16th December, 2011
Some financial experts on Thursday expressed divergent views on the N4.75 trillion budget presented by President Goodluck Jonathan to the joint session of the National Assembly.
They expressed their opinions in separate interviews with the News Agency of Nigeria (NAN) in Lagos. While some commended the budget, others said that it had shortcomings.
NAN recalls that the 2012 budget is higher than the N4.484 trillion appropriated in 2011 by six percent.
Dr. Samuel Nzekwe, a former President of the Association of National Accountants of Nigeria (ANAN), said that the only way to achieve the projected 9.59 inflation rate was for the Federal Government to make the real sectors to work.
Nzekwe said that the Federal Government should activate the real sectors to produce more goods and services.
This, according to him, will bring down the prices of goods and services and reduce inflation rate to single digit.
He also urged the Federal Government to increase the capital expenditure over the recurrent expenditure, adding that the projected high recurrent expenditure would worsen inflation.
Nzekwe called for proper management of funds projected for security in the budget to address some of the security challenges in the country.
He said that the amount would not necessarily solve all the security problems.
Nzekwe said that the decay in the infrastructure might make the projected 7.2 percent GDP growth rate in 2012 difficult to achieve.
He also said that the N560 billion earmarked for debt-servicing could have been used for the development of other sectors of the economy, saying that the increasing debts profile was due to indiscipline.
The former ANAN president said that the N7.89 billion earmarked for the agriculture sector was commendable, adding that more funds was still needed for the sector.
Nzekwe said that the sector had the potential of reducing unemployment rate.
â€œThe rate of unemployment in the country over the years have been worrisome and needs urgent attention by the Federal Government,â€ he said.
Mr. Ayodeji Fagbenle, the General Manager of Cash Craft Assets Management Ltd., said that the 70 dollars per barrel oil price benchmark was more realistic than the 65 dollars in the 2011 budget.
Fagbenle said that the benchmark would reduce pressure on the budget deficit financing since more revenue was being expected from the export of crude oil.
â€œI believe that if the money is efficiently used, there would be job creation which would impact positively on the GDP and will lead to economic growth,â€ he said.
Fagbenle said that the projected GDP growth rate of 7.2 per cent set in the 2012 budget was achievable if the apex bank could adopt right monetary policies.
Dr. Olumide Owoade, a Senior Lecturer, Economics Department, Lagos State University, said that the size of the budget could heighten inflation rate.
He said that the size and structure of the budget would increase the government spending, which he said, was detrimental to the economy.
Owoade also said that the budget did not address the issues on development of infrastructure, adding that the allocation for recurrent expenditure was higher than the capital expenditure.
The economist said that more funds were needed for the development of infrastructure so that the economy could grow.
He said that this would make for industrialisation and job creation.
Owoade said that the N50 billion earmarked for job creation would not have impact on the unemployment situation in the country.
He said that the ineffectiveness of the N50 billion earmarked for job creation in 2011 was due to poor implementation and lack of transparency in the system and this had affected the economy adversely.
Owoade said that the growth rate of 7.2 percent set in the 2012 budget was achievable if the right policies were adopted.
He said that the exchange rate of N155 to a dollar adopted by the budget was not realistic and advised the Federal Government to diversify the economic base for sustenance of exchange rate stability.