A close look at the 2017 budget indicates that its focus is on consolidating on the government economic recovery programme; restoring growth; ensure coherence between Monetary and Fiscal policies as well as Trade policy; completion of key infrastructure; and guaranteeing security of lives and properties.
Since the Budget deficit is still about the same, it is clear from the analysis that the increase on the budget is as a result of the increase in the benchmark exchange rate; marginal increase in benchmark crude price of $ 42.5/b; and Increment of over N 300 billion in recurrent expenditure.
One would therefore ask: with a deficit of N2.36 Trillion and Capital Budget of N 2.24 Trillion, what are the prospects of implementing the capital budget?
An attempt to address this question is to critically examine the CBN’s Forex Policy Regime. Currently, CBN is operating seven different Forex policies viz: Official rate, Money Transfer rate, Religious Pilgrimage rate, PMS import rate, AGO import rate, Bureau de change rate and Special window rate.
This has resulted in lack of investors’ confidence and has led to the withdrawal of over $ 87billion Foreign Direct Investment (FDI) in the last 16 months.
On solid mineral, projected revenue for 2016 was 16.3 billion and dropped to 2.5 billion in 2017. Why the steep decline in the projected revenue from Solid mineral when we are diversifying the economy to Agriculture, Solid minerals etc. Notably, there are no projections for taxes on solid mineral for 2017 to 2019. Is this a tax holiday or what?
On Gas Flaring, the projected revenue was N3 billion in 2016 and rose to N 4.7 billion in 2017. But this is very abysmal and not commensurate with the volume of gas flared and its environmental impact on the Niger Delta. Our investigation has shown that the country has the capacity to generate $ 2 billion from gas flare penalties; therefore, this Senate must enforce the Committee on Gas’s recommendation to the Honourable Minister of State for Petroleum for the review and implementation of an effective penalty regime to discourage gas flaring by oil companies.
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