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Budget 2016: N1.8tn investment will trigger economic turnaround – Adeosun

By on February 7, 2016

The Minister of Finance, Mrs. Kemi Adeosun yesterday assured the nation and the international community that the proposed N1.8 trillion capital investments in the 2016 budget would be crucial for stimulating economic growth in the country.
She also said the 2016 budget would finance investments in key infrastructure particularly in transport, power, health, housing and education and boost job creation among other things.

Adeosun who addressed participants at the KPMG in Nigeria’s CFO Forum and Survey Launch in Lagos yesterday stated that to reflate the economy and avoid recession, a spending stimulus was needed.
The Minister, in her keynote address, further explained the current administration’s plans to reposition the economy, noting that the planned “investments would create jobs with the various contractors that would execute the projects.”

She explained that public investment would attract further investments from the private sector and that investments in power and transport would further increase the competitive position of Nigerian businesses.
Adeosun, in a statement issued by her Special Adviser on Media Matters, Mr. Festus Akanbi, cited the case of Ethiopia, which is now seen as a model for African economy which had diversified from a single product, coffee to a multi-product with exports of flowers providing $3.5bn of earnings as well as leather goods and other products.
She said that to attain that level of growth, the Ethiopian government had invested up to 60 per cent of its budget in capital projects, pointing out that this threshold contrasted with the Nigerian situation, where in 2015, Nigeria’s capital expenditure was just 10 per cent of the total budget.
According to her, “No economy has ever grown by underinvesting in infrastructure.”
Nevertheless, Adeosun said ongoing ”fiscal housekeeping”, which included sanitising the payroll, which to date, had unveiled over 23,000 possible ghost workers and the creation of the Efficiency Unit was a key strategy in managing recurrent expenditure, adding that the focus on improving non-oil revenue collections was an important strategic objective.
She noted that this was essential in ensuring that the planned government borrowings were channeled to capital projects rather than being spent on recurrent items.
On the proposed borrowing to finance the 2016 budget deficit, the Minister explained that Government was seeking the lowest cost funds and was therefore consulting with the multilateral agencies, which offered concessional rates of interest as low as 1.5 per cent before looking at the commercial Eurobond Market.

She said that the financing strategy was to restructure much of the existing debts, which has short maturity and align it with the investment plans of the government in line with its Medium Term Expenditure Framework.
She further assured that government was ensuring that projects to be undertaken would create direct and indirect revenues, which would be used to repay the obligations.
The Minister said that for the medium term, the outlook for the economy was strong and that if the planned investments in capital were undertaken then the GDP growth projections showed that Nigeria would become a leading global economy.
She said that government would work to ensure that consumption from our huge population would drive internal growth across a number of key sectors.

She also assured the audience that if the disciplined implementation of the plans could be attained then Nigeria would finally be able to diversify, ending a situation where the entire nation is dependent on the oil price.

 

[ThisDay]