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Nigeria to witness healthy capital releases soon – Economists


The release of funds by the Federal Government for capital projects will improve in the months ahead going by the electoral calendar and other developments in the polity, economists have said.

According to them, plans by the Federal Government to disburse unspent funds from the 2017 budget for the development of projects in 2018 would also enhance monetary releases in coming months.

Economists at FBNQuest Capital, a renowned research firm, in a report obtained by our correspondent in Abuja on Friday, expressed optimism that the country would witness healthy funding of capital projects this year.

They said in the report, “The FGN (Federal Government of Nigeria) has already indicated that once the new budget was approved, its priority would be to disburse unused capital items of about N500bn from the 2017 budget.

“In the light of the electoral calendar, we should expect a healthy pace of capital releases in the months ahead.”

They noted that there was no time to lose since the 2018 budget had been signed off.

“The journey of the 2018 budget has finally ended with the presidential sign off on June 20, more than seven months after the proposals were first submitted to the National Assembly,” the analysts said.

Economists at FBNQuest noted that the presentation of the budget by the Minister of Budget and National Planning stressed the continuity with what it termed the “reflationary” budgets of 2016 and 2017, and the Economic Recovery and Growth Plan 2017-2020.

According to them, the buzzwords of the presentation are infrastructure and capital spending.

In an analysis of the 2018 budget, they stated that total expenditure by the Federal Government was projected at N9.12tn, compared with actual and budget figures of N6.05tn and N7.44tn for 2017.

“Capital spending was projected at N2.87tn, compared with N1.58tn actual for 2017 (through to earlier this month), which the (minister’s) presentation terms a record,” the economists stated.

The largest ministerial beneficiary in the 2018 budget is the Federal Ministry of Power, Works and Housing, as it got N683bn.

The analysts observed that among the many projects listed in the budget were N15bn for the recapitalisation of the Bank of Agriculture and Bank of Industry, and N13.3bn for the revived export expansion grant.

The economists said, “The Federal Government generally does not hit its targets for spending because of underperformance in revenue collection, and 2018 is unlikely to be any different. Total Federal Government revenue is projected at N7.17tn, compared with actual and budget figures of N2.71tn and N5.08tn for 2017.

“The total is highly ambitious. However, we note that the Federal Government expects to gather less in non-oil taxes than it did in 2017, which we consider a realistic assessment of the scale of the challenge.

“The total is substantially higher than in the 2017 budget because of new measures to raise oil revenues, and more bullish oil price and production assumptions. We notice also a N710bn projection for joint-venture equity restructuring, and look forward to some colour on the subject.”

The analysis indicated that the Federal Government’s deficit was projected at N1.95tn, representing 1.74 per cent of forecast Gross Domestic Product.

They stated that in addition to unspecified privatisation proceeds of N306bn, the deficit woud be financed by N1.64tn in new borrowing, adding that in line with the strategy of externalisation, the greater part of the borrowing of N849bn would be foreign.

Nigeria to witness healthy capital releases soon – Economists Nigeria to witness healthy capital releases soon – Economists Reviewed by mujeeb Olagunju on June 30, 2018 Rating: 5

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