Why 2017 budget can’t end recession - Enwegbara

First, let me tell Mr. President right away that if he hopes to grow the economy out of recession in 2017, this budget is not the one to do it. This is because it is not only not expansionary, it is not pro-investment, pro-growth, and pro-jobs. As a result, it is not enough to be expected to perform such magic.

Like most recessions, if this recession is not a product of a sudden accident, why this rush in sending this economy to the emergency ward? That is why, like every recessionary economy, this economy too is in urgent need of serious restructuring along with some unconventional policy reforms.

This is the only way we too should be able to permanently put ours on a healthy and sustainable growth path. Why the recovery is yet to begin is because President Buhari is yet to bring together those gifted Nigerian economic surgeons who have the pro-expansionary fiscal and monetary measures specialization needed in performing this inevitable economic diversification. 

That is recognized from Nigeria’s budget to GDP ratio, which compared to its peer economies is the lowest. It is the lowest because our tax to GDP ratio has remained over the years the lowest among the peer economies. And our tax to GDP is so low because no serious measures have been made all these years to move away from oil as government’s major revenue source. Take one of our peer economies, South Africa for example. In its June 2016 which ends in May 2017 (since South Africa runs June-May fiscal year) South Africa budgeted $143.966bn (with fiscal deficit of 3.2%) against Nigeria’s $23.928bn (with fiscal deficit of 2.18%) in 2017. 

South African Revenue Services (SARS) collected R1.0699 trillion in taxes) $76.421 billion, representing 27.26% of $280.367 billion GDP. This is against Nigeria’s (N1.373 trillion non-oil revenues) $4.502 billion representing 1.08% of $415.080 billion GDP. From this, South Africa’s budget is 53.08% with tax revenues, whereas Nigeria’s is funded with 18.81% tax revenues.

A look at the proposed 2017 budget’s N7.298tn against 2016’s N6.077tn seems higher in size. But, then, taking N305 per dollar and over 20% expected inflation average into consideration against 2016’s N197 per dollar and 16% inflation average, it becomes certain that 2017 budget is smaller. It becomes far less expansionary than the 2016 with N2.24tn capital budget at N305 per dollar is only $7.344bn against N1.8tn capital spending at 197 per dollar is $9.137bn.

Vanguard 

NB: Enwegbara, a development economist and chairman at PADCC can be reached at  basil_enwegbara@yahoo.com