Buhari Presents N6.08trillion Budget For 2016 + His Full Speech

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President Muhammad Buhari has presented a N6.08 trillion budget
for the fiscal year 2016. He presented the budget today before a
joint session of the National Assembly. In the budget, capital expenditure
takes N1.8 trillion. N396billion is voted for education, being the largest
sectoral allocation. The health sector gets N296 billion while defence has N294
billion. Read his full speech after the cut. It is titled “The Budget of
Change”.

2016 Budget Speech: “The Budget of Change”
Delivered By:
His Excellency, Muhammadu Buhari
President, Federal Republic of Nigeria
To
A Joint Session of the National Assembly (on December 22,
2016)
PROTOCOLS
I am honoured and privileged to present the 2016 Budget
proposal. This is my first address before this joint session of the National
Assembly. I have come here today, not only to address members of the National
Assembly, but also to speak directly to the men and women who placed us here.
2. I know
the state of our economy is a source of concern for many. This has been further
worsened by the unbridled corruption and security challenges we have faced in
the last few years. From those who have lost their jobs, to those young people
who have never had a job, to the people in the North East whose families and
businesses were destroyed by insurgents, this has been a difficult period in
our nation’s history, lessons that we must not forget or ignore, as we plan for
the future.
3. By June
2014, oil prices averaged $112 per barrel. But as at today, the price is under
$39 per barrel. This huge decline is having a painful effect on our economy.
Consumption has declined at all levels. In both the private and public sectors,
employers have struggled to meet their salary and other employee related
obligations. The small business owners and traders have been particularly hard
hit by this state of affairs.
4. Fellow
Nigerians, the confidence of many might be shaken. However, I stand before you
today promising that we will secure our country, rebuild our economy, and make
the Federal Republic of Nigeria stronger than it has ever been.
5. The
answers to our problems are not beyond us. They exist on our farmlands; our
corporations; in the universities in the hearts and minds of our entrepreneurs;
through the gallantry of our Armed Forces; and the resolute spirit of
Nigerians, especially the youth, who have refused to give up despite all the
obstacles confronting them.
6. This Budget
proposal, the first by our Government, seeks to stimulate the economy, making
it more competitive by focusing on infrastructural development; delivering
inclusive growth; and prioritizing the welfare of Nigerians. We believe that
this budget, while helping industry, commerce and investment to pick up, will
as a matter of urgency, address the immediate problems of youth unemployment
and the terrible living conditions of the extremely poor and vulnerable
Nigerians.
7. In the
medium to longer term, we remain committed to economic diversification through
import substitution and export promotion. This will build resilience in our
economy. It will guarantee that the problems we have today, will not confront
our children and their children. This shall be our legacy for generations to
come.
2015: A Year of Global and Domestic Challenges
8.            Today, it
is widely acknowledged that the global economy has slowed down. This is
particularly the case with emerging markets such as Nigeria. However, despite
the weak emerging market growth rates, our domestic security challenges,
declining oil prices, and the attendant difficulties in providing foreign
exchange to meet market demands, the Nigerian economy grew by 2.84% in the
third quarter of 2015.
9.            We have,
and will continue to implement strategies that will maintain macroeconomic
stability and manage the oil price shocks we are experiencing.
10.          Upon the
inauguration of this administration on 29th May 2015, we engaged key
stakeholders from various sectors of our economy and interfaced with the heads
of Ministries, Departments and Agencies (MDAs) in order to understand the true
state of our nation. What we found prompted us to take certain strategic
decisions.
11.          On the
economy, we injected new leadership at the helm of our revenue generating
agencies including the Federal Inland Revenue Service (FIRS), Nigerian National
Petroleum Corporation (NNPC), Nigerian Communications Commission (NCC), and the
Nigerian Customs Service (NCS). We implemented the Treasury Single Account
(TSA) which, so far, has provided greater visibility of Government revenues and
cash flows. We intervened to support States to navigate their fiscal challenges
by restructuring their commercial bank loans and by providing facilities to
enable them to pay salary arrears.
