- Government Releases N831 Billion For Capital Projects in 2016 Budget
The Federal Government has released N831 billion for the execution of the capital projects in the 2016 budget.
Finance Minister, Kemi Adeosun, disclosed this yesterday when she appeared before the House of Representatives Committee on Finance with her Budget and National Planning ministry counterpart, Senator Udo Udoma and Central Bank of Nigeria (CBN) officials, to explain the adjustments made on the Medium Term Expenditure Framework and Fiscal Policy (MTEF -FSP) for 2017 to 2019.
The minister said that the bulk of the capital expenditure were being spent to fix key infrastructure in the railways and road sector, which would impact on the development of the agricultural and solid mineral sectors.
She however, noted that the impact of the releases were not being felt as expected because some of the contractors owed over the years simply “sat on the money” on the basis that government needed to clear the backlog of money owed them.
She disclosed that as part of measures to correct the anomaly, government plans to introduce a promissory note, which would serve as an assurance to contractors that they would be duly paid when they are contracted to handle any project.
Adeosun, who noted that the introduction of the TSA was in line with the global practices, she disagreed with those who hold the notion that the measure was responsible for the liquidity squeeze in the banking sector of the economy.
She maintained: “There is no country in the world, with the exception of a few, where government money were held in commercial banks. If you deal with the government in America, your cheque is from the Federal Reserve; the same applies with the British too. It is only in Nigeria you deal with commercial banks where you go collect government money, place it, lend it back to government and at the end of the day the banks could not do real credit.
“Yes, taking away that business away may be painful in the short time, but, in the long term the impact on the economy is going to be positive; because we are asking them to do proper banking now.”
Udoma disclosed that the sum of N807 billion is being expected to be raised through the TSA in the 2017 budget as against the N1. 2 trillion initial projection.
He explained that due to the disruption in the production of crude oil, the economy had performed below expectations.
The Director General of the Debt Management Office (DMO), Mr. Abraham Nwankwo, said that there is a deficit reduction of N2. 438 trillion to N2. 356 trillion in the revised MTEF-FSP in spite increment in the 2017 budget from N6. 3 trillion to N7. 298 trillion.