The federal government yesterday unveiled its long-awaited Economic Recovery and Growth Plan (ERGP), in which it disclosed plans to privatise some public enterprises/assets.
The government also disclosed that it will significantly reduce its stake in joint venture oil assets and other oil and non-oil assets with a focus to raise more funds to finance the four-year plan. It did not mention the assets to be privatised or sold.
At the last check, the federal government has about 55 per cent stake in joint ventures run by oil majors including Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA.
Plans to revamp local refineries to reduce petroleum product imports by 60 per cent by 2018 are also detailed in the ERGP.
The three-year plan, comes days after the government had promised it would be ready.
Speaking at the World Economic Forum in Davos, Switzerland, acting President Yemi Osinbajo had assured that the plan would be ready by February.
“We would formally launch the four-year economic recovery approved plan in mid-February. We’ve already written it out, many parts of it…we are discussing, but it would be formally launched as a document in the middle of February,” he said.
Tagged: ‘Economic Recovery & Growth Plan 2017-2020’, the ERGP, which has three broad strategic objectives: restoring growth, investing in our people, and building a globally competitive economy, which are expected to help achieve the government’s vision of inclusive growth, would also help it take the economy from the path of steady and steep decline to sustained inclusive growth.
The federal government said it would operate a consolidated budget that will incorporate all agencies that are fully funded by the federal government by 2018.
According to the government, within the period under cover, it will restore oil production to 2.2 million barrels per day (mbpd) and reach 2.5 mbpd by 2020, to increase export earnings and government revenues by an additional N800 billion annually, reduce the fiscal deficit and debt service ratios and attract new investments.
Part of the measures to achieve that is to pass the much talked about Petroleum Industry Reform Bill and draft new regulations consistent with the Bill, “Conclude joint venture (JV) cash call arrangements and implement a new cost recovery funding mechanism for JVs,” according to the plan obtained from the website of the Ministry of Budget and National Planning.
Beyond oil, the federal government also rolled out a plan to increase non-oil tax revenues by improving tax compliance, broadening the tax net, employing appropriate technology, and tightening the tax code; as well as introduction of tax on luxury items and other indirect taxes to capture a greater share of the non-formal economy.
It disclosed that Value Added Tax (VAT) rate for luxury items would be increased in the same period from the present 5 to 15 per cent from 2018, while improving CIT and VAT compliance to raise 350 billion annually.
To achieve that, the budget and planning office said plans are on ground to conduct a broad audit campaign to identify under-filing taxpayers; improve tax compliance by engaging non-compliant taxpayers and making them comply.
Heeding experts’ advice to ensure coherence of fiscal and monetary policies, the federal government announced that it will ensure monetary policy is aligned with the other aspects of its macroeconomic programme, deploy liquidity management tools to reduce inflationary pressure and stimulate all-inclusive economic growth. The government added that it would strengthen intervention in critical sectors that can promote economic growth and reduce unemployment; sustain a market-determined exchange rate.
The federal government also said it will issue bonds and debt certificates to address outstanding government liabilities to contractors, MDAs and state governments; rebalance the public debt portfolio with increased external borrowing (from 84:16 to 60:40, domestic-external borrowing mix), focusing on concessionary sources and extend the maturity profile of public debt portfolio and deploy long-term debt instruments, including infrastructure and retail bonds in a move to optimise debt strategy.
In a move to drastically cut cost through operating and capital expenditure optimisation initiatives, the central government hopes to intensify the Presidential Initiative on Continuous Audit (PICA) activities and clean up the civil service payroll by linking the Integrated Payroll and Personnel Information System (IPPIS) to HR management systems and bank verification numbers (BVNs). The government plans to reduce unemployment from 13.9 per cent (Q3 2016) to 11.23 per cent by 2020 by creating over 15 million direct jobs between 2017 and 2020 or an average of 3.75 million jobs annually.
In line with its plan to create an enabling environment to enhance private investment, targeting energy minerals, iron/steel and gold/ gemstones with a focus to speed up establishment of a Solid Minerals Development Fund with a seed fund of N200 billion, the fedral government said that “By 2020, Nigeria will have made significant progress towards achieving structural economic change and having a more diversified and inclusive economy.”
Nigeria’s economy shrank 1.5 per cent in 2016, the first full-year contraction since 1991, due to a drop in oil prices and production output, which is the nation’s biggest export.
The naira weakened after the central bank removed a peg in June, increasing the prices of imports from fuel to food and medicine, contributing to the inflation rate rising to the highest in more than a decade.
The new plan targets growth of 7 per cent and inflation under 10 per cent by 2020, by increasing oil output, opening up new farmland and boosting investment in power, roads and ports to diversify revenue.
Meanwhile, the media adviser to the Minister of Budget and National Planning, Mr. James Akpandem has said President Muhammadu Buhari will launch the ERGP as the ceremonial presentation of the plan would take place when PMB returns from vacation.
Akpandem said that the development of the plan went through rigorous processes, including wide consultation and robust engagement with stakeholders.
“The plan has been approved by the Federal Executive Council. The core vision of the plan is one of sustained inclusive growth.
“There is an urgent need as a nation, to drive structural economic transformation with emphasis on improving both public and private sector efficiency.
“The aim is to increase national productivity and achieve sustainable diversification of production, to significantly grow the economy and achieve maximum welfare for the citizens, beginning with food and energy security,’’ he said.
The official said that the plan envisaged that by 2020, Nigeria would have made significant progress towards achieving structural economic change with a more diversified and inclusive economy.
He said that the plan was expected to deliver on five key broad outcomes, namely: a stable macroeconomic environment, agricultural transformation and food security as well as sufficiency in energy.
Other outcomes, he said, would be on improved transportation infrastructure and industrialisation, focusing on small and medium scale enterprises.
Akpandem said that the ERGP was different from previous strategies and plans because it focused on implementation, at the core of the delivery strategy over the next four years.