The Federal Government says it is finalising a Medium Term Economic Recovery and Growth Plan (ERGP 2017 – 2020) which addresses the current economic challenges and is aimed at restoring growth.
Udoma Udo Udoma, Minister of Budget and National Planning, disclosed this during the break down of the 2017 budget yesterday.
“The Plan builds on the existing Strategic Implementation Plan (SIP), and contains strategic objectives and enablers required to revive the economy. The strategic objectives of the NERGP are: Pulling the economy out of recession; Investing in our people; and laying the foundation of diversified, inclusive and sustainable growth.”
Udoma said the plan will focus on five strategic areas including; Macroeconomic Stability; Competitiveness; Growth and Diversification ;Social Inclusion, as well as Governance and Enablers.
He did not say when the plan would be released but sources tell BusinessDay that top consulting firm, Mckinsey and leading Nigerian economists have been mandated to come with the plan, which is likely to be released early 2017. The current administration has often been criticised for not having a clear economic agenda.
But the Minister said that “The 2017 Budget proposal reflects many of the reforms and initiatives in the SIP and NERGP and in the 2017-2019 Medium Term Sector Strategies (MTSS), as well as the 2017-2019 Medium Term Fiscal Framework.”
He disclosed that a “Multi-criteria analysis (MCA) approach was adopted to prioritise and select 2017 capital projects for 14 large capital spending MDAs involved in the MTSS. Projects were linked to government policies and strategic priorities.”
Listing the critical priorities of the 2017 budget, the minister said the focus is “on critical on-going infrastructure projects such as roads, railways, power, ICT, that have quick positive effects on the economy
Also included are the utilisation of Special Economic Zones and Industrial Parks as vehicles to accelerate domestic economic activity for innovation and wealth creation; contributing to food security and creating platform for agro-business in agriculture supply chains through the Agriculture Green Alternative Plan.
It also aims at establishing a Social Housing Fund to deepen the mortgage system and expand its availability across all states of the federation; encouraging and stimulating the growth of small and medium scale industries for innovation, job creation, productivity and wealth creation; and providing social safetynets for poor and vulnerable Nigerians.
Udoma also identified several key reform initiatives in the 2017 budget that are aimed at improving the revenue base of the country. These include; Subjecting the JV operations to a new funding mechanism, which will allow for Cost Recovery. Additional oil-related revenue include: Royalty Recoveries, Marginal Field Licenses, Early licensing renewals, which the Minister of state for petroleum resources said could bring additional US$1 billion in revenues.
Udo Udoma also said that the Federal Government would sustain the use of TSA to monitor the financial activities of over 900 MDAs from a single platform; broaden the tax base, improve effectiveness of revenue collecting agencies, improve tax compliance; reduce leakages by tracking trade mis-invoicing and introducing the single window to drive customs efficiencies.
He said it would further mprove the performance of independent revenue of government by ensuring that all MDAs (particularly revenue generating MDAs) present their budgets in advance, and remit their operating surpluses as required by the FRA; and extend the Integrated Personnel Payroll Information System (IPPIS) to all MDAs.
The minister disclosed that 56% of the capital allocation of the 2017 budget would be spent on infrastructure, while governance and security would gulp 20%. Economic reforms and growth are taking 12% of capital allocations, while social development would take 7%.
Other sectors consuming capital allocations in the 2017 budget include states and regional development, which is getting 4% and environment, gets 1%.
“By setting aside N2.24 trillion (inclusive of capital in statutory transfers), which is 30.7% of the total budget for capital expenditure, the objective, as set out in the SIP, of devoting at least 30% of the budget to capital expenditure has been achieved.
Much of the capital provision is directed at those projects which will facilitate economic growth, diversification, and competitiveness, ease of doing business, social inclusion, jobs, as well as governance.
This will ultimately engender the attainment of the Sustainable Development Goals (SDGs)” the minister said.
“The largest capital allocation goes to the Federal Ministry of Power, Works and Housing – N564 billion (7.7%) (25% increase over 2016 estimate). To address contractors’ liabilities, the Federal Government intends to issue over N2 trillion worth of bonds to clear outstanding contractors’ liabilities. These bonds would have a 10-year maturity and the amortisation is expected to begin in 2018.
“With regard to existing liabilities on bonds which were issued to contractors by past the administration, we have set aside the sum of N177.46 billion in the 2017 budget as a sinking fund to retire the maturing bonds.”
A total of N1.047 trillion was set-aside in the budget for infrastructure. This comprises of Power, Works and Housing N529billion; Transportation: N262 billion; Special Intervention Programmes: N150 billion. Defence: N140 billion;Water Resources: N85 billion;Industry, Trade and Investment: N81 billion;
Interior: N63 billion; Education N50 billion; Universal Basic Education Commission – N92 billion;Health: N51 billion; Federal Capital Territory: N37 billion; Niger Delta Ministry; N33 billion; Niger Delta Development Commission – N61 billion and Agriculture: N91 billion.
