The House of Representatives on Monday warned all Federal Government Ministries, Departments and Agencies (MDAs) against including what it described as ‘white elephant projects’ in their budget proposals, to shore up revenue for critical infrastructure and development of capital resources that have direct impact on the people.
This is just as the Federal Government reduced its total capital expenditure from the N4.374 trillion passed in the 2021 budget to N3.616 trillion projected in the 2022 financial estimates.
James Faleke, chairman, House of Representatives Committee on Finance, made this position at the 2022-2024 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF & FSP) Interactive Session with MDAs at the National Assembly Complex, Abuja.
Faleke said the idea where the MDAs recycle unnecessary capital projects in the budget without due regards to essential projects that will engender sustainable development in the country is no longer tenable.
“During this exercise, the National Assembly through the Committee of Finance will scrutinize the capital vote, line item by line item, and provide funds for agencies In-house capital requirements that are necessary bearing in mind the overall objectives of the MTEF/FSP as instrument for revamping ongoing drive to accelerate investment in critical infrastructures and human capital for sustainable social welfare and improved business environment”, he said.
Minister of Finance, Budget and National Planning, Zainab Ahmed while presenting highlights of the 2022-2024 MTEF/FSP said the aggregate capital expenditure projection for 2022 was N3.616 trillion out of the total expenditure of N13.981 trillion.
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Ahmed explained that the total expenditure “is made up of statutory transfers in the sum of N613 billion, debt service obligation in the sum of N3.6 trillion, provisions for sinking funds in the sum of N292 billion and total recurrent non-debt is N6.2 trillion”.
The key macro-economic assumptions contained in the MTEF/FSP include a crude oil benchmark price of $57 per barrel for 2022, crude oil production of 1.88 million barrels per day, and a dollar exchange rate of N410.15 to one US dollar, an inflation rate of 13 percent in 2022, and a nominal GDP of 149.369 trillion.
The Minister stated that the budget deficit projected for 2022 is N5.62 trillion and it would be financed by both domestic and foreign in the sum of N4.89 trillion, privatisation proceeds of N90.73 billion and drawdowns from existing project titles of N635 billion.
Responding to concerns of members of the Committee on the devaluation of Nigeria’s currency, the Central Bank of Nigeria (CBN) said, the ugly trend was informed by the effects of COVID-19 pandemic on the economy.
Edward Adamu, CBN Deputy Governor for Corporate Service explained that the exchange rate is determined by the forces of demand and supply and that there are three main avenues by which Nigeria gets foreign exchange.
Adamu said a lot of efforts within the CBN and the recovering global economy were helping oil price and remittances recover, adding that this is why we are happy that the exchange rate has stabilised somewhat; it is a moving target but it has stabilised in the import and export window for a while.
“We have proceeds from sale of crude oil, we have foreign portfolio inflows and remittances; those are the three major ways that we get forex. Crude oil sale has not been as high as we all want it to be and obviously in the aftermath of COVID-19, the global economy ground to a halt and the use of crude oil also halted.
“You go on to foreign portfolio inflows, you notice that investors also settle their affairs on the side of caution and so once COVID-19 outbreak occurred, they moved about 120 billion dollars from emerging markets to the safe haven in America and Nigeria is one of those countries the money was withdrawn from.
“All these pressures on both the demand and supply side, the availability of dollars became more difficult and we had decline or depreciation in the value of the naira,’’ he said.
