The primary objective of government’s fiscal stimulus plan is not to sell off all major critical national assets but to source immediate funds to reflate the economy and implement capital projects in the 2016 budget, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, has explained.
Senator Udoma who gave the explanation in Lagos at the weekend while briefing newsmen on the forthcoming Nigeria Economic Summit, said the intention of government is just to get enough money to fund the 2016 budget and get the economy back on the path of recovery.
Government, he stated, needs to inject a large dose of funds into the system to get the economy back on track and to faithfully implement those provisions in the capital budget tailored at reflating the economy and aiding the diversification process.
Senator Udoma explained that the country had lost almost half its expected revenue and would need to urgently source the shortfall to enable government faithfully implement the budget.
This unfortunate scenario, he explained, prompted the Economic Management Team to urgently work out a fiscal stimulus plan to generate immediate large injection of funds into the economy through asset sales, advance payment for license rounds, infrastructure concessioning, use of recovered funds, among others, to reduce the funding gap.
The other option, according to the Minister, would have been to source for additional loans, beyond the level of borrowing already projected for in the 2016 Budget. This would not be a wise option as it would raise the level of debt service to an unsustainable level.
He explained however, that government is exploring several angles in the asset sales proposal including repurchase options, which will make provision for buy-back of those assets when the situation improves.
The Minister insisted that the country’s economy may not have gone into recession but for the drastic fall in oil production levels due to disruptions caused by militant activities. At worst, he pointed out, it would have been a flat performance that would have sign-posted a new curve in the economy trajectory that would subsequently put it on the path to recovery and sustainable growth.
The Minister went on to say that the Government appreciated that the down-turn in the economy has brought hardship to the people, but he assured that government is committed to redressing the situation.
“Our goal is to unlock the economic potentials of the non-oil and high-employment sectors, so as to achieve a sustainable inclusive growth that will ensure that the majority of Nigerians become more productive, thereby reducing poverty.
“Thus, we are deliberately working towards diversifying the Nigerian economy by ensuring that the non-oil sector drives the economy because this is the sector that contributes the most to GDP; and, has more capacity to employ.”
The basic strategy, he pointed out, is to reflate the economy through fiscal stimulus and strategic implementation of annual budgets.
“What this means is that we are geared to strategically spend our way out of recession. Unfortunately, we have not met all our planned expenditures for 2016 due to low revenue outturns. However, we have ensured that the resources that we release are targeted at priorities that will stimulate activities in the economy. We are also developing a more robust monitoring and evaluation framework to track performance”, he explained.
Senator Udoma said bad as it is, the current situation provides the country with an opportunity to revamp the economy and put it on the path to sustainable growth; but in doing so, Nigerians must reduce their demand for foreign products, focus attention on refining petroleum products locally, return to agriculture, develop the solid minerals’ sector and stay the course even if the price of oil goes up again.
Getting back the economy on the path of sustainable growth would require the contribution of every sector in their respective core mandate areas, and collaboration with organs like the Nigeria Economic Summit Group (NESG) provides a veritable avenue for forging consensus on issues of national development whilst evolving a common strategy and policy framework for addressing issues constraining development.
This year’s edition of the Economic Summit, which holds between October 10 and 12, is designed to encourage more production and consumption of Made in Nigeria goods and services.
It is believed that “with more patronage, Nigerian producers will be encouraged to improve the quality of their products. As the quality of Nigerian-made goods and services improve, international demand for them will increase. The fastest route to grow the economy and to create jobs for the teeming population is by pursuing export led growth. Export led growth will add to the country’s foreign reserves and stabilize the Naira”.
The Minister pointed out that past Nigerian Economic Summits made recommendations on self-sufficiency in local production and an export-driven economy. With current economic realities, this is the perfect opportunity to articulate a national discussion on “Made in Nigeria” to promote the goods and services that are already up to standards for consumption, encourage exports and increase opportunities for SMEs.
According to him, “this year’s Summit will provide a platform to sharpen the focus of the conversation. The key thrust would be to facilitate stakeholders’ discussions/agreements on the practical issues, opportunities, policies and regulations needed for “Made in Nigeria” to become an economic growth and development destination.
“It will also seek to articulate the strategies to achieve self-sufficiency and value-addition capacities for several products and services in the shortest possible time. The sub-themes of the Summit shall deliberate on the macroeconomic environment; ease of doing business; stakeholders’ behaviour and attitudes; access to finance; infrastructure; quality and standards; technology and innovation; as well as job creation, skills and youth employment”, he added.
The key outcomes of the Summit, he noted, “are expected to include the development of practical roadmap that will contextualize “Made in Nigeria” as an economic growth and development strategy for our short, medium and long term development partnerships and policies to deliver desired results and potentials for exports to increase foreign exchange earnings and shore up our reserves. The Summit will also emphasize the strong need for execution and proper measurement of results on the part of all stakeholders.”
Media Adviser to the Hon. Minister