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No plan to reduce capital expenditure – FG

By on February 7, 2015

The Federal Government on Thursday dismissed reports that it had reduce capital expenditure in the 2015 budget to less than 10 per cent of total spending.

It also denied plans to retrench some of its workers owing to the persistent drop in oil revenue.

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, said through a statement issued by her Special Adviser on Communications, Mr. Paul Nwabuikwu, that reports that the government had cut the capital expenditure component of the budget proposal were complete misrepresentation of facts.

The statement also said the drop in oil prices had been factored into the expenditure of the government for this year, adding that this was why a scenario-based approach was used in preparing the budget.

The statement read in part, “The Federal Government had on several occasions explained that it had adopted a scenario-based approach, with accompanying adjustment measures, given the uncertainty as to where the oil price would eventually settle. In fact, the Minister of Finance had gone on record as saying that the scenarios developed go as low as $45 per barrel.

“The implication of this is that we are prepared to introduce additional policies to ensure that capital expenditure and other critical spending heads were protected to the extent possible if, indeed, the oil price stayed lower than $65 per barrel.

“The focus is on critical infrastructure projects, which drive growth, in order to maximise impact. The ministry never, at any time, said it was wedded to $65 per barrel oil price. Quite the opposite. Otherwise, we wouldn’t have taken so much pain and effort to develop the many other scenarios indicated above.”

The statement added, “The government has no plan to sack workers. The report also ignores the fact that there is significant internal demand and consumption, which are helping to drive growth in the Nigerian economy.

“A good example of this can be found in remittances from Nigerians abroad, which the World Bank estimates at $21bn per year.”

 

[Punch]