The Minister of Finance, Dr Ngozi Okonjo-Iweala, says the Federal Government has proposed a review of the oil benchmark from 77.5 dollars to 73 dollars for the 2015 budget.
Okonjo-Iweala said this on Sunday in Abuja at a media briefing on government’s strategic response to the decline in global oil prices.
She said the proposal would be sent to the National Assembly for approval, adding also that there would be review of the entire Medium Term Expenditure Framework (MTEF).
The minister said government was adopting the best scenario approach to address the current situation, adding that there was expectation that the price decline would continue in the nearest future.
She said government would adopt additional fiscal measures with appropriate monetary policy measures to cushion the effect of the decline on expenditure.
According to her, government expenditure would drop from N4.8 trillion initially submitted to MTEF to about N4.6 trillion this time.
“We are proposing a benchmark price of 73 dollars per barrel and, based on that, we are reviewing the entire MTEF and we have decided to maintain the same quantity at 2.27 million barrels per day.
“This will mean a drop in projected oil revenues from N7.287 trillion to N6.833 trillion which also indicate that we need to do something about aggregate expenditure in the budget.
“Even though the drop in oil price is a serious challenge, it is an opportunity for the country to focus on greater diversification and refocus efforts towards the non-oil sector,” she said.
Okonjo-Iweala said part of the measure was the decision to raise non-oil revenue by the Federal Inland Revenue Service (FIRS) by evolving a system of enlarging the scope of taxes.
“Only 25 per cent of the Small and Medium Enterprises (SMEs) in the country are currently registered as tax-payers, and more SMEs will be captured for broader tax sources,’’ she said.
The minister expressed optimism that FIRS would meet the additional N75 billion target and promised to strengthen tax administration to drive the non-oil revenue by blocking the leakages.
Okonjo-Iweala said there would be introduction of surcharges on luxury items to enable the well-to-do individuals in the society to be able contribute to government’s purse.
She said government would continue to invest in infrastructure, job creation, human capital development and security, as well as prioritising investment in key sectors of the economy.
“Government will also make enabling policies which will encourage private investors to continue to invest in the key sectors of the economy,’’ the minister said.
She said government would no longer fund any foreign travel and overseas training by public servants from 2015, adding that only essential cases would be allowed.
“As part of the efforts to reduce expenditure, international travel within the public service will be severely curtailed.
“Also , unaffected are public sector wages as well as key initiatives in education, health and other areas critical to the country’s human development,” Okonjo-Iweala said.
The minister said the economy was still strong in spite of the falling global oil price, saying that IMF’s estimate showed the country’s GDP remained among the best in the world.
She said creating more spending by printing more money by the government, as suggested by some people, would lead to inflation which the country had been able to tame to 8.3 per cent.
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