by Tunji Andrews

The Federal Executive Council (FEC) has approved the draft Medium Term Fiscal Framework (MTEF) for the 2015, 2016, and 2017 national budgets. This document attempts to capture the fiscal strategy of the Government for the next 3 years, set out in a complete document. The FRA 2007 requires that the Minister of Finance prepare the MTEF, which should include a macroeconomic framework, fiscal strategy and MTFF. The MTEF also serves as the basis for the preparation of the estimates of revenue and expenditure for the Annual Federal Budget. The MTEF is a crucial component of public financial management reforms as it requires the adoption of a multi-year perspective in budgeting to allocate public resources on a rolling basis over the medium-term.

The MTEF was tagged one to focus on job creation and inclusive economic growth and was unveiled to journalists at this week’s FEC meeting, by the Minister of information, Labaran Maku, alongside the ministers of Information, Labaran Maku, Works, Mike Onolememen, Health, Onyebuchi Chukwu and the minister of state for trade and investment, Samuel Ortom as well as the Director-General of the Budget Office, Bright Okogwu.

The council, which was chaired by President Goodluck Jonathan, reached its decision, after assessing past national budgets and agreeing that there was an improvement in the administration’s transformation agenda, following advice from the Economic Management Team.

Maku said the emphasis of the three year fiscal framework will be on the completion of ongoing projects. “The theme for the 2015-2017 fiscal framework continues to be job creation, inclusive growth and how you can extend the prosperity embeded in this growth to as many Nigerians as possible. Looking at our revenue profile, the non-oil revenue is a major contributor to government coffers and that is because a lot of effort by the administration over the last few years in engaging the various entities that are associated with collecting revenue have began to have very good results.”

The DG budget office, further explained that the nation’s expanding non-oil sector which was highlighted by the rebasing , was taken into consideration as it is expected to make huge contributions to the country’s revenue generation adding that the presentation of the which of the MTEF which was led by minister of finance and coordinating minister of the economy, Ngozi Okonjo-Iweala, was the outcome of some earlier efforts already made in consulting both the national assembly and some of the other stakeholders associated with the budget process.

“The emphasis will be on completion of ongoing projects. MDAs that have projects that are ongoing a lot of empahisis will be put on thier completing those projects.

“The other things I wish to mention is that in crafting a medium term fiscal framework and the budget, what we are emphasizing is those sectors that are best suited to generate growth and employment” he said.

Okogwu further noted that in the preparation process, the economic development in Organization for Economic Cooperation and Development (OECD) countries, was taken into consideration as well as Western countries that typically purchase Nigeria’s crude oil and other non-oil products.

“In this instance, we looked at the economic development in the OECD countries, western countries that typically purchase Nigeria’s crude oil and other non-oil products because it is how well they are doing that will determine how easy it is for them to import goods from us. As you know, the situation in the OECD countries is mixed. The United States economy is doing well, their recovery is there clearly although it is a little bit tenous. Sometimes you see some factors that seem to make it not so strong but it is robust and it is recovering which is good news.

“You then take a look at the European union where the economic recovery is a little bit stop and go. Other countries are doing very well others are not doing well and these countries import a lot of our own crude oil and a lot of non-oil products. We looked at all those in order to situate the Nigerian situation. In the case of Nigeria the growth that we have seen, the economic performance is very robust and it continues to be very encouraging and indeed when you look at the rating agencies who come to Nigeria, and investors, they look at this country and say in spite of insurgency and a little bit of ebola, this country is still doing very well interms of real GDP growth. But you also know that President has always emphasized that his interest is not only GDP growth but how that growth could impact majority of Nigerians” he said.

It is expected that Several assumptions will be made concerning the fiscal strategy for the 2015-2017 period. Oil price benchmarks will be adopted for the 2015, 2016 and 2017 fiscal years. The oil production benchmarks will also be set along side the companies Income Tax (CIT) projections. Other projections to be noted are the VAT collection projections and the customs duty collection receipts. These assumptions are expected to both be realistic, conservative and should have taken into account the previous performance of oil and non-oil revenue.

Emmanuel Chidiogo