Budget implementation depends on how much we can borrow ―Akabueze

THE Federal Government has tied the fate of the N2.3 trillion capital component of 2017 budget to its ability to successfully borrow enough money from domestic and foreign sources.

Vice President Prof Yemi Osinbajo on June 12, signed the N7.44 trillion budget into law with a capital component of N2.3 trillion.

Speaking in Abuja at the weekend, Director General, Budget Office of the Federation, Mr Ben Akabueze said “aggregate capital expenditure in the 2017 budget is N2.3 trillion and the budget deficit is N2.3 trillion. In essence, this capital expenditure was projected to be funded by debt.

“Out of this N2.3 trillion that we expected to borrow, approximately N1.1 trillion of it is foreign debt, which requires a resolution of the national assembly to be able to incur.

“The other N1.2 trillion is borrowing from the domestic market and remember when the budget was cast, the usual expectation was that it was cast in a 12-month cycle.

“And so domestic borrowing of N1.2 trillion was projected by the Debt Management Office (DMO) to be placed over a period”, he explained.

Akabueze however, disclosed that the resolution has not been given although a request has since been made.

It should be recalled that the 2016 budget had a capital component of N1.8 trillion but by June 12 when 2017 budget came into force, only N1.2 trillion was expended.

The Budget boss warned that such fate may well befall the current budget if all that is needed is not done.

“The 2017 capital budget may also not be fully implemented like that of 2016 if we don’t do what we should do. Remember again that for 2016, some of the foreign components of the budget didn’t come through.

“We were expecting to receive some loan from concessional lenders like the World Bank, African Development Bank.

“Between the two of them, we projected to get $2 billion to go into the funding of capital but at the end, AfDB disbursed $600 million as the first tranche but the World Bank didn’t and so, we were $1.4 billion short of the funding that we projected.

“When you look at the unfunded capital expenditure, marginally, it was just above that gap.”

Nonetheless, Akabueze disagreed that only 15 percent or N340.9 billion of the 2017 budget has been released.

“Capital expenditure is only 31 percent of the budget. The other 70 percent of the budget has been running, which is salaries, debt service obligations, statutory transfers are being done on monthly basis, overheads are being funded, service votes are being incurred. All in all, it is not 15 percent.

He noted that government has to time its domestic borrowing programme very well in order not to further put pressure on domestic interest rate; not to crowd out the private sector by being too dominant in the market. And you can only release what you have.

“The hope we have that 2017 budget may not suffer the fate of its predecessor is that some the things responsible for policy issues and problems that lenders had have mostly been dealt with. The key issue was the foreign exchange market.

“Now that the import and export window of foreign exchange has been established as a market-based window. That was a key policy challenge that we have dealt with.”