12.          We have
demonstrated a strong will to fight corruption. I am sure you will agree that
the sheer scale of corruption and impunity of the past explains in part, the
economic challenges we now face. On these initiatives, and the many more to
come, we shall not be deterred. We will pursue the recovery of everything that
belongs to the people of Nigeria. No matter where it is hidden. No matter how
long it will take.
2015 Budget Performance
13.          Distinguished
and honourable members of the National Assembly, I now present a review of the
2015 Budget. That Budget was based on a benchmark oil price of $53 per barrel,
oil production of 2.28 million barrels per day and an exchange rate of N190 to
the US$.
14.          The
projected revenue was N3.45 trillion, with an outlay of N4.49 trillion,
implying a deficit of N1.04 trillion. Due largely to under-provisioning by the
previous administration for fuel subsidy and the costs required to support the
military operations in the North East, the Government had to obtain National
Assembly’s approval for a supplementary budget of N575.5 billion. I take this
opportunity to thank all members of the National Assembly for the prompt
passage of that Bill.
2016: Budget Assumptions
15.          After
reviewing the trends in the global oil industry, we have set a benchmark price
of $38 per barrel and a production estimate of 2.2 million barrels per day for
2016. We have focused on non-oil revenues by broadening our tax base and
improving the effectiveness of our revenue collecting agencies.
16.          Also, with
the full implementation of the Treasury Single Account, we expect significant
improvements in the collection and remittance of independent revenues. To
further support the drive for increased remittances, we will ensure that all
MDAs present their budgets in advance, and remit their operating surpluses as
required by section 22 of the Fiscal Responsibility Act.
17.          We are
determined to ensure that our resources are managed prudently and utilized
solely for the public good. To set the proper tone, one of our early decisions
was the adoption of a zero based budgeting approach, which ensures that
resources are aligned with Government’s priorities and allocated efficiently.
This budgeting method, a clear departure from previous budgeting activities,
will optimize the impact of public expenditure.
18.          In
addition to the proper linkage of budgeting to strategic planning, we are
enhancing the utilization of the Government Integrated Financial Management
Information Systems (GIFMIS) to improve financial management. The recently
established Efficiency Unit is working across MDAs to identify and eliminate
wasteful spending, duplication and other inefficiencies. We engaged costing
experts to scrutinize the 2016 budget proposals. They have already identified
certain cost areas that can be centralized for economies to be made.
  
19. We have directed the extension of the Integrated
Personnel Payroll Information System (IPPIS) to all MDAs to reap its full
benefits. We will also strengthen the controls over our personnel and pension
costs with the imminent introduction of the Continuous Audit Process (CAP).
These initiatives will ensure personnel costs are reduced. Our commitment to a
lean and cost effective government remains a priority, and the initiatives we
are introducing will signal a fundamental change in how Government spends public
revenue.
2016: Laying the Foundation for Sustainable Growth
20.          The 2016
budget, as outlined, is designed to ensure that we revive our economy, deliver
inclusive growth to Nigerians and create a significant number of jobs.
21.          We aim to
ensure macroeconomic stability by achieving a real GDP growth rate of 4.37% and
managing inflation. To achieve this, we will ensure the aligning of fiscal,
monetary, trade and industrial policies.
22. As we focus on inclusive growth, we are conscious of the
current rate of unemployment and underemployment. This is a challenge we are
determined to meet; and this budget is the platform for putting more Nigerians
to work. I can assure you that this administration will have a job creation
focus in every aspect of the execution of this budget. Nigeria’s job creation
drive will be private sector led. We will encourage this by a reduction in tax
rates for smaller businesses as well as subsidized funding for priority sectors
such as agriculture and solid minerals.
23.          As an emergency
measure, to address the chronic shortage of teachers in public schools across
the country, we also will partner with State and Local Governments to recruit,
train and deploy 500,000 unemployed graduates and NCE holders. These graduate
teachers will be deployed to primary schools, thereby, enhancing the provision
of basic education especially in our rural areas.
24.          We also
intend to partner with State and Local Governments to provide financial
training and loans to market women, traders and artisans, through their
cooperative societies. We believe that this segment of our society is not only
critical to our plan for growing small businesses, but it is also an important
platform to create jobs and provide opportunities for entrepreneurs.
