|Minister of State for Finance, Alhaji Bashir Yuguda|
Tuesday, 6 January 2015
Federal Government to Maintain Growth in 2015 Despite Fiscal Challenge.
Minister of State for Finance, Alhaji Bashir Yuguda, has said the federal government was determined to maintain growth and stabilise the economy in 2015 notwithstanding the challenge of declining revenues occasioned by the falling price of oil.
He noted that the proposed take-off of the Development Bank of Nigeria (DBN) early this year was in line with government’s resolve to sustain growth as “it would greatly enhance and improve medium to long term financing for Nigerian businesses, going forward.”
Speaking in an end of year interaction with journalists in Abuja, he added that government would not waver in its resolve to further diversify the economy, significantly boost non-oil revenues, plug loopholes and cut unnecessary expenditures.
Describing 2014 as a challenging year, he maintained that the country managed sustain a stable economic growth and re-established itself as Africa’s largest economy with an impressive diversification trajectory.
He said: “We recognise that prices might slide further, but we do not intend to revise the benchmark further down. We are aware that price intelligence indicates that prices might average between $65 and $70pb in 2015. This is anchored on the fact that American shale oil which is largely driving this price shocks also runs the risk of becoming unsustainable as it is produced at a high cost of at least $65 per a barrel.”
He, however, stressed that the government was prepared to introduce further measures “if prices fall outside this range.”
He said with the Capacity Enhancement Programme (CEP) of the Federal Inland Revenue Service (FIRS) to improve non-oil tax revenue, the agency was expected to meet its target of surpassing 2014 impressive performance by about N160 billion.
On the proposed wholesale development funding institution, the minister noted that it would utilize an on-lending model and channel financing through existing commercial banks as well as restructured “specialised” banks such as the Bank of Industry and the Bank of Agriculture to fund businesses that will deepen growth and generate more jobs.
According to him, the partners that have committed to invest in the bank include the World Bank, the Africa Development Bank, the BNDES Bank in Brazil, and KfW in Germany.
The World Bank and AfDB had pledged $500 million each for the take off of the bank.
Yuguda added that the European Union EU had also indicated interest in investing in the bank, through the Union’s development financing outfit, the European Investment Bank (EIB), although negotiations were yet to be concluded.
He said: “On our part, the government has set aside the sum of N4 billion in addition to another N16 billion provision in the 2014 budget for the take off of the project. Our existing Bank of Agriculture and Bank of Industry will be re-structured as specialised institutions to retail financing from this new wholesale development bank. Additionally, the government is working on a system of tax incentives for Micro-Finance Banks in order to promote financial inclusion for the poor.”
EIB’s manifest interest followed series of meetings held in Brussels, Lagos and Abuja between a government delegation led by Yuguda and EIB officials.
The federal government had deployed two high level teams led by the Co-ordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo Oweala and Yuguda to different global financial blocs for the road show.
Yuguda, who recently led his team to Europe and some parts of Asia and the Middle East noted that the bid had raised significant interest among the global funding agencies.
Describing the transformation agenda as far reaching, the minister noted that the Jonathan administration had taken policy decisions to correct the identified structural imbalances in the economy and the concentration of government’s external revenue on crude oil sales.
He also said critical infrastructure projects would not be affected by the announced fiscal restructuring measures, describing them as “key to economic growth and development as well as job creation.”
According to him, the areas that would be affected by the fiscal adjustments include those that have the least negative impact on the generality of Nigerians, including widening the tax net, and pushing for higher levels of compliance, introduction of a new tax on luxury products as well as reducing expenditure by cutting foreign travels by government officials to the barest minimum, especially with regards to training programmes abroad.