ECONOMIC INSIGHT 2017: Year of Buharinomics in actions
ERGP launched as economy exited recession
Since he assumed office in May, 2015, President Muhammad Buhari and his team have never spent much time on the economy as they did in the year 2017. It was the year that the Federal Government launched the first economic blueprint tagged the Economic Growth and Recovery Plan (ERGP) for year 2017 - 2020. The plan is aimed at ensuring economic recovery and accelerating its growth. After the launch of the ERGP, the economy recorded little stability in the year compared to the previous year. Within the first half of the year, the economy exited recession even though with very little growth margin of 0.55 percent. Many experts within and outside the country have lauded the plan but frowned at the lack of clear blueprint for its quick implementation.
The long delay in the passage of the 2017 appropriation act, however, affected the implementation of the year’s budget. The capital expenditure implementation commenced in June which tampered with most of the projections made in the ERGP and the budget. As of October, less than 20 per cent of the capital votes was released by the Ministry of Finance due to the lack of funds to execute the projects.
Development bank took off
Within the year, government unveiled the first Development Bank in the country with takeoff capital of about $1.3 billion. The bank is to facilitate wholesale credit facility aimed at accelerating growth for SMEs and long term facilities for industries. The DBN became operationalised in the first quarter of 2017 following the issuance of operating license by the Central Bank of Nigeria (CBN). The DBN has created a credit line of N5 billion to be accessed by MSMEs through its partner financial institutions.
Tax amnesty for defaulters
One of the major initiatives in the history of the Nigerian government was the Voluntary Assets and Income Declaration Scheme (VAIDS), a time-limited opportunity for taxpayers to regularise their tax status relating to previous tax periods. VAIDS yielded over $50 million in revenue between June 29, 2017 when it was launched and October 31, 2017. Two foreign companies have also agreed to pay $110 million in regularising their tax status.
Monetary policy retained rates
In monetary policy, CBN decided to retain all its rates within the period. The Monetary Policy Committee of the bank said the decision is to maintain price stability and support the economic policies of the Federal Government. The monetary policy rate remained at 14%, Cash Reserve Ratio at 22.5 % till the last meeting of the year in November.
Naira remained stable
Naira remained stable within the period with official rate floating around N305 to N309 a dollar almost throughout the year. The rates at the parallel market and the interbank almost converged at N360 to a dollar. The stability in oil prices at the international market helped the inflow of foreign exchange to the country which led to various interventions by the CBN to the FX markets. The apex bank also introduced various FX windows for importers and exporters and for other invisible demands. The nation’s reserves appreciated to $38.7 billion as of December 28. As of October, only N470bn but the government injected another N700 towards the end of the year.
Assets tracking
The Assets Tracking and Management Project and the creation of the Assets Register were new initiatives of the Federal Ministry of Finance launched in the year designed to enhance accountability, promote transparency and deepen efficiency in line with the change agenda of the President Muhammadu Buhari administration.
The Assets Register would afford the government to know and monitor in real time online information on the inventory of government assets.
e-Accounting kicked off
On March 21, 2017, the Federal Ministry of Finance announced the development of an International Public Sector Accounting Standards (IPSAS) Compliant accounting software suite, OneBook, towards improving public financial management across all levels of government.
The software package, which was launched at the Federation Account Allocation Committee (FAAC) meeting, captured various revenue types and intended to impact the entire financial operations from budgeting, through revenue and expenditure management to final accounts.