he Federal Executive Council on Wednesday approved the 2017-2019 Medium Term Expenditure Framework (MTEFF) and Fiscal Strategy Paper (SFP), pegging oil benchmark at $42.5 within the period.
Speaking to State House Correspondents after the FEC meeting presided over by President Muhammadu Buhari, Minister of Budget, Udo Udoma with his Trade and Investment counterpart, Okechukwu Enalama also said the government pegged the crude oil benchmark at $42.5 .
He said in terms of the currency, the government is using for the exchange rate, they are using N290 to $1 while expressing hope that the naira will stabilise and N290 to $1 is a fair estimate from the Central Bank of what the naira is worth.
Udoma added that with the approval of the MTEF, which will be sent to the National Assembly for their consideration, the government has started the process of preparing the 2017 budget.
He said, “The Federal Executive Council meeting approval of the Medium Term Expenditure Framework (MTEFF). and Fiscal Strategy Paper (SFP) for 2017 to 2019.
“As you know the Fiscal Responsibility Act requires the executive to prepare the MTEFF and send it on to the National Assembly for their consideration. And it is on the basis of the MTEFF that the next budget will be fashioned. So in short we started the process of preparing the 2017 budget.”
“Before the MTEFF was presented to FEC for consideration, there was an extensive consultation with the private sectors, governors, NGOs.
According to him, In the 2017-2019 MTEFF, the government intends to intensifies efforts in pursuing manpower driven economy.
“So we intend to intensify effort to diversify the economy, we intend to go on with the implementation of ongoing reforms in public finance, we intend to enhance the environment for ease of business so as to generate private sector and private investment.
“We intend to continue to pursue gender sensitive, pro-poor and inclusive social intervention schemes similar to what we did in 2016, our social intervention programmes is going to be sustained.”
“We intend to devout even more resources to critical infrastructure projects just as we did this year. So we will continue to spend more on roads, rails, transport infrastructure, ports and so on. We intend to focus on plane governance and security and we intend to maintain the zero-based budgetary approach.”
He added that, “Let me share with you some of the key parameters and assumptions which will be underpinning the 2017-2019 MTEFF.
“Oil price benchmark: We intend to use $42.50 as a reference price in 2017. We are projecting $45 in 2018 and $50 in 2019.
Udoma noted that the government is keeping to the very conservative in terms of the reference prince of crude oil even though they are expecting it to go higher than this but are keeping to an extremely conservative price scenario.
He pointed out that In terms of oil production, the government is keeping to the same level of this year for 2017 and that is 2.2 million barrels per day. For 2018 2.3 million barrels per day, for 2019 2.4 million barrels per day.
In terms of growth rate,Udoma said the government is targeting in 2017 a 3% growth rate, 2018 a 4.26 per cent growth rate and 2019 a 4.04 per cent.
Udoma contended that the reason 2019 is slightly lower than 2018 is because that is an election year and usually in an election year because of the uncertainties the government has also made provision for that.
Asked on why the government is benchmarking using oil at a time this government is still talking about diversifying, he said, “Even though we want to diversify, we still have to use a particular number to plan in terms of revenue from crude oil. It doesn’t mean we don’t use numbers for other receipts. I was just reading the highlights.”
He explained that the government have numbers for everything, numbers they expect to get from customs, VAT, independent revenue etc.
“So we have numbers for all the things we expect but because oil is volatile and is an area that has caused us to be where we are today, we want to assure Nigerians we are not going backing to using high estimates even though we sense that prices may be moving towards $60 per barrel in the next year or so, we are still going to use conservative number.
On the level of implementation of this present fiscal year, he said, In terms of the performance of the current budget, in terms of the capital budget, we have released over N400 billion and we are upto date in terms of the recurrent, all salaries have paid, overheads are released, statutory transfers are made.
On his part, the Minister of Trade and Investment, Okechukwu Enalama disclosed that council also approved the ratification of the World Trade Organisation (WTO) Trade facilitation agreement.
According to him, this is an agreement that was approved by all the members of WTO in the ministerial conference that was held in 2013.
He said what that agreement seeks to do is basically to lower the cost of trade generally for everybody.
“There was a clear understanding that everybody benefits from lowering the cost of doing trade, it is particularly beneficial to developing countries that wants to be able to access the international market. Nigeria was one of the countries that approved the agreement then and we have been going through the process to ratify the agreement so that it will come into effect.
“The idea is that the agreement will come into effect when is ratified by two thirds of all the countries that approved it originally, we think that will happen sometimes this year.
“Given the importance of trade to Nigeria and our standing, we believe that is appropriate that we not only ratify the agreement but also that we champion the cause of lowing the cost of doing business that the agreement seeks to achieve,” he said