Delay in the passage of 2017 appropriation bill by the Federal Government is creating uncertainty and holding back investments, analysts at South Africa-based NKC Research have revealed.
In a chat with New Telegraph, at the Public Presentation of Edelman Trust Barometer survey 2017 in Lagos, the research firm’s analyst, Cobus de Hart, said that government’s sluggishness in getting its public finances back on track has hit growth.
This, he said, is expected to reduce Nigeria’s 2017 Gross Domestic Product (GDP) growth.
The National Assembly had passed N7.44 trillion for the 2017 budget last Monday, following disputes between the lawmakers and executives that delayed its passage for months.
The budget saw spending rise by N142 billion more than had originally being expected late last year, from N7.298 trillion (2016) to N7.44 trillion, to be financed through N1.66 trillion borrowing.
Specifically, the budget estimates that the oil price would be $44.6 dollars per barrel, are conservative, with Brent crude currently trading at above $50, suggesting government might benefit from bigger oil revenues than expected. But Hart said that the Federal Government is still struggling to get it right on the balance of spending and tax changes needed to resolve budget deficits.
He said: “The delay in implementing much-needed adjustment policies is creating uncertainty, holding back investment and risks, generating deeper difficulties in the future.”
He noted that Nigeria, being a resource-intensive country, is still struggling with revenue losses and issues such as foreign exchange some two years after the fall in oil price that triggered its economic difficulties.
The expert said rather than cutting spending, Nigeria has opted to issue progressively larger budgets in a hope that its investment will revive the country’s flagging economy, emerging from its first recession in 25 years.
Besides, he noted that Nigeria has resisted the International Monetary Fund (IMF)’s calls for a removal of restrictions to foreign exchange rates.”
Hart pointed out that the most “noteworthy change” in the final document compared to last year’s draft was the planned composition of domestic and foreign borrowing, with government now planning to rely more on Nigerian creditors.
He noted this could have implications for decisions regarding the further easing of exchange rate restrictions, which many outside observers, including some multilateral creditors, argue are central to the country’s foreign currency and economic woes.
Consequently, he said that this could suggest Nigeria was struggling to attract overseas investors, although the country had already successfully issued international bonds this year. Hart said it would also mean that Nigeria would be less beholden to demands for reform being tied to its borrowing.