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+--- Thread: FG Can’t Fund Budget 2018 Unless Assets Are Sold, Says Ministers (/showthread.php?tid=4051)
FG Can’t Fund Budget 2018 Unless Assets Are Sold, Says Ministers - Mhiz Rebecca - 10-29-2018
Huge cost of servicing new loans amid poor revenue informed
the Federal Government’s decision to dispose of 10 state-owned
assets to select investors and the public between now and year
end, in order to fund the 2018 fiscal plan.This clarification
was given by the Minister of Finance, Mrs. Zainab Ahmed,
and her counterpart in the Budget and National Planning
Ministry, Senator Udoma Udo Udoma, who also argued that
borrowings and the assets sale not only constituted strategic
actions to funding the 2018 budget, but were in the overall
interest of the country.
In the sale of the 10 ailing key national assets, two of which
must be sold this month (Nicon Insurance Limited and
Skyway Aviation Handling Co), the government is expected to
earn the sum of $797m, that is N289b. A Director at the
Bureau of Public Enterprises (BPE), Joe Anichebe, who
revealed government’s plan to sell the outfits, informed that
the privatisation agency had pledged to raise N306b to help
finance the planned spending.
Apart from the Ajaokuta Steel Complex, which the Central
Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele equally
identified as one of the assets penciled for disposal, other
firms that are up for sale are in the power, aviation and
insurance sectors.Earlier in July this year, the Director
General of the Bureau of Public Enterprises (BPE), Mr. Alex
A. Okoh, also informed that some entities had been prepared
for privatisation or for commercialisation.
He listed them as Afam Power Plant; concessioning of
Terminal “B,” Warri Old Port; restructuring and
recapitalisation of the Bank of Agriculture (BOA); partial
commercialisation of the Nigerian Postal Services (NIPOST);
and the restructuring/ commercialisation of six River Basin
Development Authorities (RBDAs); partial commercialisation
of three selected national parks and re-privatisation of Yola
Disco etc.
In the 2018 Appropriation Act, the sum of N350b is expected
from privatisation proceeds, and the BPE boss, Okoh had
advised the Federal Government to reduce the propensity of
loans accretion because of their high cost of service, and
instead dispose of some obsolete assets to raise money for the
funding of the yearly budgets.
The capital component for which vital assets are being sold to
part finance, in addition to funds from borrowings in the local
and international markets is N3. 133t, out of the N 9.12t the
2018 fiscal plan, which implementation began mid – June this
year.Under the plan, nearly N2t is to be raised from
borrowings from both the domestic and international markets
to fund infrastructure captured in the spending plan for the
year.
The Guardian recently learnt that the sum of N643b has so
far been raised from the domestic market by the Debt
Management Office (DMO) this year, and handed over to the
Federal Government for that purpose. Speaking recently while
on a familiarisation tour of revenue generating agencies, as
well as, at the just concluded International Monetary Fund
( IMF)/World Bank Annual Meetings in Indonesia, Bali,
Indonesia, Ahmed defended the approach adding that more
funds outside government’s revenue was needed to make things
happen because revenue has become inadequate.
Corroborating Ahmed, Udoma said: “The draft 2019-2021
Medium Term Fiscal Framework shows that Nigeria faces
significant medium-term fiscal challenges, especially with
respect to revenue generation. Thus, key reforms will be
implemented with increased vigour to improve revenue
collection and expenditure management. Achieving fiscal
sustainability and macro-fiscal objectives of government will
require bold, decisive and urgent action.”
One of those in support of the planned sale of government
assets is a macro-economic policy analyst, Prof. Ken Ife, who
equally sees the decision as sound and well-articulated policy
under the government’s privatisation plan.
According to Ife: “The decision to privatise Ajaokuta Steel
Complex is a wise decision because that complex remains one
of the white elephant projects that we have in Nigeria. We
need to look for a competent investor with a large war chest
who can inject the needed funds to revatilise that complex so
that it can play its role in the country, by providing the
necessary steel derivatives for rail, auto, manufacturing,
building and construction industries and the production of
steel pipelines for the transportation of petroleum products
thousands of kilometres away.
The advantage is enormous. You can’t beat it. All we ask is
that government must this time around be cautious and
careful in the selection to avoid a repeat of the situation that
we are experiencing in the power privatisation programme,
where DISCOsdiscos operators are still heavily dependent on
government to supply them money, and are refusing to metre
customers, preferring estimated bills, where they collect
monies from customers indiscriminately.”
As far as development economist and public analyst, Mr.
Odilim Enwegbara is concerned, what the government intends
to do amounts to asset-stripping on the eve of the country’s
general election, insisting that the government can still
borrow more money both locally and internationally.
His words: “This administration cannot embark on a sale of a
key strategic asset like Ajaokuta Complex when it has less
than a year to end its tenure. It should wait until after
election to do so, that is if it wins again. Besides, the
executive lacks the power to sell such a critical national asset
without the approval of the legislature, which I am aware, is
making efforts to revitalise that complex.
“Again, another concern is that if the complex is sold under
any name, it will be given away after government’s over $30b
investment there. Let the government look for funds elsewhere
to fund the budget because it cannot sell key national assets to
fund one fiscal budget. What happened to the recovered loot
that they got?”