Almost four months after President Muhammadu Buhari forwarded the 2017, 2018 and 2019 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF and FSP) to both the Senate and House of Representatives for approval, the upper legislative chamber yesterday finally passed the document.
The Senate in the passage of the document, approved the adoption of N305 to the US dollar as exchange rate as proposed by the executive arm of government for the 2017 budget, just as it okayed $44.5 per barrel as oil benchmark price for 2017 budget as against the $42.50 per barrel as requested by the President.
The lawmakers also directed that the Central Bank of Nigeria (CBN), should as a matter of urgency, initiate measures that will close the gap between the parallel market and the official exchange rate.
Interestingly, outside the increase of price of oil benchmark from $42.50 per barrel as requested by the Executive, $44.5 per barrel oil benchmark price for 2017 budget, all other projections by the executive were retained by the Senate. The Senators had late last year termed the proposal “empty”.
In approving both the domestic and foreign borrowing, the Senate insisted that they should be on project-tied basis and that in borrowing more, government must remain focused and ensure it uses the fund for critical projects that will increase productivity and also contribute to financing such debt.
Before the approval of the additional borrowing of N2.321 trillion, the Senate said, “Globally acceptable ratio of debt to GDP is 56%. Nigeria still ‘ operates within its country specific ratio of 19.39% of debt to GDP. This implies that Nigeria can still potentially borrow or increase its country borrowing limit.
“Total outstanding external debt stock is at $11.26 billion, thus Nigeria’s external debt has been rising at an average of 9.2% per annum. In the case of domestic debt, the total domestic debt stock of the Federal Government is $37.44 billion. In 2017 FGN is projecting an additional borrowing of N2.321 trillion comprising of N1.253 trillion (domestic) and N841.067 trillion (foreign).”
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