12 February 2013

Nigeria: Hope Dims On Jonathan's Assent to 2013 Budget

The stalemate between the Nigerian executive and legislature over the 2013 budget deepens

Expectations that President Goodluck Jonathan will sign the 2013 budget as approved by lawmakers before last Christmas may not materialize after all.

The Minister of Finance and Coordinating Minister for the Economy, Ngozi Okonjo-Iweala, described speculations of the President signing the budget this week as premature.

"Whereas discussions between the Executive and the National Assembly are ongoing in a cordial atmosphere, it is not yet clear when they will be concluded, as much work remains to be done," the Minister said through her Special Adviser on Media, Paul Nwabuikwu.

"Against this background, reports stating that the President will sign the budget this week are therefore not realistic," she added.

Lawmakers had recorded a commendable achievement in Nigeria's history of legislative processes since 1999 when they approved the appropriation bill on the eve of a new fiscal calendar, weeks before the expiration of 2012.

President Jonathan had addressed a joint session of the National Assembly on October 10, 2012 where he presented the initial proposal of N4.25 trillion in the "Budget of Consolidation and Inclusive Growth."

Though the approval by the lawmakers on October 20 adopted the proposed crude oil production capacity of 2.53 million barrels per day and an exchange rate of N160 to the dollar, they raised the benchmark oil price from $75 per barrel to $79, with an additional N63 billion to the budget.

Other key assumptions and parameters in the 2013 appropriation accepted by the lawmakers included gross domestic products growth rate of 6.5 per cent, and inflation rate of 9.5 per cent.

The executive, which had last year expressed the desire to see the 2013 budget passed before the end of the year, has rejected the decision by the National Assembly to jack up the final appropriation figure to about N4.924 trillion.

An ensuing stalemate has seen President Jonathan stick to his guns not to append his signature to the budget till the lawmakers rescind their actions on the oil benchmark; zero allocation to the Securities and Exchange Commission, SEC; and removal of additional items not included in the original proposal.

There were indications that the leadership of the ruling Peoples Democratic Party, PDP, was determined to wade in and resolve the stalemate, as the issue is already degenerating into a national crisis. It is, however, not clear which of the two groups would agree to yield their positions.

Both the Governor of the Central Bank of Nigeria, CBN, Lamido Sanusi, and Ms. Okonjo-Iweala believe the lawmakers did not have the people's interest at heart when taking their decision to raise the benchmark price above.

For Mr. Sanusi, oil benchmark price above $75 per barrel would render the budget unrealistic in the face of the instability of crude oil prices at the international oil market and the continued dwindling capacity of the Nigerian National Petroleum Corporation, NNPC to meet its production projections.

Ms. Okonjo-Iweala believes indiscriminate padding of the budget would negatively impact its macroeconomic components, while a higher oil benchmark would make borrowing more expensive.

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