.Says volatile oil price, capital projects allocation barriers to budget implementation
As controversies continue to trail the allocation of N350billion for capital projects in 2017 N7.441 budget, at a time Nigeria is facing the challenge of huge infrastructure deficit, many financial experts are calling on government to increase allocation for capital projects to over 50 percent of the total budget, in order to ensure provision of hard and soft infrastructure for businesses to thrive for optimum productivity in various sectors of the economy.
In a chat with Sunday Vanguard, a financial expert and the current President, Constance Shareholders Association of Nigeria, Mr. Shehu Mikail, stressed that the budget will not pull Nigeria’s economy out of recession, as volatility of crude oil price at the international market can work against the budget’s implementation if the price declines below the budget benchmark of $44.50 per barrel.
He said, “Other things that can prevent the budget from achieving the intended purpose of economic recovery include allocation for capital expenditure, which is not sufficient, unnecessary delay and administrative bottle-necks in the system. For instance, the first quarter of 2017 has passed and the economy is already in the second quarter, while implementation of the budget, which ought to provide a financial framework on how capital projects are executed for the year is yet to start. So, when will the budget implementation begin, in order to have a turn around in the economy? How many capital projects can N350billion achieve with the state of our infrastructure now? It shows that the economy may likely not achieve much due to the structural lag in passing, signing the budget and the issues stated here.”
He went on, “Government should even tell us the level of implementation in 2016 budget, because at present, 2016 appropriation bill is yet to be fully implemented. It is obvious that the economy may achieve just a little turn around if there is speedy implementation in 2017 budget. “The reality is that the economy is in serious crisis. For example, the banking sector is facing a challenge of about N2trillion bad loan and the real sector is in comatose. Now many manufacturing firms are looking for ways to diversify into our areas aside from their core business target, in order to say float in business, power supply is still less than 4,000mega watt, poverty is on the increase, unemployment rate is still very high and nothing much is happening in agriculture. Two years of this administration, what can say are significant achievements in economic growth and development?
On a sustainable solution, he said, “To start with, let government increase allocation for capital expenditure in 2017 budget to over 50 percent of the whole budget to guarantee provision of constant electricity, good roads, functional rail system and other public goods needed for the economy to enhance productivity”.
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