What To Expect From 2012 Budget
|Finance Minister, dr. Ngozi Okonjo-Iweala|
As the Federal Government perfects the 2012 budget for presentation to the National Assembly, the Minister of Finance, Dr. Ngozi Okonjo-Iweala, has given insights into the proposals, which she said would transform the nation.
According to her, “it won’t be business as usual for revenue generating agencies like Nigeria Customs Service (NCS) and the Federal Inland Revenue Service (FIRS) as they will no longer be permitted to ‘recklessly’ spend more on their operations.
“Henceforth, they must remit at least 25 per cent of the gross revenue they generate while their expenditures would be captured in the rest. This is a clear departure from the past when revenue generating agencies quote ridiculous amounts as money spent in generating revenue, leaving government with a trifling sum.”
Okonjo-Iweala spoke as indication emerged yesterday that President Goodluck Jonathan will on Tuesday next week address a joint session of the National Assembly for the purpose of presenting the 2012 Appropriation Bill to the parliament.
Consequently, the House of Representatives, through a motion moved by the Majority Leader, Mulikat Akande-Adeola and adopted by members through a voice vote, yesterday suspended its relevant rules ahead of Tuesday next week to enable the chamber admit its Senate counterpart for the purpose of the joint session to be addressed by the President.
Meanwhile, the Senate has approved a total sum of N31.86 billion supplementary appropriation on the virement proposals by President Jonathan, as it witnessed a rowdy session over presidential nominees.
Speaking at the third economic policy and fiscal strategy seminar organised in Abuja by the Centre for the Study of the Economies of Africa yesterday, Mrs. Okonjo-Iweala said the 2012 budget would raise capital spending to 33 per cent and reduce recurrent expenditure.
The budget, she stressed, would still give room for borrowing on a lesser scale, with emphasis to be placed on domestic borrowing than foreign loans, adding that the new borrowing pattern would keep reducing on yearly basis, starting with the 2012 budget. To achieve its target on recurrent expenditure, the minister said the budget would focus on a smaller number of ministries, departments and agencies, as many of the existing ones would be pruned, with many merged with others with similar responsibilities.
According to Okonjo-Iweala, priority would be given to investment in the areas of security, infrastructure (power, roads, rail and aviation), agriculture, housing and construction - which she described as the next big push after agriculture - oil and gas, solid minerals, creative industries, education and skills, information and communication technology and health. The minister said greater emphasis would be placed on completion of outstanding projects before new ones were embarked upon.
Okonjo-Iweala, who was in her full element as she reeled out figures from the budget, gave the key targets to include pegging of budget at $70 per barrel, ensuring that fiscal deficit is financeable and kept below three per cent of GDP, reducing recurrent expenditure from 74.4 per cent of total expenditure to below 70 per cent by 2015, increasing capital expenditure by 1.5 per cent per year (at least five per cent by 2015), steady domestic debt at 16.4 per cent of GDP, reformation of fertilizer, petroleum, and other inefficient subsidies, completion of existing stockpiles of ongoing projects, and that state governments introduce greater fiscal prudence and rationality in expenditure.
The minister disclosed that the 2012 budget would wield the big stick against corporate entities, which default with tax payment, as government would look to the non-oil sector to finance parts of the budget. “We are going after people who don’t pay their taxes, especially the corporate bodies. We are also going for agencies that don’t remit their internally generated revenues. We need to increase our non-oil revenues to boost the budget performance. We like to say we are the giant of Africa. We are, no doubt, but we are going the wrong way. We need to grow our economy with the non-oil sector,” she said.
On the Customs and Ports reforms, she fingered certain elements whom she said were trying to frustrate government’s efforts at the port, assuring government was putting its feet down in handling reform in the maritime sector.
