President Goodluck Jonathan, on Wednesday, presented a N4.9tn budget to the National Assembly for the 2013 fiscal year.
In
the estimates titled, budget of “fiscal consolidation with inclusive
growth,” Education, Defence and Police were allocated the highest share
of N1.095trn
A breakdown of the N1.095trn shows the Education sector getting N426.53bn; Defence, N348.91bn, and Police, N319.65bn.
Missing
copiously from the budget was a provision for fuel subsidy, an
indication perhaps that government may fully remove the subsidy in 2013.
The
presentation was done even as the National Assembly slammed the
Executive for the poor implementation of previous budgets, warning that
it would no longer tolerate such tardiness.
While
presenting the budget, Jonathan stuck to his original proposal of $75
per barrel of crude and rejected the $80 recommended by the House as the
“realistic” crude oil benchmark for the 2013 budget
Observers believe that the development might set off a fresh budget dispute between the National Assembly and the Executive.
The N4.92trn proposed for 2013 is five per cent more than the N4.7trn budgeted in 2012.
The
President had proposed a $75 benchmark in the 2013-2015 Medium Term
Expenditure Framework and Fiscal Strategy Paper he sent to the
legislature in September.
The 2013
budget has a deficit of N1.03trn. The House had argued that with the
extra $5, the deficit would be cut down to N666.3bn.
Jonathan
argued that his administration decided to stick to the proposed
benchmark because of the unpredictable nature of oil prices in the
international market, adding that the decision was taken “based on a
well established econometric methodology of estimating oil price moving
averages.”
The government puts daily oil production for 2013 at 2.53 million barrels as against the current 2.48m computed for 2012.
Fiscal consolidation
The
2013 proposals also has the Health sector getting N279.23bn as
allocation; Works, N183.5bn; Agriculture and Rural Development,
N81.41bn; and Power, N74.26bn.
The
funding of the power and gas sector, the President said, would be
complemented with a proposed infrastructure Euro Bond of about $1bn
(about N160bn) in order to complete the gas pipelines and other
infrastructure investments.
According
to the President, the projected GDP growth rate for 2013 is 6.5 per
cent, different from the 6.85 per cent it earlier proposed in the MTEF.
“The
revision is underpinned by the fact that the severe floods experienced
over large parts of the country are expected to impact on economic
activity in 2013, especially Agriculture. However, the growth prospects
may improve with the plan to boost dry season farming,” he said.
Out
of the aggregate expenditure of N4.92trn, Jonathan said that N2.41trn
was earmarked for recurrent expenditure and N1.5trn for capital
projects. The sum of N380.02bn was also allocated to Statutory Transfers
and N591.76bn for Debt Service.
Jonathan
added that the budget proposed a reduction in recurrent expenditure
from 71.47 per cent in 2012 to 68.7 per cent. Similarly, he said that
capital expenditure would increase from 28.53 per cent in 2012 to 31.3
per cent in 2013.
He said, “Based on
the above, the fiscal deficit is projected to improve to about 2.17 per
cent of GDP in the 2013 Budget compared to 2.85 per cent in 2012.
“This
is well within the threshold stipulated in the Fiscal Responsibility
Act, 2007 and clearly highlights our commitment to fiscal prudence. We
are determined to further rein in domestic borrowing, and this way,
ensure that our debt stock remains at a sustainable level.”
The
government anticipates the gross federally collectible revenue in 2013
to be N10.84tn “of which the total revenue available for the Federal
Government’s Budget is forecast at N3.89trn, representing an increase of
about nine per cent over the estimate for 2012.”
To promote agriculture and industry, the Federal Government proposed ‘supportive fiscal measures’ for some priority areas.
The
President said from January 1, 2013, importation of machinery and spare
parts for local manufacturing of sugar would attract a zero per cent
duty while import duty and levy on raw sugar would be 10 and 50 per
cent. He also announced a five-year tax holiday for ‘sugarcane to sugar’
value chain investors.
According to
him, import duty and levy on raw sugar would be 10 per cent and 50 per
cent respectively, while refined sugar would attract 2o per cent duty
and 60 per cent levy. Rice –both brown and polished – would attract 10
per cent import duty and 100 per cent levy.
