FULL TEXT OF PRESIDENT BUHARI'S 2016 BUDGET ADDRESS.

PROTOCOLS
I am honoured and privileged to present the 2016 Budget
proposal. This is my first address before this joint session of
the National Assembly. I have come here today, not only to
address members of the National Assembly, but also to
speak directly to the men and women who placed us here.
2. I know the state of our economy is a source of concern for
many. This has been further worsened by the unbridled
corruption and security challenges we have faced in the last
few years. From those who have lost their jobs, to those
young people who have never had a job, to the people in
the North East whose families and businesses were
destroyed by insurgents, this has been a difficult period in
our nation’s history, lessons that we must not forget or
ignore, as we plan for the future.
3. By June 2014, oil prices averaged $112 per barrel. But as
at today, the price is under $39 per barrel. This huge decline
is having a painful effect on our economy. Consumption has
declined at all levels. In both the private and public sectors,
employers have struggled to meet their salary and other
employee related obligations. The small business owners
and traders have been particularly hard hit by this state of
affairs.
4. Fellow Nigerians, the confidence of many might be
shaken. However, I stand before you today promising that
we will secure our country, rebuild our economy, and make
the Federal Republic of Nigeria stronger than it has ever
been.
5. The answers to our problems are not beyond us. They
exist on our farmlands; our corporations; in the universities
in the hearts and minds of our entrepreneurs; through the
gallantry of our Armed Forces; and the resolute spirit of
Nigerians, especially the youth, who have refused to give up
despite all the obstacles confronting them.
6. This Budget proposal, the first by our Government, seeks
to stimulate the economy, making it more competitive by
focusing on infrastructural development; delivering inclusive
growth; and prioritizing the welfare of Nigerians. We believe
that this budget, while helping industry, commerce and
investment to pick up, will as a matter of urgency, address
the immediate problems of youth unemployment and the
terrible living conditions of the extremely poor and
vulnerable Nigerians.
7. In the medium to longer term, we remain committed to
economic diversification through import substitution and
export promotion. This will build resilience in our economy.
It will guarantee that the problems we have today, will not
confront our children and their children. This shall be our
legacy for generations to come.
2015: A Year of Global and Domestic Challenges
8. Today, it is widely acknowledged that the global economy
has slowed down. This is particularly the case with emerging
markets such as Nigeria. However, despite the weak
emerging market growth rates, our domestic security
challenges, declining oil prices, and the attendant difficulties
in providing foreign exchange to meet market demands, the
Nigerian economy grew by 2.84% in the third quarter of
2015.
9. We have, and will continue to implement strategies that
will maintain macroeconomic stability and manage the oil
price shocks we are experiencing.
10. Upon the inauguration of this administration on 29th
May 2015, we engaged key stakeholders from various
sectors of our economy and interfaced with the heads of
Ministries, Departments and Agencies (MDAs) in order to
understand the true state of our nation. What we found
prompted us to take certain strategic decisions.
11. On the economy, we injected new leadership at the helm
of our revenue generating agencies including the Federal
Inland Revenue Service (FIRS), Nigerian National Petroleum
Corporation (NNPC), Nigerian Communications Commission
(NCC), and the Nigerian Customs Service (NCS). We
implemented the Treasury Single Account (TSA) which, so
far, has provided greater visibility of Government revenues
and cash flows. We intervened to support States to navigate
their fiscal challenges by restructuring their commercial
bank loans and by providing facilities to enable them to pay
salary arrears.
12. We have demonstrated a strong will to fight corruption. I
am sure you will agree that the sheer scale of corruption
and impunity of the past explains in part, the economic
challenges we now face. On these initiatives, and the many
more to come, we shall not be deterred. We will pursue the
recovery of everything that belongs to the people of Nigeria.
No matter where it is hidden. No matter how long it will
take.
2015 Budget Performance
13. Distinguished and honourable members of the National
Assembly, I now present a review of the 2015 Budget. That
Budget was based on a benchmark oil price of $53 per
barrel, oil production of 2.28 million barrels per day and an
exchange rate of N190 to the US$.
