NIGERIANS got yesterday a glimpse into their economic well-being next year. Low income earners will get a tax cut, cassava bread will displace flour bread on the breakfast table and waivers and concessions on rice importation will be thrown out of the window.
But security will – apparently in the spirit of the times – get priority, with the government voting N921b of the N4.749tr it plans to spend next year.
The proposal is an increase of six per cent over the N4.484 trillion appropriated for 2011.
President Goodluck Jonathan unveiled the fiscal estimate at a Joint Session of the National Assembly in Abuja.
Curiously, Dr. Jonathan did not use the phrase “fuel subsidy withdrawal” as he explained his budget of “fiscal consolidation, inclusive growth and job creation”.
But in what was seen as a veiled reference to the combustible issue, which will surely see fuel prices rising, Dr Jonathan spoke about his administration’s determination to conclude work on the Petroleum Industry Bill (PIB).
He said: “With regard to the petroleum sector, the Federal Government is conscious of the need to bring the Petroleum Industry Bill debate to conclusion so as to give investors the comfort and policy certainty that they require.
“My Administration is determined to bring this matter to closure by engaging with all stakeholders and I, therefore, call on the National Assembly to work with us in this regard.”
Jonathan noted that the 2012 budget proposal came at the end of a long consultative process with key stakeholders and “translates the development plans of government unveiled in the Transformation Agenda into concrete actions”.
The aggregate expenditure in the proposal comprises N398 billion for Statutory Transfers, N560 billion for Debt Service, underscoring the real need to address the rising domestic debt profile and N2.472 trillion for Recurrent (Non-Debt) Expenditure.
Jonathan explained that the government is conscious of the need to control the cost of governance.
“Agencies with overlapping mandates” are to be streamlined “as a way to realign public expenditure”.
The President said the budget is based on a set of assumptions reflecting the government’s determination to maintain prudence in the face of continued uncertainties in the external environment.
“Accordingly, the budget is based on the following: Oil production of 2.48 million barrels per day (mbpd) up from 2.3mbpd for 2011; benchmark oil price of US$70/barrel, a cautious revision from the US$75/barrel approved in the 2011 amended budget; exchange rate of NGN155/US$; projected GDP growth rate of 7.2%; and projected inflation rate of 9.5%,” he said.
Jonathan noted that based on the above assumptions, the gross federally collectible revenue is projected at N9.406trillion, of which the total revenue available for the Federal Government’s Budget is forecast at N3.644 trillion, representing an increase of 9 per cent over the estimate for 2011.
Non-oil revenue is projected to grow significantly as recent efforts to reform revenue collecting agencies and the implementation of initiatives to further develop non-oil sectors are expected to yield results.
He said that the declining share of capital is being reversed so it will account for about 28 per cent of total expenditure in 2012 as against 26 per cent in 2011.
“We intend to continue on this path so that by 2015, it will have risen to almost 33%,” he said.
To curtail recurrent expenditure, the government has embarked upon the policy of fiscal consolidation as evident from the Medium-Term Fiscal Framework.
He explained that the share of recurrent expenditure in the proposal is 72 per cent, down from 74.4 per cent in 2011, “and we intend to continue on this downward trend up to 2015”.
The government is also pursuing the biometric verification of workers and pensioners as part of the effort to control cost.
Capital expenditure has an allocation of N1.32 trillion, representing a 15 per cent increase over the amount approved in the 2011 Budget.
The emphasis, Jonathan said, is on the completion of critical infrastructure projects.
A breakdown of allocations to some critical sectors is as follows:
Security - N921.91 billion; Power [including Bulk Trader, Nelmco, and Multi-Year Tariff Order (MYTO)] -N161.42 billion; Works - N180.8 billion; Education [excluding Universal Basic Education Commission, Petroleum Technology Development Trust Fund (PTDF) & Education Trust Fund] - N400.15 billion; Health - N282.77 billion; Agriculture and Rural Development - N78.98 billion.