“All
commercial aircraft and aircraft spare parts imported for use in
Nigeria will now attract zero per cent duty and VAT. This will
appreciably improve safety in our skies as newer fleet and less onerous
maintenance will prevail,” he said.
Business unusual
Indications, however, emerged after the speech that the President’s proposals might have a tough time at the National Assembly.
The
first salvo came from the Chairman of the National Assembly, Senator
David Mark, who warned that budget proposals “were mere estimates and
not immutable figures.”
He said, “As
to whether the National Assembly has the power to make inputs to
Appropriation Bills laid before it, our stand is that parliament is
constitutionally empowered to make inputs. What the 1999 Constitution
enjoins Mr. President to lay before the National Assembly are mere
estimates and not immutable figures.
“And
once the estimates are so laid, their consideration becomes subject to
the constitutionally prescribed modes of exercising legislative power.
Therefore, we do not think that the constitution intended to turn the
National Assembly into a mere mechanical rubber-stamp that must
robotically pass budget estimates as presented.”
He
added that the National Assembly would deploy “its weapon of oversight”
more than ever before in order to ensure the full implementation of the
nation’s budgets.
“The need to
ensure efficient utilisation of public finance for the promotion of the
public good will be our guiding principle. We will work to ensure that
the lofty developmental goals embedded in the budget are fully
realised,” he said.
Mark noted that
in exercising its constitutional power, the National Assembly would be
mindful of the fact that the social and economic challenges currently
facing the nation were the severest in the country’s contemporary
history.
“The National Assembly is
also conscious of the fact that urgent steps need to be taken to address
dire infrastructural challenges,” he said.
Mark
also pointed out that the nation’s budgets tended to incorporate every
conceivable project, including those that the local governments were
better positioned to execute.
“I
advise that we depart from this practice and target projects that are
realistically attainable with defined mechanisms for implementation and
easy monitoring,” he said.
On his
part, the Speaker of the House of Representatives, Aminu Tambuwal, told
Jonathan that the committees of the House, which just returned from an
assessment tour of the 2012 budget projects, passed a “clearly
unimpressive” verdict.
Tambuwal
reminded the President that legislators had no “other motives” when they
demanded budget implementation other than to ask for the dividends of
democracy to be delivered to the people through the execution of
projects.
The speaker called for a
change in poor implementation in 2013 to avoid Executive-Legislative
disputes. He also opposed the rising debt profile of the country,
especially domestic borrowing, which he noted had crowded out private
investors in the economy.
Tambuwal
said, “It is important to state at this point the clear provisions of
Section 8 of the Appropriation Act to the effect that approved budgeted
funds shall be released to MDAs (Ministries, Departments and Agencies)
as at when due. This is sadly observed more in breach.
“The
Composition of the Public Procurement Council provided under the Public
Procurement Act is very critical to budget implementation. The sanctity
of extant legislations and respect for the rule of law are critical
hallmarks of true democracy. We, therefore, once more call on Mr.
President to expeditiously constitute this council so as to free the
Federal Executive Council from the burden of contract administration, so
they can concentrate on the more sublime issues of their constitutional
roles and responsibilities.
“It
will be recalled that the 2012 budget contained a deficit and the main
source of funding this deficit was domestic borrowing. Figures emanating
from the Debt Management Office regarding domestic borrowing are
however worrisome. At a whopping $33.6bn, government appears to be
monopolising domestic borrowing to the unhealthy exclusion of the
private sector. This is certainly a matter of grave concern because
global statistics on sustainable debt-GDP ratio percentages cannot
continue to be used as guide for an economy that is not keeping pace
with global trends.
“In our effort
to address this concern, only yesterday(Tuesday), in passing the
2013-2015 Medium Term Expenditure Framework, which is the basis for
annual budgets, the House resolved to raise the oil price benchmark from
$75 per barrel to $80 per barrel with the objective that the
difference of $5 per barrel be channeled exclusively towards reducing
the deficit in the budget and consequently reducing domestic borrowing
for same purpose by 66 per cent. This will make available these loanable
funds to our private sector which will stimulate the economy and job
creation for our teeming unemployed youths.”
In the article
- Topics:
- Goodluck Jonathan
