The secrecy surrounding the
“signing” into law of the 2013 Appropriation Act by President Goodluck Jonathan
is sparking concerns across the country.
“signing” into law of the 2013 Appropriation Act by President Goodluck Jonathan
is sparking concerns across the country.
Analysts believe that,
technically, no budget has been signed since some conditions were attached and
the document sent back to the National Assembly for alteration. That the
Federal Ministry of Finance also failed to provide a breakdown of the “signed”
budget also points to the fact that the “signing” was merely cosmetic. The
president signed the budget in secret, defying the known tradition of previous
years when it was done in full public glare, fuelling suspicion that the budget
may not have been signed.
technically, no budget has been signed since some conditions were attached and
the document sent back to the National Assembly for alteration. That the
Federal Ministry of Finance also failed to provide a breakdown of the “signed”
budget also points to the fact that the “signing” was merely cosmetic. The
president signed the budget in secret, defying the known tradition of previous
years when it was done in full public glare, fuelling suspicion that the budget
may not have been signed.
The suspicion is further fuelled
by the failure of the finance ministry to make available a breakdown of the
signed budget unlike in the past when details of the signed budget were readily
available to allow for public analysis. According to Wale Abe, chief executive
officer of the Financial Market Dealers Association of Nigeria (FMDA), signing
a public document like the budget of the country behind closed door means that
the budget has not been signed.
by the failure of the finance ministry to make available a breakdown of the
signed budget unlike in the past when details of the signed budget were readily
available to allow for public analysis. According to Wale Abe, chief executive
officer of the Financial Market Dealers Association of Nigeria (FMDA), signing
a public document like the budget of the country behind closed door means that
the budget has not been signed.
Okechukwu Unegbu, former president
of the Chartered Institute of Bankers of Nigeria (CIBN), said that, as it were,
there is no way anybody can implement such a budget.
of the Chartered Institute of Bankers of Nigeria (CIBN), said that, as it were,
there is no way anybody can implement such a budget.
Samir Gadio, a London-based
emerging markets strategist with Standard Bank, said the final shape of the
2013 Appropriation Bill will hopefully be made public in the near future.
emerging markets strategist with Standard Bank, said the final shape of the
2013 Appropriation Bill will hopefully be made public in the near future.
LEADERSHIP gathered that the
decision to keep sealed lips over the breakdown is not unconnected to the grey
areas identified in the budget approved by the National Assembly (NASS).
decision to keep sealed lips over the breakdown is not unconnected to the grey
areas identified in the budget approved by the National Assembly (NASS).
An inside source at the Ministry
of Finance told LEADERSHIP that the executive has decided not to accept the
major alterations made to the 2013 budget by the NASS. Among the areas of
disagreement between the executive and the legislature are the inclusion of
constituency projects in the budget and the provision of zero budget for the
Securities and Exchange Commission (SEC).
of Finance told LEADERSHIP that the executive has decided not to accept the
major alterations made to the 2013 budget by the NASS. Among the areas of
disagreement between the executive and the legislature are the inclusion of
constituency projects in the budget and the provision of zero budget for the
Securities and Exchange Commission (SEC).
Accordingly, it has decided not to
make the breakdown public until the differences are sorted out.
make the breakdown public until the differences are sorted out.
The president signed the budget in
the understanding that that the Act is to be further referred to the National
Assembly for amendment to accommodate some of the hitherto grey areas that the
two parties had reached consensus on.
While President Jonathan sent a budget of N4.92 trillion to the National
Assembly for approval last October, the National Assembly returned an approved
budget of N4.98 trillion, that is, N63 billion higher.
the understanding that that the Act is to be further referred to the National
Assembly for amendment to accommodate some of the hitherto grey areas that the
two parties had reached consensus on.
While President Jonathan sent a budget of N4.92 trillion to the National
Assembly for approval last October, the National Assembly returned an approved
budget of N4.98 trillion, that is, N63 billion higher.