Others are: Water Resources - N39 billion; Petroleum Resources – N59.66 billion; Aviation - N49.23 billion; Transport - N54.83 billion; Lands & Housing - N26.49 billion; Science & Technology - N30.84 billion; Niger Delta - N59.72 billion; Federal Capital Territory Administration (FCTA) - N45.57 billion and Communications Technology - N18.31 billion.
Fiscal deficit is projected at about 2.77 per cent of GDP as against 2.96 per cent this year.
Jonathan said the projected deficit “is within the threshold stipulated in the Fiscal Responsibility Act, 2007 and clearly highlights our commitment to fiscal prudence as a way to create more space for the private sector”.
“This will also have a salutary effect on our domestic debt profile, which has risen significantly in recent years,” Jonathan said, adding: “We are determined to rein in domestic borrowing, and through this, ensure that our debt is at a sustainable level.”
Jonathan noted that his administration is pressing forward with key structural reforms.
He said: “We are implementing the privatisation of the power sector.
“We believe that the power sector can benefit from liberalization and privatization by attracting investors in the same manner as the telecommunications sector has done.
“In the same vein, government will come up with policies to encourage investment in the downstream sector through liberalisation so as to create jobs for our people,” the President said.
He noted that as estimated in the First National Implementation Plan of the Nigeria Vision 20:2020, the country needs N32 trillion for the execution of capital projects in four years.
Of the amount, he said, the private sector is expected to contribute N13 trillion.
He said the government was implementing the Power Roadmap which aims to create a robust power sector through the privatisation of the generation and distribution of power. It will also create an enabling environment for investment.
Institutional arrangements, he noted have been made for a Bulk Trader company to intermediate between power producers and distributors in a market setting, thereby giving Independent Power Producers (IPPs) the confidence to invest in generation capacity.
Senate President David Mark, in his opening remarks, noted that Nigerians have over the years “listened to very beautiful and impressive budget speeches eloquently delivered”.
Mark noted that, unfortunately, the implementation of the budgets has not matched the words as economic policies often lack continuity and projects are needlessly discarded or abandoned.
He added: “We have what it takes to be a great nation or a world power. But we have never challenged ourselves sufficiently over the years to attain this desired goal. It is our hope and sincere belief that this budget will challenge us; and to take the challenge we must tighten our belts.
“To do so, we must ensure that all sectors and every Nigerian, irrespective of position or status, is involved. Let me remind us that in 2011 the Legislature led the way in reducing our overhead and recurrent expenditure in order to increase investment in capital expenditure and to lead by example.
“We must lay emphasis on critical infrastructure, reduce revenue leakages, grow the economy, generate employment, encourage local production and promote made-in Nigeria goods.”
He assured that the National Assembly will ensure the comprehensive implementation of the 2012 budget to the letter through oversight functions.
Mark said: “Let this budget be the one that will say let there be light, and there is light; let there be roads and there are roads; let there be water, and there is water; let there be employment and there is employment; let there be medi-are and it is so; and let there be food and there is food.”
House of Representatives Speaker Aminu Tambuwal cautioned against selective and low budget implementation.
Tambuwal, who noted that the 2012 budget came late, hoped that the 2012 budget will not only lead to the revitalization of the economy, but also reposition the country on the path of true development.
He said that it is noteworthy that the executive has made the completion of ongoing projects a critical aspect of the 2012 budget.
He said: “The sheer number of uncompleted and mostly abandoned projects and programmes in this country boggles the mind. It is the single most obvious sign of shoddy government implementation of the national budget over the years.
“Let me emphasize that selective budget implementation has no place in our constitution and the legislature shall not abdicate its responsibility in ensuring full budget implementation through the instrumentality of oversight.
“We hope that this time around, we shall break the jinx of low budget implementation. The truth is, there is no better signal that a government is alive to its responsibility than through its strict adherence to its own budget proposal.”-The Nation
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