14. The projected revenue was N3.45 trillion, with an outlay
of N4.49 trillion, implying a deficit of N1.04 trillion. Due
largely to under-provisioning by the previous administration
for fuel subsidy and the costs required to support the
military operations in the North East, the Government had
to obtain National Assembly’s approval for a supplementary
budget of N575.5 billion. I take this opportunity to thank all
members of the National Assembly for the prompt passage
of that Bill.
2016: Budget Assumptions
15. After reviewing the trends in the global oil industry, we
have set a benchmark price of $38 per barrel and a
production estimate of 2.2 million barrels per day for 2016.
We have focused on non-oil revenues by broadening our tax
base and improving the effectiveness of our revenue
collecting agencies.
16. Also, with the full implementation of the Treasury Single
Account, we expect significant improvements in the
collection and remittance of independent revenues. To
further support the drive for increased remittances, we will
ensure that all MDAs present their budgets in advance, and
remit their operating surpluses as required by section 22 of
the Fiscal Responsibility Act.
17. We are determined to ensure that our resources are
managed prudently and utilized solely for the public good.
To set the proper tone, one of our early decisions was the
adoption of a zero based budgeting approach, which
ensures that resources are aligned with Government’s
priorities and allocated efficiently. This budgeting method, a
clear departure from previous budgeting activities, will
optimize the impact of public expenditure.
18. In addition to the proper linkage of budgeting to strategic
planning, we are enhancing the utilization of the
Government Integrated Financial Management Information
Systems (GIFMIS) to improve financial management. The
recently established Efficiency Unit is working across MDAs
to identify and eliminate wasteful spending, duplication and
other inefficiencies. We engaged costing experts to scrutinize
the 2016 budget proposals. They have already identified
certain cost areas that can be centralized for economies to
be made.
19. We have directed the extension of the Integrated
Personnel Payroll Information System (IPPIS) to all MDAs to
reap its full benefits. We will also strengthen the controls
over our personnel and pension costs with the imminent
introduction of the Continuous Audit Process (CAP). These
initiatives will ensure personnel costs are reduced. Our
commitment to a lean and cost effective government
remains a priority, and the initiatives we are introducing will
signal a fundamental change in how Government spends
public revenue.
2016: Laying the Foundation for Sustainable Growth
20. The 2016 budget, as outlined, is designed to ensure that
we revive our economy, deliver inclusive growth to
Nigerians and create a significant number of jobs.
21. We aim to ensure macroeconomic stability by achieving
a real GDP growth rate of 4.37% and managing inflation. To
achieve this, we will ensure the aligning of fiscal, monetary,
trade and industrial policies.
22. As we focus on inclusive growth, we are conscious of the
current rate of unemployment and underemployment. This
is a challenge we are determined to meet; and this budget is
the platform for putting more Nigerians to work. I can
assure you that this administration will have a job creation
focus in every aspect of the execution of this budget.
Nigeria’s job creation drive will be private sector led. We will
encourage this by a reduction in tax rates for smaller
businesses as well as subsidized funding for priority sectors
such as agriculture and solid minerals.
23. As an emergency measure, to address the chronic
shortage of teachers in public schools across the country, we
also will partner with State and Local Governments to
recruit, train and deploy 500,000 unemployed graduates and
NCE holders. These graduate teachers will be deployed to
primary schools, thereby, enhancing the provision of basic
education especially in our rural areas.
24. We also intend to partner with State and Local
Governments to provide financial training and loans to
market women, traders and artisans, through their
cooperative societies. We believe that this segment of our
society is not only critical to our plan for growing small
businesses, but it is also an important platform to create
jobs and provide opportunities for entrepreneurs.
25. Furthermore, through the office of the Vice President, we
are working with various development partners to design an
implementable and transparent conditional cash transfer
program for the poorest and most vulnerable. This program
will be implemented in phases. Already, the compilation of
registers of the poorest persons is ongoing. In the coming
weeks, we will present the full programme, which will
include our home-grown public primary school feeding and
free education for science, technology and education
students in our tertiary institutions. Indeed, this will mark a
historic milestone for us as a nation.
