The Federal Government, yesterday, introduced some
austerity measures and scaled down the crude oil bench mark for the 2015
budget.In a bid to insulate the economy from falling crude oil prices the
federal government announced far-reaching policy measures to deal with the
crashing crude oil prices, cutting 2015 oil benchmark from $78 to $73 per
barrel. Crude oil prices dropped to $77.76 per barrel, some cents below the $78
earlier proposed to the National Assembly as bench mark for the 2015 budget.The
Federal Government, yesterday, introduced some austerity measures and scaled
down the crude oil bench mark for the 2015 budget.The Coordinating Minister for
the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala told journalists
in Abuja that the decision to cut revenue projection was part of measures
designed to maintain economic stability, boost non-oil revenues further, plug
loopholes and waste, as well as cut unnecessary expenditures in order to cope
with the situation.Keeping to her earlier warning that the government will soon
introduce measures to protect the economy she said: “As part of the response to
falling oil prices, the Medium Term Expenditure Framework (MTEF) and the Budget
2015 proposal to the National Assembly have been revised. Government is now
proposing a benchmark of $73 per barrel to the National Assembly compared to
the earlier proposed benchmark of $78.“Given the nature of the oil market, we
needed to see the extent and trend of the oil price in order to take the right
measures. Panic is not a strategy. It’s important that our strategies are based
on facts and a clear understanding of both the strengths of the economy and the
challenges posed by the drop in oil prices which is currently at $79 for our
premium Bonny Light Crude.“The drop in oil prices is a serious challenge which
we must confront as a country. We must be prepared to make sacrifices where
necessary. But we should also not forget that we retain some important
advantages such as a broad economic base driven by the private sector and
anchored on sound policies.”FG determined to strengthen economyDr.
Okonjo-Iweala assured, however, that the federal government would continue to
fund infrastructure, job creation, agriculture and human capital development,
especially the health and education sectors, as part of the Goodluck Jonathan
administration’s determination to strengthen the economy to positively affect
the poor.“To show how serious government is about job creation, President
Goodluck Jonathan”, she disclosed, “will tomorrow, (today) November 17 launch
the 4th edition of YouWin to support another 1,500 entrepreneurs along with a
private equity fund for entrepreneurs.“Our strategy is to continue to
strengthen the sectors that drive growth such as infrastructure, agriculture and
housing while reducing waste with a renewed focus on prudence.”According to
her, the policy was scenario-based and that additional measures would be
introduced if oil prices declined further.The minister said that the basket of
measures with growth which has remained above six per cent, reassure investors
and keep the economy on a stable course through the crisis.Curtailing
wastageAccording to Dr. Okonjo-Iweala, there would be no more foreign travels
by civil servants unless for purposes that could be fully defended as
absolutely necessary.In addition, foreign training programmes would be stopped
and all trainings done in-country.The exception, she said, would be to secure
foreign sponsorship for such travels and training abroad.The Minister added
that the federal government would work to eliminate duplication among the
functions of the Ministries, Departments and Agencies, MDAs, by working on the
Steve Ornsaye Report.She, however, observed that since the MDAs to be
re-aligned were created by law the National Assembly would be required to
repeal such laws before any administrative step could be taken.Luxury Goods
TaxPart of the immediate steps to cushion the fall in oil revenue, the minister
said, was to significantly increase non-oil revenue in the country, as she
announced an aggressive tax administration in which, private jets, yachts,
Champagne and a list of others to be announced would be taxed.The minister said
that the idea of Luxury Goods Tax was not to stop wealthy members of the
Nigerian public from enjoying their wealth but to create an avenue for them to
share with those at the lower levels of the ladder.According to the minister,
the issue of capital flight was now engaging the attention of the
administration, just like many other African nations, saying that a study has
been commissioned to determine the activities of corporate citizens and other
individuals who were evading taxes as well as those involved in capital
flight.She added that monetary measures should also be expected in the efforts
to ensure a stable Nigerian economy, despite the falling oil
prices.Okonjo-Iweala dismissed suggestions of printing Naira notes just to keep
spending, as according to her, that would be the worst that could happen to an
economy, especially among the poor, adding, “spiral inflation is the worst
enemy of the poor.“Printing money without adequate revenue support will lead to
serious consequences for the country. It will spur inflation as the experiences
of Germany in the early part of the last century and more recently, Argentina
and Zimbabwe demonstrate. This prescription will victimize the poor and middle
class that it is supposedly protecting,” she said.
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