Sketchy highlights of the signed
budget gleaned by LEADERSHIP indicated that the National Assembly had increased
statutory transfers from N380.02 billion proposed by the executive to N338.97
billion. Also the capital expenditure was jacked up from N1.54
budget gleaned by LEADERSHIP indicated that the National Assembly had increased
statutory transfers from N380.02 billion proposed by the executive to N338.97
billion. Also the capital expenditure was jacked up from N1.54
trillion to N1.62 trillion while
the recurrent expenditure was reduced from N2.412 trillion proposed by the
executive to N2.38 trillion, indicating a difference of N26 billion. Only the
provision for debt service was left untouched at N591.76 billion.
the recurrent expenditure was reduced from N2.412 trillion proposed by the
executive to N2.38 trillion, indicating a difference of N26 billion. Only the
provision for debt service was left untouched at N591.76 billion.
Gadio said, at this stage, it
appears that the National Assembly has been successful in raising the oil price
benchmark to USD79 per barrel versus USD75 per barrel in the draft put forth by
the finance ministry. This is consistent with the multi-year stance of
parliament which has typically sought to impose a more expansionary fiscal
stance than that proposed by the government.
appears that the National Assembly has been successful in raising the oil price
benchmark to USD79 per barrel versus USD75 per barrel in the draft put forth by
the finance ministry. This is consistent with the multi-year stance of
parliament which has typically sought to impose a more expansionary fiscal
stance than that proposed by the government.
“There are few countries in Africa
where parliament systematically pushes spending up, even though it is
controlled by the same party that won the presidential contest,” said Gadio.
where parliament systematically pushes spending up, even though it is
controlled by the same party that won the presidential contest,” said Gadio.
In this context, one can
understand why the MPC of the CBN recommended creating an independent body that
would set up the oil price benchmark based on tangible economic fundamentals
and oil price projections.
understand why the MPC of the CBN recommended creating an independent body that
would set up the oil price benchmark based on tangible economic fundamentals
and oil price projections.
An upward trend in the oil price
benchmark in coming years would be problematic not only because the oil price
is unlikely to increase sizeably from current levels, but also given that the
effective fiscal breakeven point has generally been much higher as illustrated
by the modest accumulation of Excess Crude Account (ECA) proceeds (only USD9.2
billion [3.5 per cent/GDP]).
benchmark in coming years would be problematic not only because the oil price
is unlikely to increase sizeably from current levels, but also given that the
effective fiscal breakeven point has generally been much higher as illustrated
by the modest accumulation of Excess Crude Account (ECA) proceeds (only USD9.2
billion [3.5 per cent/GDP]).
In solving the benchmark puzzle,
Unegbu wondered how a board which will not implement the budget of a company
force on the managing director what the budget midget must be.
Unegbu wondered how a board which will not implement the budget of a company
force on the managing director what the budget midget must be.
Abe said the only thing the
National Assembly could do is to ensure close monitoring of budget
implementation.
Gadio went further to say that the reality is that the budget of the federal
government is only a part of the fiscal puzzle in Nigeria.
National Assembly could do is to ensure close monitoring of budget
implementation.
Gadio went further to say that the reality is that the budget of the federal
government is only a part of the fiscal puzzle in Nigeria.
What really matters is the
federally consolidated fiscal position at the three-tier level (including the
budget of the federal government and states) that also factors in
above-the-line expenditure and the balance of the excess crude account. This
aggregate approach would be in line with international best practice since one
would be able to compare Nigeria’s overall revenue as a country (rather than
federal government revenue) with total public expenditure across the board.
federally consolidated fiscal position at the three-tier level (including the
budget of the federal government and states) that also factors in
above-the-line expenditure and the balance of the excess crude account. This
aggregate approach would be in line with international best practice since one
would be able to compare Nigeria’s overall revenue as a country (rather than
federal government revenue) with total public expenditure across the board.
“At this stage, only the IMF
attempts to calculate this ratio (-0.4 per cent/GDP in 2012; expected 2.8 per
cent/GDP in 2013), but the Nigerian authorities have yet to provide similar
estimates”.
attempts to calculate this ratio (-0.4 per cent/GDP in 2012; expected 2.8 per
cent/GDP in 2013), but the Nigerian authorities have yet to provide similar
estimates”.
