This Day (Lagos)

16 December 2011

Nigeria: Jonathan - We Can't Continue Subsidy With Borrowed Funds

President Goodluck Jonathan Thursday subtly defended his decision to leave out fuel subsidy from the 2012 budget, painting a graphic picture of how the country has been borrowing to fund capital projects when the money spent on subsidy alone would have sufficed instead.

But the House of Representatives has demanded that subsidy must be returned to the budget.

In the Senate, members were unanimous in condemning the provision of N922 billion for security in the 2012 budget - a position the House also agrees with, arguing that the vote was bloated and lopsided against some key sectors such as power, education and agriculture, even when Nigeria was not at war.

Jonathan said government borrowed the entire capital budget was N1.146 trillion this year, whereas it has paid over N1.2 trillion for fuel subsidy alone. "This year with the present budget, we are paying back the part of the money we borrowed but what is in the budget is only N560 billion, just about half of the money we borrowed. Who will pay the balance and when, with interest? There is no way we can continue to run the economy this way," he said.

He said he did not intend to take decisions that would create pains for Nigerians but insisted that he had to do it for the people to start enjoying life instead of continuing in the window-dressing that stalls growth and development. Jonathan was speaking yesterday night at the 2011 Christmas Carol Service at the at the Banquet Hall of the Presidential Villa, Abuja.

He said: "I would not have loved to mention the issue of deregulation but it is a very topical issue. Sometimes it even comes in our religious houses. I would plead with religious leaders, both Christians and Muslims, to join government to see how we can improve the economy of this country. Demand for everything is increasing. During the civil war how many cars did we have? How many roads did we have? The demand for everything has expanded over the period. So we have more challenges and we believe that with the present situation, for quite some years, government has been borrowing money to run its affairs and the amount we borrowed continues to increase. Who are we borrowing these monies for? Who will come and pay the debt? I normally ask."

Jonathan warned that unless the economy was diversified and aggressive agriculture and industrialisation pursued, the oil reserve of the country might be depleted within the next 35 to 40 years which would mean enslaving the future generations. He asked what life would be like without oil if the country that has oil still borrows to fund its operations.

"Government must look for ways to expand the economy. We must look for other ways of earning money. We must go back to farming and not just subsistence farming that we know but really taking farming as a business... we must create wealth through farming... we must industrialise... we must begin to produce things in this country and we need the subsidy to do that and especially with the number of people graduating from the universities every year. How do we create jobs for them? And I believe we cannot continue to borrow. In fact last year our capital budget was N1.146 trillion and we borrowed the whole capital budget and even a little more.

" There is no way we can continue to run the economy this way. We find it difficult to do things that appear not to be popular and I know that one of the things that worry us is the fear of the unknown. If there is subsidy, what will life be? Yes, we know there will be a little pain because we know ourselves. Nigerians sometimes exploit opportunities.

"Ordinarily the pains would have been minimal in the sense that as we are talking now diesel is deregulated since Obasanjo time and nobody is going to touch [the price of] diesel and most of the vehicles we use [for goods transportation] use diesel. Ordinarily, transport cost for any vehicle that use diesel is not supposed to change but Nigerians being what they are at the beginning will try to be funny. We must encourage use of gas and all that and use of vehicles that have fuel efficiency," Jonathan said.

He likened the beginning of new experiences to the fear of the unknown, pointing at the experience of the GSM revolution in Nigeria where, he said, "they were even hoarding the SIM cards [when operations started]. To buy a SIM card at a time you had to do funny things because people were desperate but now the companies give you SIM card with [pre-loaded] credit on it just to hook up to their line. I tell Nigerians that we are very hopeful and so nobody should fear".

He said no government would intentionally inflict pains on his people and distanced himself from such actions and decisions but asked for the support of Nigerians to get the country running well again.

"The pains will be temporary; after few weeks or few months, Nigerians will be better off. The economy will be repositioned. We must aggressively pursue agriculture, we must aggressively pursue industrialisation for jobs to be created in the economy," he explained.

But earlier yesterday, Chairman, House Committee on Media and Public Affairs, Hon. Zakary Mohammed (PDP/ Kwara), said fuel subsidy must be provided for in the budget.

"We have taken a decision that we do not want subsidy taken out of the budget so definitely subsidy has to be in the budget. The House of Representatives still stands on that fact that we are not voting for subsidy removal because there are key indicators and conditions that we have set before subsidy can be removed. One of them is that our refineries must be fixed to refine products and reduce our dependence on imported fuel," he stated.

Mohammed said Nigerians and the Nigeria Labour Congress (NLC) should not entertain any fears about the alleged secret removal of subsidy because the parliament was poised to dissect the budget document to identify the grey areas in it and amend them before its passage into law. He said though the budget was presented very late in the year, it would be wrong to write off the entire document as a disaster until its contents have been fully assessed on sector by sector basis.

"The budget has been laid before the House but we would not take it hook line and sinker. We would look at each of these sectors according to their merit and we think that defence (security) should not take as much as that (N921.91billion), almost a trillion. We believe it is on the high side.

"We can take out some funds from the defence allocation and take it to areas like power sector which has a potential of impacting positively on the rate of unemployment in the country. If our industries are moribund and some are trying to move out of Nigeria because of the power situation, they will definitely come back and a lot of our population would be employed. "For NLC to describe the entire budget document as a disaster may not be right. We might have our areas of disagreement but we have to look at it from all perspectives to really understand its content.

Even though it came late, it is incumbent on us to do our own lawful functions on that budget. We are definitely going to dissect every part of that budget and take money from where we think are overloaded to other areas where we think can be a boost to the economy. Our economy is fragile and like the case of a patient in an emergency ward that needs all the support of experts," he said. Senators yesterday also began the consideration of the bill, with many of them venting their spleen on some aspects of the budget presented to a joint session of the National Assembly on Tuesday by President Goodluck Jonathan.

In their various comments on the general principle of the 2012 Appropriation Bill yesterday, the lawmakers were unanimous in their condemnation of the N921.91 billion allocated to security, as well as the preponderance of recurrent over capital expenditure.

According to the senators, the problem of insecurity in the country is largely caused by youth unemployment, which could be a thing of the past if priority attention is given to agriculture, which could mop up the unemployment market. But the Co-ordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, had, while giving a breakdown of the budget on Wednesday, disclosed that the security vote was meant for Defence, Police Affairs and Police Formations, National Security Adviser and Ministry of Interior.

There was however a general agreement that some of the proposals in the Appropriation Bill are laudable and, if well implemented, could restore hope to the country. The attack on the security vote was led by Senator Olubunmi Adetunmbi (ACN, Ekiti North) who noted that the sectoral allocations were not reflective of what the country needed especially as it related to huge security vote.

Adetunmbi faulted the allocation to the security sector which he said was four times what is given to health. "What is going into the security is six times what we are spending for power. The prioritisation of our spending is not reflective of what is happening in our economy. If we spend more on agriculture, which can provide jobs, we won't worry about security," he said.

The lawmaker complained that the budget was silent on safety nets to cushion the effect of the transformation Nigerians expected.

He described 35 ministries and over 800 parastatals as a huge drain on the economy. Deputy Senate President Ike Ekweremadu said the budget, if well implemented, would restore hope in the nation.

Ekweremadu urged the Senate "to do something" about late presentation of the budget as well as open up the process of budgeting. He argued that the processes leading to the drawing of the budget estimates were shrouded in secrecy.

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