The 2016 Budget
26. Distinguished members of the National Assembly, I now
present, the 2016 Budget proposals of the Federal
Government. Based on the assumptions I presented earlier,
we have proposed a budget of N6.08 trillion with a revenue
projection of N3.86 trillion resulting in a deficit of N2.22
trillion.
27. The deficit, which is equivalent to 2.16% of Nigeria’s GDP,
will take our overall debt profile to 14% of our GDP. This
remains well within acceptable fiscal limits. Our deficit will
be financed by a combination of domestic borrowing of
N984 billion, and foreign borrowing of N900 billion totaling
N1.84 trillion. Over the medium term, we expect to increase
revenues and reduce overheads, to bring the fiscal deficit
down to 1.3% of GDP by 2018.
28. In 2016, oil related revenues are expected to contribute
N820 billion. Non-oil revenues, comprising Company
Income Tax (CIT), Value Added Tax (VAT), Customs and
Excise duties, and Federation Account levies, will contribute
N1.45 trillion. Finally, by enforcing strict compliance with the
Fiscal Responsibility Act, 2007 and public expenditure
reforms in all MDAs, we have projected up to N1.51 trillion
from independent revenues.
29. Although we are working to diversify our economy, we
will not lose sight of the need to restructure the oil and gas
sector which has been marred by corruption and plagued
with inefficiencies. Accordingly, I have directed the
Petroleum Products Pricing Regulatory Agency (PPPRA) to
adjust its pricing template to reflect competitive and market
driven components. We believe this can lower input costs
and attain efficiency savings that will enable PPPRA to keep
the selling price for all marketers of petrol at N87 per liter
for now.
30. The current fuel scarcity with long queues at petrol
stations all over the country causing social dislocation is
very unfortunate. Government profoundly apologizes to
Nigerians for this prolonged hardship and misery. It is as a
result of market speculators and resistance to change by
some stakeholders. Government is working very hard to end
these shortages and bring fuel to the pumps all over the
country.
31. I have also directed the NNPC to explore alternate
funding models that will enable us to honour our obligations
in Joint Ventures (JVs) and deep offshore fields. We are
confident that these measures can be achieved and will
lower the burden that the traditional cash calls have
imposed on our budget and cash flows as well as contribute
towards shoring up our national reserves.
32. To deliver our development objectives, we have
increased the capital expenditure portion of the budget from
N557 billion in the 2015 budget to N1.8 trillion, in the 2016
budget. Distinguished and honourable members of the
National Assembly, for the first time in many years, capital
expenditure will represent 30% of our total budget. In future
years we intend to raise the percentage allocation for capital
expenditure.
33. This is a fulfillment of our promise to align expenditure
to our long-term objectives, and a sign of government’s
commitment to sustainable development. This increased
capital expenditure commits significant resources to critical
sectors such as Works, Power and Housing – N433.4 billion;
Transport – N202.0 billion; Special Intervention Programs –
N200.0 billion; Defence – N134.6 billion; and Interior – N53.1
billion. These investments in infrastructure and security are
meant to support our reforms in the Agriculture, Solid
Minerals and other core job creating sectors of our
economy.
34. We will invest to safeguard lives and property.
35. We will invest in equipping our farmers with the right
tools, technology and techniques.
36. We will invest in empowering and enabling our miners to
operate in a safe, secure and humane environment.
37. We will invest in training our youths, through the revival
of our technical and vocational institutions, to ensure they
are competent enough to seize the opportunities that will
arise from this economic revival.
38. Indeed, the future looks bright. And I ask that we all work
together to make this vision a reality. The 223% year on year
growth in capital expenditure demonstrates our desire to
make Nigeria more competitive, and start the journey to
deliver sustainable development in our country.
39. In fulfillment of our promise to run a lean government,
we have proposed a 9% reduction in non-debt recurrent
expenditure, from N2.59 trillion in the 2015 Budget to N2.35
trillion in 2016. Furthermore, we have budgeted N300 billion
for Special Intervention Programs, which takes the total
amount for non-debt recurrent expenditure to N2.65 trillion.
