FG Moves to Douse Budget Tension with N’Assembly

The row over 2011 budget between the Federal Government and National Assembly may be nipped in the bud following moves by key parastatals to submit their proposals to the federal legislature.

Senate President David Mark had warned on Wednesday that the budget would not be approved until government’s budgetary proposals for federal parastatals, departments and agencies are forwarded to the National Assembly.

Mark observed that the parastatals were in the habit of generating funds and expending them without recourse to the National Assembly for necessary approval.

House of Representatives Speaker Dimeji Bankole had last week also demanded that the details of the budgets of some 31 Federal Government agencies including the Central Bank of Nigeria (CBN) an  the Nigerian Ports Authority (NPA), among others, must be sent to the National Assembly before the lawmakers would commence any legislative work on the 2011 budget. 
Yesterday, Minister of Finance, Mr. Olusegun Aganga, said the agencies would be asked to submit their proposals, while confirming that the CBN had already prepared its own and would be submitting it “soon”.

He did not give reasons why the proposals were delayed but assured Nigerians that the condition would be met.  
Aganga also disclosed that the Federal Government had signed a memorandum of understanding (MoU) with the China EximBank to finance two critical infrastructure – Abuja-Kaduna rail and National Security Communi-cation projects – at a cost of the $900 million.

Aganga, who unfolded these at a ministering briefing on the 2011 Budget proposals in Abuja, also declared that as part of overall measures to bolster economic  growth and enthrone a continuous policy of living with available means, the Federal Government had halved the deficit recorded in the 2010 Budget from 6.6 per cent of the gross domestic product (GDP) to 3.3 per cent in the 2011 budget proposals.

Giving an insight into the loan, the minister disclosed that the MoU, which he signed for the Federal Government during his visit to China last week would enable CCECC, the contractors from China to construct the rail and build an industrial park in Idu, a training centre for rail operations and management at no additional cost to the government.

The rail project is to gulp $500 million and is targeted to create over 4000 jobs while that of National Security Comm-unication is to cost $400 million.

The minister disclosed that the concessionary loan with a 2.5 per cent interest rate would be administered by his ministry and has a moratorium of between 7 and 10 years.

He said the 2011 Budget is aimed at fiscal consolidation to reduce deficit and subsequent domestic  debt accumulation.
“Over the last several months, I have continually highlighted the need to restructure our spending so that it does not result in the crowding out of the critical capital investments needed to achieve our developmental goals. We  require a continuous policy effort as a nation to live with our means; therefore fiscal consolidation  is aimed at reducing budget deficit and subsequent domestic debt accumulation,” he said.

Aganga therefore posited that the 2011 budget proposals reflect the following:
*Aggregate expenditure has been reduced  by 18.1 per cent from N5.1597 trillion in 2010 to N4.226 trillion in 2011;
* Despite absorbing the full impact of the increase in salaries by 53 per cent in July 2010, government has reduced non-debt recurrent expenditure by 7.02 per cent to N2.4817 trillion;

* The non-debt recurrent expenditure includes overheads, which have been cut from N536 billion to N381 billion, a reduction of 29  per cent. The cuts affect both the Executive and Legislature.

The minister observed that capital expenditure at N1.006 trillion represents a 43 per cent cut when compared to the 2010 appropriation, adding: “But even at N1.006 trillion, it is higher than the highest amount we have ever implemented in a 12-month or 15-month implementation.

“In fact, the N919.5 billion utilised by our MDAs in the 15 months comprising the 2009 fiscal year represents the largest amount of capital expenditure expended by our  MDAs in any fiscal year.

Also, when considered in the light of the new government policy to privatise power generation and distribution and to actively pursue PP arrangements for other infrastructure projects, our proposal is practical and realistic.
“We have also reduced the level of domestic debt (borrowing) by 38 per cent approximately to N865 billion.”

Aganga noted that the principles of performance-based budgeting has been introduced in the 2011 budget, adding that this would ensure  a shift from simple resource commitments to the MDAs towards actual execution, delivery and performance.
He disclosed that ensuring fiscal consolidation implies stronger fiscal discipline, adding that “we aim to achieve this through the establishment of the Nigerian Sovereign Wealth Fund (SWF).
The SWF, he said, has three main goals. These  include:

*To build a savings base future generations of Nigerian citizens using a part of todays’ oil and gas revenue.
*To enhance the development of critical infrastructure (roads, railways, airports, etc).
*To provide stable last resort source of financing for commodity price induced budget deficits based on very clear prudential guidelines.

He noted that $1 billion seed capital had been set aside for the fund even as he disclosed that the SWF had received the approval of the Federal Executive Council (FEC) and the National Economic Council  (NEC) and a bill for its establishment  currently before the National Assembly.

On capital projects, including roads construction, the minister said a watchdog akin to the Nigeria Extractive Industry Transparency Initiative (NEITI) was under way to monitor and ensure that projects were executed according to projections.

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Posted by admin on Dec 24 2010. Filed under Headlines, Legislature. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry