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Published On: Fri, Nov 10th, 2017

Proposed 2018 Budget: N305 Exchange Rate, 12.4% inflation Rate realistic -Dr. Uwaleke

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By Etuka Sunday

Finance analyst and Head, Banking and Finance Department, Nasarawa State University, Keff, Dr. Uche Uwaleke has described as realistic the 2018 budget estimate predicated on some key parameters like N305/US$ exchange rate and Inflation Rate of 12.4 percent.
Dr. Uwaleke in a chat with our correspondent however, said, target GDP growth figure of 3.5 per cent and oil output benchmark of 2.3 million barrels per day appeared ambitious.
Recall, President Muhammadu Buhari on Tuesday presented to National Assembly a budget proposal of N8.6tr for 2018 fiscal year.
The budget estimate was predicated on the key parameters and assumptions of the 2018 to 2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) of an oil benchmark price of US$45 per barrel; Oil production estimate of 2.3 million barrels per day; Exchange rate of N305/US$ for 2018; Real GDP growth of 3.5 percent; and Inflation Rate of 12.4 percent.
Meanwhile, the federally collectible revenue estimates in 2018 includes N11.983 trillion, which implies that the three tiers of Government will receive about 12 percent more revenues in 2018 than the 2017 estimate.
Also, of the amount, the sum of N6.387 trillion is expected to be realised from oil and gas sources, while a total receipts from the non-oil sector are projected at 5.597 trillion Naira.
Dr. Uwaleke said, the target GDP growth figure of 3.5 per cent and oil output benchmark of 2.3 million barrels per day would be dependent on peace in the Niger Delta region.
The University Don said: “I think the crude oil price benchmark of 45 US dollars per barrel is realistic judging from forecasts by the US Energy Information Administration as well as the World Bank on the back of current strong crude oil demand, reduced oil drilling activities in the US and output cut agreement between OPEC, Russia and other non oil producing countries.
“The exchange rate of N305 to the US dollar is in line with the government’s Economic Recovery and Growth Plan and I also think it is in order.
“Also realistic is the inflation target of 12.4 per cent considering the fact that headline inflation has been trending downwards since February 2017 partly on account of improved liquidity in the forex market and stability in exchange rate.
“However the target GDP growth figure of 3.5 per cent and oil output benchmark of 2.3 million barrels per day appear ambitious.
“The latter in particular depends on peace in the Niger Delta region which the government is confident in securing through continuous engagement in dialogue with the stakeholders from the region.
He gave two reasons for the slow implementation of the 2017 Budget thus: “Two major reasons account for the poor implementation of the 2017 capital budget. The first is the delay in the passage of the budget coupled with the cumbersome procurement process.
“The second is shortfall in projected revenue especially government independent revenue. The 2018 budget proposals have been presented to the National Assembly earlier than the case with the 2017 budget that was done in December 2016.
“So, implementation of the 2018 budget is expected to witness a higher success rate if it can be passed by the Legislature early enough,” he said.

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