Author Topic: Don: Capital Expenditure Vote Too Low  (Read 351 times)

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Don: Capital Expenditure Vote Too Low
« on: January 09, 2018, 09:55:29 AM »
DEAN, Faculty of Business Administration, University of Uyo, Uyo, Akwa Ibom State, Professor Leo Ukpong, has emphasised the role of capital expenditure in achieving and sustaining economic growth of any nation.

He said countries that want significant economic growth devote a substantial part of     their budget to capital expenditure.

Ukpong, a professor of Financial Economics, noted that with Nigeria?s ?state of deficit? infrastructure, the 30.80 per cent allocated for capital expenditure in this year?s budget is relatively low.

?If we take a look at the proposed 2018 capital expenditure budget, we will likely discover that most of the amounts in this category are earmarked for projects that were previously budgeted for (such as uncompleted road projects). Conservatively, my guess is to make a dent on our poor infrastructure state, a minimum of about 40 per cent should be allocated towards capital projects, and these projects should be those that will broadly stimulate the economy in the short run and sustain it in the long run,? he explained.


 
Ukpong said the projected 12.50 per cent yearly inflation in the budget does not reflect the inflationary reality in the country.

?I think the 12.50 per cent inflationary assumption is seriously under estimated. The implication of this estimation is that borrowing will be low and expensive, leading to a drop in business investment and in house-hold consumption. In turn, this will lead to drop in expected tax revenue and the gross domestic product (GDP),?  Ukpong explained.

He further argued that with the average lending rate to business at about 21 per cent; high dependency on manufacturing equipment and parts import; external pressures on naira devaluation; dependency on generators as a source of energy; and  heavy subsidy on crude oil refined products, the projection remains a far cry from reality.

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Don: Capital Expenditure Vote Too Low
« on: January 09, 2018, 09:55:29 AM »

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