The Minister of Budget and National Planning, Sen. Udoma Udo Udoma, at the weekend threw more light on the reason behind the setting up of the Technical Committee on the Implementation of a new Minimum Wage by President Muhammadu Buhari.
Recall that Buhari on Wednesday, Jan. 9, inaugurated the technical committee headed by Bismarck Rewane.
Speaking at an interactive session with some editors in Lagos at the weekend, Udoma explained that the Technical Committee was to, among other things, identify additional sources of revenue to ensure that government meets the increased costs that will arise from the implementation of a new minimum wage without affecting its ability to meet the other obligations.
He noted that whenever a new minimum wage bill is enacted there are demands for some wage increases even from those already earning more than the new minimum wage and such salary increases will impose additional costs on Government.
Therefore, the Minister said, the Technical Committee is expected to make suggestions as to how government can raise additional revenues to ensure it meets its expenditure on other services such as education, health, infrastructure etc. after paying the increased salaries.
“The committee is expected to, amongst other things, look at how to get additional revenues so that as our wage bill goes up, we are able to increase our revenues to ensure that our spending on capital projects, our spending on basic infrastructure, our spending on health, our spending on education and others is not reduced. In short, the committee is to advise on ways to ensure that notwithstanding the increase in payroll costs, there continues to be adequate funding for other government activities. This is not just for the 2019 fiscal year, but going forward, thereafter.”
Regarding the debt service to revenue ratio, Udoma assured that as the nation’s revenue situation improves the ratio will come down.
He said “Nigeria does not have a debt problem, as such. Our debt is within prudent limits. However, we need to optimise our revenue generating potential. This will bring down our debt service to revenue ratio. Given the size of our economy we can, and should, be doing better, in revenue generation. This explains our focus as a Government on revenues and revenue generation.”
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Responding to the complaints about the size of the 2019 budget, the Minister explained “Some commentators have complained that the 2019 Budget Proposal is too small. They would like us to have a larger budget. All of us in Government would also like Nigeria to have a larger budget. Indeed as our revenues grow we will be able to expand our budget size. In truth, though we have increased our budget size significantly since we took over Government in 2015, our budget size is still far too small to meet all our needs.
“However, we are limited by the size of our revenues. Our current proposal for 2019 represents the maximum size that we believe we can prudently fund from our revenue and debt sources. There is no point announcing a large budget that you cannot fund. As we are able to generate more revenues in future we will be able to continue to increase the size of our budgets.”
Udoma also told the editors that the federal government was proposing to bring the budget deficit down slightly from the N1.95 trillion projected for 2018 to N1.895 trillion in 2019. This, he said, is 1.3% of Gross Domestic Product (GDP), well within the 3% limit set by the Fiscal Responsibility Act.
He also touched on the issue of unemployment, saying that government was working hard to improve the enabling environment for economic expansion which will lead to the creation of additional jobs. He was confident that as the various initiatives of the Economic Recovery and Growth Plan, ERGP, continue to be implemented, more jobs would be created at a rate that is much faster than population growth, thereby bringing down the unemployment figures.
“Most of these jobs will be created in the private sector particularly in agriculture, construction, manufacturing, trade and services,” he said.
