Government has restated its determination to recover the slowing GDP growth and to forestall the possibility of recession through full implementation of the 2016 budget.
The Minister of Finance, Mrs. Kemi Adeosun, gave this assurance in a statement made available to the media within the week.Noting that the focus of the current administration is to stimulate the economy and achieve a real GDP growth rate of 4.2 per cent by the implementation of the draft 2016 budget, the minister added that 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 transport, roads, housing and power with a view to achieving a substantial increase in gross capital formation, as well as fund the budget deficit and the negative trade balance in a cost effective and efficient manner that will keep the government within the acceptable debt sustainable ratio, expected of most emerging economies.
In the statement, the minister, 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.
“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.
Even though we believe 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,” she said.
Stressing the commitment of government on infrastructure despite the present oil price, she said: “We are firmly committed to the countercyclical budget expenditure model. Therefore, we will not reduce our investment in infrastructure. Our deficit will expand by N0.8trn to N3trn, which will be three per cent of GDP. This is still within the comfort zone for the international rating agencies.”