An authority in world finance, who is the regional head of Africa Global Research, Standard Chartered Bank, London, Razia Khan, yesterday took a swipe at the 2013 budget, saying it is unrealistic.
Khan also advises the executive committee on matters relating to Africa, and provides in-depth analysis of African economies to the bank's clients.
She spoke in an exclusive interview with LEADERSHIP yesterday where she raised fears over the federal government's ability to implement the proposed N4.929 budget for year 2013, given the developments in the oil sector.
Khan, while commenting on the proposed budget, said the rise in spending was not unexpected.
She however said that a $75/pbl benchmark oil price together with a hugely ambitious output assumption of 2.5 million barrels per day (bpd) was worrying.
"It's much more the output assumption that may prove unrealistic - sure, Nigeria can get there when it is producing at an all-time high," said Khan.
She however explained that, in more normal times, actual oil output is likely to lag behind this.
But she expressed faith in the share of capital expenditure in total spending, saying the increase is pretty significant. That is, from 28.5 per cent of total budget to 31.34 per cent.
"Of course, given recent politics, implementation of the capital expenditure budget will remain in focus - but, in all, this is pretty good news," she said.
Her only concern is the oil output assumption, which could easily be undershot, necessitating more borrowing.
The federal government hinted yesterday it would spend the sum of N4.929 trillion under the 2013 budget, just as it projected a total revenue of N3.89 trillion.
In a bid to avoid a recurrence of executive/legislative row over budget implementation, it said it was making frantic effort, to ensure that the 2013 budget proposal gets to the National Assembly by September this year.
Coordinating minister for the economy and minister of finance Dr. Ngozi Okonjo-Iweala, who gave this hint, also disclosed that government has chosen $75 per barrel benchmark for the 2013 budget as against $72 in 2012, with a projection of 2.48 million barrels per day production for next year, instead of the 2.3 million barrels per day in the 2012 budget.
She stated this while briefing State House correspondents alongside information minister Mr. Labaran Maku.
According to Okonjo Iweala, FEC presided over by President Goodluck Jonathan approved the 2013 Fiscal Policy Framework to be ready for onward transmission of the 2013 budget to the National Assembly next month.
Noting that the federal government was also doubling efforts to expedite action on the implementation level of the 2012 budget, she said the implementation level "as at June 20, following four months of implementation starting from April, was 41.3 per cent".
To achieve the 2013 budget framework, she said, the resources of the country would be managed prudently and transparently while ensuring priority was given to the key growth sectors of the economy and national security.
"Fundamentally, the focus of the federal government's proposal on Budget 2013 as reflected in the Medium Term Expenditure Framework and Fiscal Strategy Paper is that the budget should make practical impact on the areas that matter most to the Nigerian people - job creation, power supply, roads, rail, other infrastructure and, of course, agriculture," she said, adding that there would be a continuation of the downward trend in recurrent expenditure and upward trend in capital expenditure.
Okonjo-Iweala noted that, under the proposal of the Fiscal Strategy Paper, recurrent expenditure will decline from 71.47 per cent in 2012 to 68.66 per cent in 2013 and continue to decline in the medium term.
She said, within the same period, capital expenditure was expected to rise from 28.53 per cent in 2012 to 31.34 per cent in 2013 and would continue in like manner in the medium term.
Accordingly, she said, government has put in place for the first time "a strong strategy for managing domestic debt," noting that the first part of the strategy was to ensure a decline in fiscal deficit and domestic borrowing from 2.85 per cent and N744.4 billion in 2012 to 2.17 per cent and N727.19 billion in 2013 respectively with further decline up to 2015.
She hinted of the creation of a "sinking fund" of N25billion yearly to accumulate money for paying off bonds, saying "broadly, the focus will be on improving aggregate revenue receipts, optimizing expenditure and keeping the fiscal deficit at reasonable level".
"The proposal for the 2013 budget is based on a rigorous review of the performance of the global economy with regard to negative economic developments around the world which have the potential to negatively impact the country's economy. Based on a foundation of prudence, the proposals represent a robust response to these developments anchored on a strong macro-economic framework," she added.
Wale Abe, chief executive officer of the Financial Market Dealers Association (FMDA) of Nigeria, said a lot of things might still come into play before the year end. He however said that nothing was impossible if things do not change, but warned that any drastic change before the year runs out could alter a lot of things.
On the benchmarked oil price, Abe said it makes some sense. According to him, oil prices are around $95.6 per barrel currently and $75 per barrel benchmark makes sense.
His concern, however, is the benchmarked production which government puts at 2.5 million bpd. According to him, that will be a function of what happens in the Niger Delta creeks, plus how the issue of federalism is resolved.
Also, FEC yesterday approved the award of contract for the Transaction Advisory Service for the improvement of Apakun-Murtala Muhammed Airport road under public-private partnership scheme as well as that of Transactional Advisory Services for design, build, finance and operate on the second Niger Bridge.
Works minister Onolememen, who gave this hint, also disclosed that FEC has also approved the extension of the dualisation of the Kano-Maiduguri road section II from Dutse-Kwanar Huguma, a distance of 24 kilometres.
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