He said the difference might be in its implementation and the sustainability of the underlying assumptions.
He, however, said there was hope of getting out of recession if the right things were done, adding that the recession story has both external and domestic dimensions.
“We may not have much influence on the external factors such as oil price, but we have control over the policy environment that we create to attract private capital. I believe that appropriate policy choices can make a great deal of difference in our story.
“We need policies that would stimulate domestic and foreign investment. We need to inspire the confidence of investors.
“The economy is still a major attraction as an investment destination. The fundamentals are still good. But we need to complement this with the right policies – monetary policy, foreign exchange policy, tax policy, investment policy, trade policy and fiscal policy,” Muda told The Nation in an interview in Lagos at the weekend.
He said the oil price assumption is conservative enough and appropriate for the budget.
“However, the oil output assumption of 2.2mbd is optimistic, given the prevailing conditions in the Niger Delta. It is noteworthy that many of the revenue assumptions for 2016 have been reviewed downwards to more realistic levels. The emphasis of proposed capital spending on infrastructure is laudable.
“Works, Power, and Housing Ministry has the highest capital allocation of N529 billion; Transportation ministry has the second highest of N262 billion.
“But given the huge deficit in infrastructure, these allocations are still not adequate to make the desired impact.
“The public private partnership option needs to be quickly activated to attract private sector capital,” Muda said.
He said there were several commendable policy pronouncements in the budget presentation by President Muhammadu Buhari.
Some of these, according to him, include restoration of the Export Expansion Grant (EEG),which is the main incentive for the non-oil export sector; the vote of N50 billion to boost the Special Economic Zones and the Export Processing Zones; the N15 billion capitalisation support of Bank of Industry (BoI) and Bank of Agriculture (BoA); the decision of clear arrears of electricity bills owed by Ministries, Departments and Agencies (MDAs) to power distribution companies; the decision to look into contractor arrears of about N2 trillion which had accumulated for over 10years.
He said the pronouncement by Buhari that 2017 would see a harmonisation of monetary, fiscal and trade policies was comforting.
“The truth, however, is that the policy environment will have a much greater impact in stimulating investment and pulling the economy out of recession than the budgetary appropriations. No doubt the budget is important, but the economic policy framework for investors is more important,” Muda said.
- Source – The Nation