OrderPaperToday- At the resumption of Wednesday’s plenary, Senators expressed concern over viability of the 2016 budget and called for review of the oil benchmark from $38/barrel as contained in the proposal.
The lawmakers who conveyed their anxiety during a debate on the proposal, emphasized on diversification of the economy to mitigate the effect of dwindling global oil price on Nigeria’s economy.
Chairman Senate Committee on Finance Sen. John Enoh said the National Assembly should consider reviewing the oil benchmark and exchange rate before passing the budget.
“The Exchange Rate figure, which this budget has pegged at N197, if compared to the parallel market, we need to be a little bit more realistic and practical.
Enoh also expressed concern that the budget had a deficit figure higher than the capital.
“What it means is that some component of what we are going to borrow, will be used for recurrent items and we need to be very careful on this basis. But we need to also remember that when the IMF chief executive came to Nigeria, she was quite graphic in what she demonstrated.
“That a situation in Nigeria in which for every one Naira, about 37kobo is devoted to servicing debt, we need to be a little bit more careful about it.’’
According to him, this posed a challenge to Nigeria National Petroleum Corporation(NNPC) to come up with new funding models for joint venture cash calls.
Also, Suleiman Adokwe (PDP-Nassarawa South) urged the Federal Government to establish revenue sources before going to borrow.
He stressed that if Nigeria proceeded to borrowing, it would give a false sense of economic well-being.
“It is a very bad economic policy to begin to borrow almost 50 percent of what you need to fund the budget. What other jurisdictions do is to debate between whether to tax or not to tax so that we generate employment depending on the way you look at it.
“Industrialists prefer tax holidays so that they can use the profit to employ more, while welfarists believe that if you tax more, you will pay more people and more people will go to work.
“Unfortunately, we are not doing any of these two, we are simply going to borrow and if you just borrow to provide welfare and it does not provide economic growth in any way, people will just eat and go to sleep.
“But if you are borrowing to invest in productive resources that will generate more income, then you know that you are borrowing for a good purpose,’’ he said.
Adokwe however commended the fact that the 2016 budget would
stimulate the economy through economic diversification, import substitution, export expansion and promotion.
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