Still On 2016 Budget
Saudi Arabia has described the current prices of oil as “rock bottom”. So you can start to imagine the bottom of a gigantic granitic rock in your village if you are from one of the basement complex areas of Nigeria and not sedimentary Niger Delta area. Too much grammar! Ok, imagine the bottom of Everest. It is really a tough time for the world particularly emerging economies like Nigeria when oil price is at 11 year low.
Saudi Arabia has proposed a budget deficit of $98bn and will be cutting subsidies on water, PMS and electricity. Anyone living in an arid, desertic region like Saudi Arabia will understand that cutting subsidies on water is really a tough choice.
Nigeria is proposing a budget deficit of about $10bn (N2tr). The country will borrow N1.8tr, all of which will be used to fund capital projects that will translate into infrastructural development and not a Kobo will be used to pay salaries and allowances.
Our total debt stock will amount to 14% of our GDP which is acceptable in line with international standard because we can pay back without rescheduling or refinancing. Borrowings should only be discouraged when it is used to settle recurrent expenditure and satisfy the extravagant lifestyle of few individuals.
It’s indeed a difficult time but below $40 a barrel of oil is not sustainable, prices will increase but this bearish period will prompt Nigeria to diversify its economy.
On foreign reserve, Saudi Arabia make boast of $700bn. Nigeria has $29bn dollars – can only last 6 months of importation. Well! This again will reduce our proclivity for foreign goods, medical tourism et cetera.
As citizens, all we need do, is to consistently support and pray for the current administration as we try to navigate this headwind.
There will be positive turnaround in the economic fortunes of Nigerians in the year 2016 as massive government spending will boost consumer spending.
God bless Nigeria!
Written by Kolawole Omole.