Daily Independent (Lagos)
Rotimi Durojaiye, Bassey Udo, Adeola Yusuf, Festus Owete, Otei Ohams and Chesa Chesa
3 December 2008
The Federal Government has proposed N2.87 trillion as budget for next year in spite of expected decline in revenue.
The amount is 4.45 per cent above the N2.748 trillion initially appropriated in 2008, and an increase of 8.42 per cent above the 2008 amended budget of N2.647 trillion.
President Umaru Yar'Adua, who finally presented the proposal to the National Assembly on Tuesday after several postponements, also announced measures to curb inefficient spending in ministries, departments and agencies (MDAs).
Recurrent expenditure is frozen by way of overheads.
He said the budget would focus on delivering on the promises of his seven-point agenda by enhancing investment in infrastructure and human capital development.
Recurrent expenditure accounts for N1.649 trillion (about 57.46 per cent), N796.7 billion (about 27.76 per cent) is for capital expenditure.
Capital vote of N796.7 billion is significantly higher than capital expenditure of N491 billion in 2007.
Debt service has N283.6 billion, statutory transfers N140.7 billion.
The budget is underlined by five key assumptions: oil production of 2.292 million barrels per day (bpd), a benchmark oil price of $45 per barrel (pb), Joint Venture cash calls ($5 billion), inflation rate (8.2 per cent), and a Gross Domestic Product (GDP) growth rate of 8.9 per cent.
"On the basis of these assumptions, taking into account the revenue sharing formula, the total federally collected revenue is projected at N5.131 trillion, which includes oil revenues of N2.9405 trillion and non-oil revenues of N1.973 trillion (as well as other non-Federation Account items such as grants and special levies amounting to N217.5billion).
"The total revenue for the Federal Government budget is forecast at N1.778 trillion, including independent revenue of N306 billion," Yar'Adua said.
With expenditure at N2.87 trillion and revenue N1.778 trillion, there would be a deficit of N1.09 trillion or 3.95 per cent of Gross Domestic Product (GDP), based on the oil price benchmark of $45 pb, and an output of 2.292 million bpd.
The deficit would be financed by signature bonuses, privatisation proceeds, recall of $200 million from the Nigerian Trust Fund of the African Development Bank, domestic borrowing, a Naira-denominated international bond and issue of $500million, as well as unspent sums in the 2008 budget.
Five priority sectors account for 91 per cent of the capital vote:
*N361.2 billion for critical infrastructure, including capital allocations of N88.5 billion for power, N15.4 billion (aviation), N26.5 billion (petroleum resources), N129.3 billion (works), N35.2 billion (transport), and N48.7 billion (of a capital vote of N64.45 billion) for infrastructure in the Federal Capital Territory (FCT).
*N131.9 billion for human capital development, including N39.6 billion (health), N33.6 billion (education), N32.6 billion (conditional grants for Millenium Development Goals, MDGs), N19.7 billion (MDGs Quick Win projects), and N6.3 billion (MDGs capacity building).
*N91.8 billion for land reform and food security, focusing on agriculture and water resources.
*N67 billion for security.
*N77.12 billion for the Niger Delta, comprising N27.12 billion for the Niger Delta Development Commission (NDDC) and N50 billion for the Ministry of the Niger Delta, including provision for enhancing infrastructure, environmental protection, youth development and grassroots empowerment.
Key power projects include:
*N3.5 billion for the Mambilla hydro-electric generation, N21.5 billion for other generation projects (including N6.5 billion to complete the Niger Delta Power Holding Company (PHCN's) National Integrated Power Projects, NIPP), N32 billion (transmission), and N19.25 billion (distribution).
*N903.9 million (trans-Sahara gas pipeline), N6.7 billion (Calabar-Umuahia-Ajaokuta gas pipeline), N10.3 billion (Ajaokuta-Abuja-Kano pipeline), and N1.1 billion (gas supply pipeline to PHCN Delta IV).
The decline in international oil prices compelled the government to make adjustments in its spending plans and priorities, Yar'Adua explained, adding that inefficient spending by MDAs would be curbed to reflect new realities.
He announced the suspension of investment in non-priority capital outlays such as the acquisition of new vehicles, and the construction and furnishing of new headquarters for MDAs.
Expenditure on international travels and training is slashed by 50 per cent, and on local travels by 25 per cent.
"Recurrent expenditure on personnel costs will also be controlled with the full deployment of IT (information technology), by way of the Integrated Personnel and Payroll Information System (IPPIS), to all MDAs.
"Payments for goods and services will be discharged through the e-payment system to increase efficiency and reduce avenues for corruption."
Minister of State for Finance, Remi Babalola, pledged that the budget will be implemented to the letter, and that each Minister and accounting officer "will be held responsible and accountable for the non-implementation or the non-execution of their mandates.
"On a quarterly basis, the Presidential Budget Performance Team will ensure a more dynamic, result-oriented and performance-based budgeting process. Each MDA will become more accountable for the deliverables in terms of outputs and outcomes."
Both Governors Ikedi Ohakim (Imo) and Namadi Sambo (Kaduna) who met with Yar'Adua after the presentation also reacted to the budget.
Ohakim insited that "I am part of this one and I am telling you that this budget will be implemented. I know the spirit and the work behind the budget and as I stand here I am proud to be a Nigerian.
"I am happy today that Mr. President has read the best budget ever in this country. A budget that has specifics. A budget that you can hold somebody responsible if nothing is done. So we are moving in the right direction."
Sambo noted how "the budget has specifically indicated the plan to achieve food security, power, and improvement in the transportation system. Railway has been brought into focus and the need to emphasise on the maintenance of existing infrastructure.
"There is also the emphasis on the need to distribute gas. For us to achieve any meaningful stride in the power sector there is the need to have the major ingredient for power generation, which is gas, and this has been put in the budget.
"The Niger Delta has been given prominence. I must congratulate (Yar'Adua) and urge all Nigerians to put all hands on deck to ensure that we achieve the objective of the 2009 budget."
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