As I mentioned earlier, the Efficiency Unit set up by this
Administration together with effective implementation of
GIFMIS and IPPIS will drive a reduction of overheads by at
least 7%, personnel costs by 8% and other service wide
votes by 19%. Distinguished and honourable members, this
budget will be executed to provide optimum value by
ensuring every naira spent by this Government, counts.
40. We will devote a significant portion of our recurrent
expenditure to institutions that provide critical government
services. We will spend N369.6 billion in Education; N294.5
billion in Defence; N221.7 billion in Health and N145.3
billion in the Ministry of Interior. This will ensure our
teachers, armed forces personnel, doctors, nurses, police
men, fire fighters, prison service officers and many more
critical service providers are paid competitively and on time.
41. Distinguished and honourable members of the National
Assembly, our 2016 borrowings will be principally directed
to fund our capital projects. Furthermore, the sum of N113
billion will be set aside for a Sinking Fund towards the
retirement of maturing loans; while N1.36 trillion has been
provided for foreign and domestic debt service. This calls for
prudent management on our part, both of the debt portfolio
and the deployment of our hard earned foreign exchange
earnings.
42. I am aware of the problems many Nigerians currently
have in accessing foreign exchange for their various
purposes – from our traders and business operators who
rely on imported inputs; to manufacturers needing to import
sophisticated equipment and spare parts; to our airlines
operators who need foreign exchange to meet their
international regulatory obligations; to the financial services
sector and capital markets who are key actors in the global
arena.
43. These are clearly due to the current inadequacies in the
supply of foreign exchange to Nigerians who need it. I am
however assured by the Governor of Central Bank that the
Bank is currently fine-tuning its foreign exchange
management to introduce some flexibility and encourage
additional inflow of foreign currency to help ease the
pressure.
44. We are carefully assessing our exchange rate regime
keeping in mind our willingness to attract foreign investors
but at the same time, managing and controlling inflation to
level that will not harm the average Nigerians. Nigeria is
open for business. But the interest of all Nigerians must be
protected. Indeed, tough decisions will have to be made. But
this does not necessarily mean increasing the level of pain
already being experienced by most Nigerians.
45. So to the investors, business owners and industrialists,
we are aware of your pains. To the farmers, traders and
entrepreneurs, we also hear you. The status quo cannot
continue. The rent seeking will stop. The artificial current
demand will end. Our monetary, fiscal and social
development policies are aligned.
Conclusion
46. Mr. Senate President, Mr. Speaker, distinguished
members of the National Assembly, in spite of the global
economic uncertainties; we must remain steadfast in our
commitment to steer this country back to greatness.
47. The Nigerian economy needs to move away from
dependency on oil. Our growth must be inclusive. Nigerians
must be part of the growth story. As a Government, we shall
deliver security, jobs and infrastructure. This is the right of
all Nigerians.
48. I know many people will say “I have heard this before”.
Indeed, trust in Government, due to the abuse and
negligence of the past, is at an all-time low. This means we
must go back to basics. Our actions will speak for us. My
team of dedicated, committed and patriotic Nigerians is well
aware of the task ahead and I can assure you that we are
taking on the challenge.
49. We will not betray the trust reposed in us.
50. We will welcome and be responsive to your feedback
and criticisms.
51. We are here to serve. And indeed, Nigerians will get the
service they have longed for and which they rightly deserve.
52. We as a Government cannot do it alone. We will require
the support of all civil servants, the organized labour,
industry groups, the press and of course, our religious and
traditional institutions. This is a call for all of us to stand and
serve our country.
53. This Budget represents a major step in delivering a new
opportunity for Nigeria. It demonstrates our confident
optimism that despite the challenging times, we have the
will, resourcefulness and commitment to deliver prosperity
to our people. And by the Grace of Almighty God and the
sheer will and determination of the Nigerian people, we will
come out stronger and more united than ever.
54. Thank you and God bless the Federal Republic of Nigeria.