25.          Furthermore,
through the office of the Vice President, we are working with various
development partners to design an implementable and transparent conditional
cash transfer program for the poorest and most vulnerable. This program will be
implemented in phases. Already, the compilation of registers of the poorest
persons is ongoing. In the coming weeks, we will present the full programme,
which will include our home-grown public primary school feeding and free
education for science, technology and education students in our tertiary
institutions. Indeed, this will mark a historic milestone for us as a nation.
The 2016 Budget
26. Distinguished
members of the National Assembly, I now present, the 2016 Budget proposals of
the Federal Government. Based on the assumptions I presented earlier, we have
proposed a budget of N6.08 trillion with a revenue projection of N3.86 trillion
resulting in a deficit of N2.22 trillion.
27.  The
deficit, which is equivalent to 2.16% of Nigeria’s GDP, will take our overall
debt profile to 14% of our GDP. This remains well within acceptable fiscal
limits. Our deficit will be financed by a combination of domestic borrowing of
N984 billion, and foreign borrowing of N900 billion totaling N1.84 trillion.
Over the medium term, we expect to increase revenues and reduce overheads, to
bring the fiscal deficit down to 1.3% of GDP by 2018.
28. In 2016,
oil related revenues are expected to contribute N820 billion. Non-oil revenues,
comprising Company Income Tax (CIT), Value Added Tax (VAT), Customs and Excise
duties, and Federation Account levies, will contribute N1.45 trillion. Finally,
by enforcing strict compliance with the Fiscal Responsibility Act, 2007 and
public expenditure reforms in all MDAs, we have projected up to N1.51 trillion
from independent revenues.
29. Although
we are working to diversify our economy, we will not lose sight of the need to
restructure the oil and gas sector which has been marred by corruption and
plagued with inefficiencies. Accordingly, I have directed the Petroleum
Products Pricing Regulatory Agency (PPPRA) to adjust its pricing template to
reflect competitive and market driven components. We believe this can lower
input costs and attain efficiency savings that will enable PPPRA to keep the
selling price for all marketers of petrol at N87 per liter for now.
30. The
current fuel scarcity with long queues at petrol stations all over the country
causing social dislocation is very unfortunate. Government profoundly
apologizes to Nigerians for this prolonged hardship and misery. It is as a
result of market speculators and resistance to change by some stakeholders.
Government is working very hard to end these shortages and bring fuel to the
pumps all over the country.
31. I have
also directed the NNPC to explore alternate funding models that will enable us
to honour our obligations in Joint Ventures (JVs) and deep offshore fields. We
are confident that these measures can be achieved and will lower the burden
that the traditional cash calls have imposed on our budget and cash flows as
well as contribute towards shoring up our national reserves.
32.  To deliver
our development objectives, we have increased the capital expenditure portion
of the budget from N557 billion in the 2015 budget to N1.8 trillion, in the
2016 budget. Distinguished and honourable members of the National Assembly, for
the first time in many years, capital expenditure will represent 30% of our
total budget. In future years we intend to raise the percentage allocation for
capital expenditure.
33. This is a
fulfillment of our promise to align expenditure to our long-term objectives,
and a sign of government’s commitment to sustainable development. This
increased capital expenditure commits significant resources to critical sectors
such as Works, Power and Housing – N433.4 billion; Transport – N202.0 billion;
Special Intervention Programs – N200.0 billion; Defence – N134.6 billion; and
Interior – N53.1 billion. These investments in infrastructure and security are
meant to support our reforms in the Agriculture, Solid Minerals and other core
job creating sectors of our economy.
34. We will
invest to safeguard lives and property.
35. We will
invest in equipping our farmers with the right tools, technology and
techniques.
36. We will invest in empowering and enabling our miners to
operate in a safe, secure and humane environment.
37. We will
invest in training our youths, through the revival of our technical and
vocational institutions, to ensure they are competent enough to seize the
opportunities that will arise from this economic revival.
38. Indeed, the future looks bright. And I ask that we all
work together to make this vision a reality. The 223% year on year growth in
capital expenditure demonstrates our desire to make Nigeria more competitive,
and start the journey to deliver sustainable development in our country.
