Daily Independent (Lagos)
3 December 2008
Nearly every one is jittery over the 2009 budget, a feeling stoked by the fall of the Naira, and the global price of oil, against the backdrop of admission by the government that it has failed to implement the 2008 budget in full.
The Naira continued on a freefall on Wednesday at the official market, the Wholesale Dutch Auction System (WDAS), losing N7 and trading at N127.5 to the Dollar, a development analysts said is connected with the 2009 Appropriation Bill whose indices are not too encouraging.
President Umaru Yar' Adua on Tuesday presented a N2.87 trillion deficit financing budget to the National Assembly, raising fears that next year will be very tough for Nigerians, especially with the projected N1.09 trillion deficit embedded in the budget.
The Naira, which had recorded relative stability over the last three years, also shed N1.11 against the Dollar at Monday trading, fuelling apprehension among major dealers and operators of a bleak next year amid a global financial meltdown.
Not even the clean bill of health from an international investment bank, Merrill Lynch, which rated Nigeria among the least vulnerable economies in the world - based on a number of economic indicators - could save the Naira as parallel market and bureau de change rates also nosedived to as low as N130 to the Dollar.
The WDAS, which holds twice a week, is moderated by the Central Bank of Nigeria (CBN) as the official market where foreign exchange (forex) end users bid for it through their banks.
The WDAS was introduced in February 2006 to bridge the gap between the official and parallel markets.
The 2009 budget is benchmarked at $45 pb, but the price slipped to $46 per barrel (pb) on the international market, and there are fears it could drop to $30 pb in the first quarter of next year.
Oil prices remained near three-year lows as the slowdown in United States and Chinese economies continues to hurt demand for crude, especially in the U.S. which serves as the major oil market for Nigeria.
However, Minister of State for Finance, Remi Babalola, told journalists that "we are also prepared to weather the storm if the price falls below the benchmark. We have in stock strategic imperative to cushion the effect and protect the economy from downward slide.
"While it is virtually impossible to forecast oil price due to many unknown supply and demand variables, our benchmark is supported by logical and pragmatic bases.
"The objective of the budget is using oil resource as a shot in the arm, converting it into physical and financial assets to develop non-exhaustible resources.
"We are investing in productive public infrastructure in transportation, power, and others. We are investing in agriculture, human capital development, and export promotion."
The government acknowledged that the 2008 budget has been implemented below average. But it passed the buck.
Finance Minister, Shamsuddeen Usman, told journalists after the Federal Executive Council (FEC) meeting in Abuja that the ministries, departments and agencies (MDAs) accessed capital funds without being able to fully use them, thus resulting in between 40 per cent and 45 per cent implementation.
"One of the first things was the delay in getting the budget approved (by the National Assembly) and the ups and downs that followed even after it was approved in April - we went for an amendment, the amendment wasn't approved until, I mean, you know the story. So that obviously contributed to the delay in getting the budget implemented," he said.
"The second issue was really the new Public Procurement Act. Some of the MDAs were not very clear about the requirement and it took quite some time for them to be properly enlightened about the new procedure.
"In the old Act everything had to be approved by the Bureau for Public Procurement (BPP) but the new (Act) has made it easier in the sense that it is the MDAs that are supposed to set up their own public procurement protocol and follow all the due process mechanism and only get that certified by the BPP."
By Mojeed Jamiu, Adeola Yusuf (Lagos), Festus Owete, Otei Oham, Chesa Chesa and Adetutu Folasade-Koyi (Abuja)
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