delinquent with the payment of taxes to begin to pay their taxes as appropriate.
The budget provision for SURE-P was massively cut from the N102 billion estimate provided by the executive to about N21 billion, which did not take many people by surprise as one of the concerned legislators is on record to have remarked that following the cascading oil price, the SURE-P provisions in the budget were dead on arrival! But SURE-P has assumed a life of its own considering the many beneficial programmes which have been embarked upon on this platform. These include all the recently targeted employment generation programmes such as the up-scaling of FERMA for the upgrade and maintenance of road infrastructure, the Graduate Internship Scheme, and Women and Youth Community Service programmes, including health-enhancing projects such as malaria/polio eradication, avoidance of mother-to-child transmission of HIV/AIDS, amongst others. It is, therefore, now almost inconceivable that such laudable programmes would be abruptly terminated. Subsidy provision on petrol importation has been reduced from N200 billion to N100 billion and that on kerosene from N91.08 billion to N45.52 billion.
The country must resolve to end the leakage to the treasury arising for subsidy-related expenditures. One expected that we should have seized the opportunity of the falling oil price to exit this regime. We must be in a hurry to terminate the shame of a country which is a major oil producer resorting to the importation of refined products because of lack of domestic capacity to refine what it consumes. And there will be no takers with regard to the private sector injecting capital in this respect unless the downstream petroleum product market is deregulated. Considering the tight situation of Budget 2015, there is certainly no room for making service-wide vote. It will be interesting when we do a review of Budget 2015 by the end of the year to ascertain how much of it has been implemented.
Boniface Chizea
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