The Federal Government plans a Gross Domestic Product (GDP) growth rate of 42 per cent, with the implementation of Budget 2016, Finance Minister Mrs Kemi Adeosun has said.
In an article, the minister said the full implementation of the budget will see to the recovery from the slowing GDP growth and forestall the remote possibility of a recession.
Mrs Adeosun wrote: “The administration is also determined to reduce the cost of governance, extract efficiencies in public service and enhance revenue collections. The administration plans to increase government expenditure on infrastructure i.e. transport, roads, housing and power with a view to achieving a substantial increase in gross capital formation and to fund the budget deficit and the negative trade balance in a cost effective and efficient manner, which will keep the government within the acceptable debt sustainable ratio that is expected of most emerging economies.”
The Minister, who acknowledged the impact of the sliding oil prices on Nigeria’s economy, said: “Our main macroeconomic objective is to use a government expenditure-led growth strategy in 2016, combined with a stimulant approach based on injections of more efficiently collected revenues and blocking of leakages. The combination of these fiscal injections will have a catalytic multiplier effect on the GDP growth rate.”
”The budget deficit is estimated at N2.2trn or 2.16 per cent of GDP based on an estimated benchmark oil price of $38pb. In view of present realities and the dynamics in the global oil markets, we have braced ourselves for the probability of a further decline in oil prices,” she said.
Though the government believes the average price of oil in 2016 will recover, “we have developed a shadow budgeting process with tactical responses to build in the flexibility in our borrowing needs. This way, we will not undermine the fundamental principle of the economic stimulus model used by countries facing a contraction in economic activities and growth,” the minister said.
She pledged the government’s resolve to go ahead with its robust commitments on infrastructure despite the oil price crash. Mrs Adeosun said: “We are firmly committed to the countercyclical budget expenditure model. Therefore, we will not reduce our investment in infrastructure i.e. transport, roads, housing and power. Our deficit will expand by N0.8trn to N3trn, which will be 3per cent of GDP. This is still within the comfort zone for the international rating agencies.”