At last, President Goodluck Jonathan will this morning present his N4.9trn 2013 budget address to a joint session of the National Assembly, after cutting a deal with the House of Representatives to avoid embarrassment on the floor of the house.
Jonathan, in a letter of request which was read on the Senate floor by the Senate president, David Mark, requested 10am slot for him to deliver his address.
The letter put paid to fears that the address may not be presented because of the refusal of the House of Representatives to entertain it on the grounds that the 2012 budget was unimplemented. It was speculated that the president may decide to rather forward the budget proposals through his adviser on National Assembly matters as was the case during the regime of President Ummaru Musa Yar'Adua. Jonathan was to predent the budget address on October 4, but it was put off when the reps adjourned, apparently to evade the joint session for the budget presentation.
However, LEADERSHIP learnt that the members of the House have soft-pedalled after entreaties and are ready to welcome the president to the chambers. The House members, it was learnt last night, caved in to the strident appeals made by President Jonathan, urging them to see reasons and sheathe their sword.
"The president met with the leadership of the House and also sent several surrogates to intercede on his behalf. Before then, the House members, I can tell you, were poised for a major showdown that could have embarrassed the president before all Nigerians. Do not forget that the budget address will be beamed live to the Nigerian public," said a source in the House.
The source further confirmed that the president was enthralled by the possible showdown that could culminate in open booing and condemnation of his budget performance, which is at the centre of the disagreement, hence he launched several appeals. The president was said to have reached out during the independence anniversary celebration and the occasion of the birthday celebration of the mother of the deputy speaker, Emeka Ihedioha, in Mbaise, Imo State, penultimate week. "That thawed the ice. Indeed it was a strategic move nobody could resist. The president unleashed his chief of staff and others on the reps at the occasion. That was where the deal was struck. "
However, the House of Representatives is insisting on an $80 per barrel of crude oil benchmark for the 2013 budget in opposition to $75 per barrel proposed by the finance ministry and the Central Bank of Nigeria (CBN). This may again elicit further disagreement between both parties, though the Senate may not concur.
The executive had ecommended in its Medium Term Economic Framework (MTEFF) paper that the 2012 projection of $75 per barrel be maintained through 2013, citing in part economic crisis in the Eurozone.
The lower house joint committee on Finance; Legislative Budget and Research; National Planning and Economic Development; Aid, Loans and Debt Management which was detailed to scrutinize the MTEFF paper, in its report submitted and subsequently adopted on Wednesday, also warned against external borrowings in 2013 as the they were not captured in the MTEFF paper.
The lower chamber lawmakers also advised the executive to cut domestic borrowing by 66 percent, saying it will allow the private sector to access credit. The finance ministry had projected domestic borrowing of N727.19 billion for 2013. The lower house said the figure should be cut to N243.33 billion.
"Any additional foreign borrowing during the period must be approved by the National Assembly or it will be at the lender's risk," the report stated.
The report also recommended that government increase its oil exploration drive vis a viz increasing crude production. It approved crude oil production targets of 2.526 million, 2.610 million and 2.648 million barrels per day for 2013, 2014 and 2015 respectively.
To achieve the increased revenue, the report recommended curbing pipeline vandalism and eliminating crude oil theft.
For non-oil revenue, the report recommended increasing revenue generation by the Nigeria Customs Service and the Federal Inland Revenue Service.
Bismarck Rewane, CEO of Financial Derivatives Company (FDC) Limited, who spoke to LEADERSHIP, believes that a lower oil benchmark would enable more savings and provide a framework for fiscal discipline and consolidation, knowing full well that budget deficit must not exceed 3 percent of GDP or N1.3 trillion.
He argued that savings would improve sovereign credit rating of Nigeria, reducing borrowing cost of government, banks and companies in the euro bond market, improved outlook as well as serve as an incentive for inward investment flows.
Rewane warned of key concerns. These, he said, include a possible fall in oil prices, disruption in production or a double whammy which would be a drop in production and price below estimates.
If any of these happens, it would negatively impact revenue and increase fiscal deficit beyond three per cent of gross domestic product (GDP). That is because increased external borrowing may be inevitable, mainly to meet the infrastructure requirements and balance of payments support.