FG To Maintain Growth In 2015 Despite Declining Revenue, Says Yuguda

BY ABU IDRISU

The Federal Government has restated its determination to maintain growth and stabilise the economy in 2015 despite the challenge of declining revenues among oil producing countries.

The Minister of State for Finance, Amb. Bashir Yuguda who made this known in an end of year interaction with newsmen in Abuja stressed that the Government would not waver in its resolve to further diversify the economy, significantly boost non-oil revenues, plug loopholes and cut unnecessary expenditures.

Yuguda described 2014 as a challenging year but maintained that the country managed to maintain a stable economic growth and re-established itself as Africa’s largest economy with an impressive diversification trajectory.

The Minister further stated that the planned take off of the Development Bank of Nigeria early this year was in line with the bid to sustain growth as “it would greatly enhance and improve medium to long term financing for Nigerian businesses, going forward.”

Crude oil price yesterday slid further, clearly below the 2015 budget benchmark of $65 per barrel, a trend analysts reason, if sustained for long, might affect Government spending in the year. However Yuguda emphasized  that the Government’s scenario-based approach to the regime of oil price shocks is structured to proactively respond to such situations.

According to him, “We recognize that prices might slide further, but we do not intend to revise the benchmark further down. We are aware that price intelligence indicates that prices might average between $65 and $70pb in 2015. This is anchored on the fact that American shale oil which is largely driving this price shocks also runs the risk of becoming unsustainable as it is produced at a high cost of at least $65 per a barrel.”

Yuguda however stressed that the Government was prepared to introduce further measures “if prices fall outside this range.”

He noted that the Government initiated “the Capacity Enhancement Programme (CEP) of the Federal Inland Revenue Service (FIRS) to improve non-oil tax revenue”, adding that the agency is expected to meet its target of surpassing 2014 impressive performance by about N160 billion.

On the proposed Wholesale development funding institution, the Minister noted that it would utilize an on-lending model and channel financing through existing commercial banks as well as restructured “specialized” banks such as the Bank of Industry and the Bank of Agriculture to fund businesses that will deepen growth and generate more jobs.

According to him, the partners that have committed to invest in the bank include the World Bank, the Africa Development Bank, the BNDES Bank in Brazil, and KfW in Germany.

The World Bank and AfDB have pledged $500 million apiece for the take off of the bank. Yuguda added that the EU had also indicated interest in investing in the bank, through the Union’s development financing outfit, the European Investment Bank (EIB), although negotiations were yet to be concluded.

“On our part, the Government has set aside the sum of N4 billion in addition to another N16 Billion provision in the 2014 Budget for the take off of the project. Our existing Bank of Agriculture and Bank of Industry will be re-structured as specialized institutions to retail financing from this new wholesale development bank.

“Additionally, the government is working on a system of tax incentives for Micro-Finance Banks in order to promote financial inclusion for the poor.”

EIB’s manifest interest followed series of meetings held in Brussels, Lagos and Abuja between a Government delegation led by Yuguda and EIB officials.

It will be recalled that the Federal Government had deployed two high level teams led by the Co-ordinating Minister of the Economy/Minister of Finance Dr Ngozi Okonjo Oweala and Amb. Yuguda to different global financial blocs for the road show. The Minister of State for Finance who recently led his team to Europe and some parts of Asia and the Middle East noted that the bid has raised significant interest among the global funding agencies.

Describing the transformation Agenda as far reaching, the Minister noted that the Jonathan administration had taken policy decisions to correct the identified structural imbalances in the economy and the concentration of Government’s external revenue on crude oil sales.

Maintaining that the Government has made progress in this regard, Yuguda affirmed that it was evident in the rebased GDP, which showed “the strengthening of agriculture, services, construction, hospitality and other non-oil sectors.”

He explained further that critical infrastructure projects will not be affected by the announced fiscal restructuring measures, describing them as “key to economic growth and development as well as job creation.”

The areas that would be affected by the fiscal adjustments, according to him, are those that would have the least negative impact on the generality of Nigerians, including widening the tax net, and pushing for higher levels of compliance, introduction of a new tax on luxury products as well as reducing expenditure by cutting foreign travels by Government officials to the barest minimum, especially with regards to training programmes abroad.