Posted on November 13, 2017
Economic and financial experts have expressed concerns over the Federal Government’s ability to implement the 2018 proposal, saying the current year’s budget performance has been below average.
They also conveyed divergent views over the budget assumptions and key indices as presented by President Muhammadu Buhari to a joint session of the National Assembly on Tuesday.
While some expressed doubt over its likely efficacy, others said the budget would achieve all it was set to achieve if its implementation would begin on time.
The Chief Executive Officer, Financial Derivatives Company Limited, Bismarck Rewane, described the budget proposal as good but said there were fundamental issues with some of its assumptions.
He said, “It is called the ‘Budget of Consolidation’ but the success is not fully entrenched yet. The growth is still fragile. It is a step in the right direction but it is not bold, aggressive and robust enough.
“If you discount inflation with the expenditure, then you see that it is still small. You need an increase of at least 30 per cent. The exchange rate of N305/$ is not realistic. What volume of transactions is done at that rate?
“Looking at the oil production of 2.3 million barrels per day, I don’t think that is perfect. It is a good budget but it did not go far. You need to grow expenditure by a minimum of 30 per cent. As an economist, I will say there is a lot of work to be done; you need vision, courage and integrity.”
An analyst and Managing Director, Afrinvest Securities Limited, Mr. Ayodeji Ebo, said the N8.6tn expenditure was too ambitious, saying he wondered how the Federal Government would raise such an amount.
“My concern is how the government will fund the expenditure. The government is still far behind in terms of getting revenue to fund the 2017 budget. The exchange rate of N305/dollar is not realistic considering the fact that most transactions are now being done at N363/dollar,” he stated.
Ebo stressed the need to pass the budget on time and begin its implementation by January.
An economist at Capital Economics, John Ashbourne, said the budget was too ambitious.
He told Reuters, “Mostly, I think that they are setting themselves yet more unattainable goals.
“The Federal Government falls short on its revenue and expenditure targets every year, and Buhari always responds by writing an even more ambitious target into the budget for the following year.”
An economist at Lagos-based Vetiva Capital Management, Michael Famoroti, said, “If the government will borrow externally as it has indicated, the budget has to be passed early so that it can meet up with the funding gap
“There is the challenge of getting approval from the legislature and it’s something it can’t overlook.”
In his comments, the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said, “The budget is achievable. The oil revenue projection of N2.4tn is achievable. The main condition is to ensure stability in the Niger Delta, as this will enable them to achieve 2.3 million barrels per day output target. If this budget is passed on time, the 3.5 per cent growth and 12.4 per cent inflation rate will be achievable. The year 2018 is the last full year the government has to impress the electorate. What we need is diligent implementation of the budget.
“The 2017 budget has some issues because it was passed late and the economic environment was tougher than now. This is why we must begin the implementation of the 2018 budget in January.