“Even in the absence of precise
and official federally consolidated fiscal figures, we suspect Nigeria’s fiscal
position is balanced at best despite the elevated oil price as illustrated by
the marginal proceeds of the excess crude account. Indeed, the excess crude
account is, in a sense, the residual of the fiscal equation in Nigeria and a
key indicator to monitor in this regard”, said Gadio.
and official federally consolidated fiscal figures, we suspect Nigeria’s fiscal
position is balanced at best despite the elevated oil price as illustrated by
the marginal proceeds of the excess crude account. Indeed, the excess crude
account is, in a sense, the residual of the fiscal equation in Nigeria and a
key indicator to monitor in this regard”, said Gadio.
Meanwhile, the presidency has
declared that, contrary to the claims of the opposition Action Congress of
Nigeria, the nation’s economy is not in danger of collapse as all globally
recognised indices indicate that the Nigerian economy is stable and on an
upward beat.
declared that, contrary to the claims of the opposition Action Congress of
Nigeria, the nation’s economy is not in danger of collapse as all globally
recognised indices indicate that the Nigerian economy is stable and on an
upward beat.
A statement signed by the senior
special assistant to the president on public affairs, Dr Doyin Okupe, described
the claim by the ACN as lacking in substance and runs contrary to the verdicts
of reputable international rating agencies who have consistently upgraded the
country’s economic ratings in the last one and a half years.
special assistant to the president on public affairs, Dr Doyin Okupe, described
the claim by the ACN as lacking in substance and runs contrary to the verdicts
of reputable international rating agencies who have consistently upgraded the
country’s economic ratings in the last one and a half years.
According to the presidency
spokesman, contrary to the claim of the ACN that the cost of producing a barrel
of oil had “skyrocketed” to 35 dollars in 2012 from 4 dollars in 2002, the
actual cost of production stands at approximately 17 dollars per barrel. The
cost of oil production per barrel had never risen as high as the opposition
claims.
spokesman, contrary to the claim of the ACN that the cost of producing a barrel
of oil had “skyrocketed” to 35 dollars in 2012 from 4 dollars in 2002, the
actual cost of production stands at approximately 17 dollars per barrel. The
cost of oil production per barrel had never risen as high as the opposition
claims.
Even at the height of restiveness
in the Niger Delta area and its consequential effect on the upstream oil
sector, the per barrel cost of oil production in Nigeria never rose above 18
dollars. When compared with a sum of between 50 and 70 dollars per barrel spent
on production of shale oil by the United States of America, the cost of
producing oil in Nigeria, which is 17 dollars per barrel, as well as a
prevailing sale price of over 100 dollars per barrel does not support the
alarming claim of the opposition, he said.
in the Niger Delta area and its consequential effect on the upstream oil
sector, the per barrel cost of oil production in Nigeria never rose above 18
dollars. When compared with a sum of between 50 and 70 dollars per barrel spent
on production of shale oil by the United States of America, the cost of
producing oil in Nigeria, which is 17 dollars per barrel, as well as a
prevailing sale price of over 100 dollars per barrel does not support the
alarming claim of the opposition, he said.
The statement added that the
second leg upon which the ACN based its wrong assertions is similarly laden
with deceptive undertones. “For a fact, there are incidents of crude oil theft
which had existed for several decades before this administration came on board.
However, the truth is that this is currently being tackled through proactive
steps by the government.
second leg upon which the ACN based its wrong assertions is similarly laden
with deceptive undertones. “For a fact, there are incidents of crude oil theft
which had existed for several decades before this administration came on board.
However, the truth is that this is currently being tackled through proactive
steps by the government.
The opposition is most probably
aware of the fact that President Jonathan recently secured the cooperation of
the prime minister of the United Kingdom and the French president on measures
to prevent refineries in Europe from buying crude oil stolen from Nigeria.
aware of the fact that President Jonathan recently secured the cooperation of
the prime minister of the United Kingdom and the French president on measures
to prevent refineries in Europe from buying crude oil stolen from Nigeria.
