Emmanuel Aziken and Tordue Salem
4 December 2008
PERSONNEL of two key arms of government - the Presidency (part of the executive) and the legislature, comprising National Assembly members - will earn a total N47.8 billion as emoluments next year, Vanguard investigations have revealed.
This amount represents 2.9 per cent of the N1.649 trillion budgeted for recurrent expenditure in the 2009 budget proposal which President Umaru Yar'Adua presented to the National Assembly on Tuesday.
The executive and legislators are already on the war path over government's intention to float a $500 million bond in the international capital market to finance the deficit in the 2009 budget.
The 360 members of the House of Representatives are to receive N26, 676,225,627, while their Senate counterparts will get N15,321,393,017 in the first quarter of next year, totalling N41,997,618,634.
The proposal for the Legislators' salaries and allowances is contained in the breakdown for the Legislature in the 2009 budget presented to the Joint Session by President Yar'Adua.
The N41.9 billion is part of a total of N61.6 billion for the entire National Assembly as an institution, including the National Assembly Service Commission, which is to get 715,784,947 million the National Assembly Office, N6.4 billion, while aides to the Legislators would take N4.3 billion as salaries.
The House Committee on Public Accounts is to get an allocation of N82.4 billion, while its Senate counterpart would be expending N71.4 billion.
The General Service Office of the National Assembly that caters to miscellaneous is to get N8.09 billion allocation in the 2009 budget.
The Presidency is to be allocated N5.3 billion to be expended in 2009.
Despite a drastic drop in crude oil output, and a deficit of N1.09 trillion in the 2009 budget estimates, the amount billed to be shared by the two arms of government shows over 10% increase from 2008 budget.
According to the Presidency, "the 2009 Budget preparation has been based on the outcomes of the 2009-2011 Medium-Term Sector Strategies which held in July 2008 with the active involvement of the Organised Private Sector and Civil Society, and in consultation with the relevant Committees of the National Assembly.
"The 2009 Budget preparation also drew upon the Medium-Term Fiscal Framework which was conveyed to the National Assembly in October. However, this framework has since been reviewed in light of recent economic developments. We have sought to be more efficient in the use of public resources by eliminating or rationalising areas of waste and focussing on the critical sectors that would propel the growth of our economy and help us realise the objectives of the Seven-Point Agenda."
Yar'Adua, Senator disagree over $500 million bond
Meanwhile, the President has written the Senate seeking its approval for government to float a $500 million bond in the international capital market to finance the deficit in the 2009 budget.
The request which was conveyed through a letter directed to the President of the Senate, Chief David Mark, was read on the floor of the Senate yesterday.
The request, however, faced immediate opposition with Senator Iyiola Omisore, chairman of the Senate Committee on Appropriation moving against the request. Omisore in a memo to the Minister of Finance circulated to Senators described the request as bogus, warning that it was a move capable of taking Nigeria back into the debt trap. Besides, Omisore criticised the market rate interest proposed for the bond issue as he said it was against the trend to seek loans on concessionary interest rates.
Yar'Adua's letter
Yar'Adua in his letter for legislative approval for the bond issue to be denominated in naira, had given the following advantages for the bond issue.
He said: "An ICM outing would be a means of raising substantial capital needed to finance infrastructure, and create, in line with the Seven-Point Agenda and NEEDS II, the right environment for private sector led growth;
"A sovereign bond issuance will serve as a benchmark for subsequent issues by the Federal Government, Sub-national Governments and, more importantly, the private sector;
"It will complement significantly, efforts being made to project Nigeria internationally as one of the strong emerging economies in the world;
"The bond will create more awareness about Nigeria in the international investor community particularly fund managers. This will provide a strong investor base for capital issues coming out of Nigeria whether it be from the public or private sector;
"The experience gained from a global issue, will serve to improve skill sets in local parties that will be involved in the packaging of the issue, and, give closer insight to how the international capital markets operate. Such skills and knowledge would be brought to bear on future issues and possibly, serve to raise the standards in our local capital markets; and
"The International Fund Managers and self-managed financiers (individuals and corporate) who wish to either take equity or provide credit facilities to parties interested in the PPPs, will need the benchmark to facilitate their decision and participation."
Besides, he noted recent successes by some African countries in raising bonds from the international market.
Omisore disagrees with President
However, Omisore in a letter to the Minister of Finance dated December 2, 2008 with reference number NASS/S/COA/08/v.2/135 had dismissed the arguments for the bond issue.
He said: "The ultimate goal for the implementation of any public sector programme or project is to enhance the welfare of the citizenry. The response by FMF therefore focused on the means, rather than the ultimate end of any capital flow. Such sweeping statements have led the nation into unbridled procurement of externally-sourced loans, only to regret thereafter.
"A major benefit allegedly derivable from loan is that it will provide a benchmark for private sector borrowing. In my view, the Federal Government of Nigeria (FGN) needs to prove this assertion beyond any doubt.
We should note that FGN did not specify the beneficiary projects. The important information must be provided. It is also obvious that the loan would be sourced at market rates, which should be higher than that concessionary loan normally preferred for the financing of public sector projects. The net benefit of this market-based loan must be convincingly articulated.
"FGN needs to demonstrate concisely the extent to which the procurement of the loan would reduce the cost of borrowing by Nigerian-based private sector operators from the ICM.
"Both officials and market sources of fund base their decision mainly on the Country Risk Assessment (CRA) reports. I am yet to decipher how procurement of the sovereign loan as proposed will reduce Nigeria's overall CRA. FGN needs to clarify this relationship.
"As noted earlier, the nation has never prudently utilized external loans for the public sector, since the loan procured in 1957 for the construction of the national rail network. FMF should therefore, demonstrate the fundamental institutional improvements towards achieving the stated benefits of this and other forms of external borrowing.
"Research evidence has adjudged the debt sustainability criteria being employed by FMF/DMO as misleading and taking any theoretical underpinning. It is also geared towards a nation's perpetual dependence on loans rather than real development.
Recourse to borrowing for development financing should be a stop-gap measure, and not a perpetual life support facility. For example, the indicated sustainability criteria continued to claim that Nigeria's debt profile was sustainable up to the mid-1990s.
However, others based on the incremental capital output ratio (ICOR), had shown that Nigeria's debt profile had become unmentionable as far back as 1980. Our lessons of experience have confirmed that analyses based on ICOR were a better reflection of the reality.
"The National Economic Empowerment and Development Strategy (NEEDS) places much emphasis on public private partnership (PPP) as a major source of development financing. The continued emphasis on (especially) external borrowing by the public sector negates this orientation, and calls to question our real commitment towards evolving a private sector-led market-oriented national economy.
"The feedback was silent on the willingness or otherwise of the FGN to conform with constitutional requirement of securing legislative approval before the implementation of the decision of Federal Executive Council, even if the proposal has merit."
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