39.  In
fulfillment of our promise to run a lean government, we have proposed a 9%
reduction in non-debt recurrent expenditure, from N2.59 trillion in the 2015
Budget to N2.35 trillion in 2016. Furthermore, we have budgeted N300 billion
for Special Intervention Programs, which takes the total amount for non-debt
recurrent expenditure to N2.65 trillion.
39. As I
mentioned earlier, the Efficiency Unit set up by this Administration together
with effective implementation of GIFMIS and IPPIS will drive a reduction of
overheads by at least 7%, personnel costs by 8% and other service wide votes by
19%. Distinguished and honourable members, this budget will be executed to
provide optimum value by ensuring every naira spent by this Government, counts.
40. We will
devote a significant portion of our recurrent expenditure to institutions that
provide critical government services. We will spend N369.6 billion in
Education; N294.5 billion in Defence; N221.7 billion in Health and N145.3
billion in the Ministry of Interior. This will ensure our teachers, armed
forces personnel, doctors, nurses, police men, fire fighters, prison service
officers and many more critical service providers are paid competitively and on
time.
41. Distinguished
and honourable members of the National Assembly, our 2016 borrowings will be
principally directed to fund our capital projects. Furthermore, the sum of N113
billion will be set aside for a Sinking Fund towards the retirement of maturing
loans; while N1.36 trillion has been provided for foreign and domestic debt
service. This calls for prudent management on our part, both of the debt
portfolio and the deployment of our hard earned foreign exchange earnings.
42. I am aware
of the problems many Nigerians currently have in accessing foreign exchange for
their various purposes – from our traders and business operators who rely on
imported inputs; to manufacturers needing to import sophisticated equipment and
spare parts; to our airlines operators who need foreign exchange to meet their
international regulatory obligations; to the financial services sector and
capital markets who are key actors in the global arena.
43. These are
clearly due to the current inadequacies in the supply of foreign exchange to Nigerians
who need it. I am however assured by the Governor of Central Bank that the Bank
is currently fine-tuning its foreign exchange management to introduce some
flexibility and encourage additional inflow of foreign currency to help ease
the pressure.
44. We are
carefully assessing our exchange rate regime keeping in mind our willingness to
attract foreign investors but at the same time, managing and controlling
inflation to level that will not harm the average Nigerians. Nigeria is open
for business. But the interest of all Nigerians must be protected. Indeed,
tough decisions will have to be made. But this does not necessarily mean
increasing the level of pain already being experienced by most Nigerians.
45. So to the
investors, business owners and industrialists, we are aware of your pains. To
the farmers, traders and entrepreneurs, we also hear you. The status quo cannot
continue. The rent seeking will stop. The artificial current demand will end.
Our monetary, fiscal and social development policies are aligned.
Conclusion
46. Mr. Senate President, Mr. Speaker, distinguished members
of the National Assembly, in spite of the global economic uncertainties; we
must remain steadfast in our commitment to steer this country back to
greatness.
47. The Nigerian economy needs to move away from dependency
on oil. Our growth must be inclusive. Nigerians must be part of the growth
story. As a Government, we shall deliver security, jobs and infrastructure.
This is the right of all Nigerians.
48. I know
many people will say “I have heard this before”. Indeed, trust in Government,
due to the abuse and negligence of the past, is at an all-time low. This means
we must go back to basics. Our actions will speak for us. My team of dedicated,
committed and patriotic Nigerians is well aware of the task ahead and I can
assure you that we are taking on the challenge.
49. We will not betray the trust reposed in us.
50. We will welcome and be responsive to your feedback and
criticisms.
51. We are here to serve. And indeed, Nigerians will get the
service they have longed for and which they rightly deserve.
52. We as a Government cannot do it alone. We will require
the support of all civil servants, the organized labour, industry groups, the
press and of course, our religious and traditional institutions. This is a call
for all of us to stand and serve our country.
53. This Budget represents a major step in delivering a new
opportunity for Nigeria. It demonstrates our confident optimism that despite
the challenging times, we have the will, resourcefulness and commitment to
deliver prosperity to our people. And by the Grace of Almighty God and the
sheer will and determination of the Nigerian people, we will come out stronger
and more united than ever.
54. Thank you and God bless the Federal Republic of Nigeria.

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