“Similarly, the Jonathan
administration has provided more and better surveillance boats for the Nigerian
Navy to enhance patrol of our coastal waters. This has resulted in arrest of
several vessels engaged in oil theft and these were well reported in the
Nigerian print and electronic media.”
administration has provided more and better surveillance boats for the Nigerian
Navy to enhance patrol of our coastal waters. This has resulted in arrest of
several vessels engaged in oil theft and these were well reported in the
Nigerian print and electronic media.”
The presidency drew the attention
of the opposition political party to the Petroleum Industry Bill currently
before the National Assembly which, it said, was conceived by President
Jonathan to provide for best practice processes for acreage availability,
bidding and awards and therefore address the problems of dwindling oil and gas
exploratory opportunities and corruption, among other problems in the sector.
of the opposition political party to the Petroleum Industry Bill currently
before the National Assembly which, it said, was conceived by President
Jonathan to provide for best practice processes for acreage availability,
bidding and awards and therefore address the problems of dwindling oil and gas
exploratory opportunities and corruption, among other problems in the sector.
It added that the need to
diversify the Nigerian economy and reduce dependence on oil has also been the
driving force of the federal government’s massive investment in agriculture in
a manner unprecedented in the annals of Nigeria. “In the year 2012 alone, the
agricultural sector accounted for over 75 per cent of all non-oil export, the
highest output in 25 years.”
diversify the Nigerian economy and reduce dependence on oil has also been the
driving force of the federal government’s massive investment in agriculture in
a manner unprecedented in the annals of Nigeria. “In the year 2012 alone, the
agricultural sector accounted for over 75 per cent of all non-oil export, the
highest output in 25 years.”
While agreeing that there is
indeed a need to reduce the cost of governance at all tiers of government in
Nigeria, the statement explains that that President Jonathan has shown
practical commitment through a reduction in recurrent expenditure from 74 per
cent in 2011 to 71 per cent in 2012 and 68 per cent in the 2013 budget, adding
that the medium-term target is to reach 60 per cent recurrent expenditure.
indeed a need to reduce the cost of governance at all tiers of government in
Nigeria, the statement explains that that President Jonathan has shown
practical commitment through a reduction in recurrent expenditure from 74 per
cent in 2011 to 71 per cent in 2012 and 68 per cent in the 2013 budget, adding
that the medium-term target is to reach 60 per cent recurrent expenditure.
The statement said it is of
concern that a political party, individual or any organisation worth its salt
would choose to ignore the positive rating of the Nigerian economy by reputable
international rating agencies in the last one and a half years of the Jonathan
administration but rather conjure imaginary figures to make wild claims.
concern that a political party, individual or any organisation worth its salt
would choose to ignore the positive rating of the Nigerian economy by reputable
international rating agencies in the last one and a half years of the Jonathan
administration but rather conjure imaginary figures to make wild claims.
“One wonders if the ACN would have
ignored the ratings by Fitch, Standard & Poor’s, Moody’s and JP Morgan if
those bodies had turned in a negative verdict on the Nigerian economy. The only
conclusion one can draw from this is that the opposition has once again chosen
the myopic and jaundiced path of public policy analysis rather that base its
assessment on verifiable, objective indices. Unfortunately, a matter as
sensitive as a nation’s economy ought not to be subjected to this fashion of
blind politicking.”
ignored the ratings by Fitch, Standard & Poor’s, Moody’s and JP Morgan if
those bodies had turned in a negative verdict on the Nigerian economy. The only
conclusion one can draw from this is that the opposition has once again chosen
the myopic and jaundiced path of public policy analysis rather that base its
assessment on verifiable, objective indices. Unfortunately, a matter as
sensitive as a nation’s economy ought not to be subjected to this fashion of
blind politicking.”
While assuring Nigerians that the
federal government remains committed to implementing sound economic policies
and development of the nation’s infrastructure, the presidency urged
politicians to exhibit statesmanship in addressing issues of critical nature
rather than seeking to score cheap points in a desperate manner.
federal government remains committed to implementing sound economic policies
and development of the nation’s infrastructure, the presidency urged
politicians to exhibit statesmanship in addressing issues of critical nature
rather than seeking to score cheap points in a desperate manner.
Source: Leadership