On the controversial fuel subsidy removal plan, the minister called for understanding of Nigerians, stressing that the move was necessary to get fund for critical infrastructure. She assured that the monitoring and evaluation of the spending of the funds to be saved from the subsidy removal would be transparent, as it would be managed by eminent Nigerians. She spoke of several safety nets to be used to alleviate the hardship that will follow fuel subsidy removal.
Her words: “An analysis of the nation’s economic growth between 1971 to 2010, matching percentage in total expenditure to change in oil revenue, shows extreme volatility. There was however a remarkable difference between 2003 to 2007 showing marked stability when, with the help of external agencies, created a mechanism to de-link the price of oil at which we budget from the prevailing price from which we build the excess crude account and managed volatility in the country.
“We had no mechanism for managing volatility in this country. Look at GDP growth also showing signs of volatility. I don’t think there is any country that can grow and develop with these levels of volatility. You just need to find a way to manage it. It’s because we’ve allowed ourselves to be expressively vulnerable to external events and development. Nigerians have to pay attention.”
The Director-General of the Budget Office, Dr. Bright Okogu who also spoke at the same event, lamented the amount spent on servicing the nation’s wage bill, putting the estimated cost of paying workers for the 2012 fiscal year at N1.7 trillion. Citing the cost cutting measures at the National Assembly, he stressed that overhead cost of the Federal Government had come down significantly because of the whistle blowing effort of the Central Bank of Nigeria (CBN) governor.
He called for cooperation from the National Assembly on the parameters on which the 2012 budget is set, stressing that that way, the nation would move on a clear and sustainable direction of growth.
At the National Assembly later yesterday, Okonjo-Iweala sought the support of the lawmakers to the strategies being adopted by the government to achieve its economic transformation agenda. The minister during a meeting with the House of Representatives’ Committee on Finance, declared that the thrust of the administration’s economic agenda was the drive for reduction in the country’s recurrent expenditure, an issue which she noted would assist in reducing the deficit in yearly budgets.
According to her, President Jonathan’s administration is more committed to the policy of restricting budget deficit to three per cent of GDP. “Our expenditure pattern has been very volatile and unsteady. This is not healthy at all. We want to cut recurrent expenditure and restrict it to below 70 per cent of annual budget. That is the reason we have equally been waging war against ghost workers and ghost pensioners syndrome,” she said.
The minister informed the lawmakers that another key economic reform strategy of the administration was the drive towards reducing the nation’s debt burden. “We are watching our domestic borrowing. Although we cannot stop taking loan because we need it to survive, we will try as much as possible to reduce it, particularly local debts. Our local debt before was N852 billion. But we have been able to bring it down to N794 billion. We will keep it down as time goes on until we reach N500 billion. An important point here is that we must pay our debts and we will make every effort to pay,” she said.
The Finance Minister hinted that government was in serious drive to increase its revenue most especially in the non-oil sector, pointing out that the administration had put machineries in place to block all leakages in the economy. Responding to lawmakers’ concerns about the alleged refusal of some revenue generating agencies to remit funds to the treasury, the minister assured that more pressure was being put on those agencies to comply with all rules of remittances to boost the nation’s revenue.
The Senate Committee on Appropriation, after examining President Jonathan’s virement proposal, and in concurrence with the House of Representatives, which approved the virement during the week, gave its approval. The panel however called for an extension of capital budget implementation of 2011 Appropriation Act to March 2012 to allow for effective implementation of capital components.
The Chairman of the committee, Ahmed Mohammed Macccido, explained that the National Assembly did not approve virement for recurrent expenditure because the request contravened a clause in the extant Appropriation Act.
On the nomination of chairman and members of the National Human Rights Commission, the Senate resolved to request President Jonathan that, in making any or further nomination(s) to the Board of the Commission, should have regard to the provisions of Section 14 (3) of the Constitution of the Federal Republic of Nigeria 1999 (as amended).
The Committee on Judiciary, Human Rights and Legal Matters, after scrutinising the Curriculum Vitae and other accompanying documents of nominees, approved the nominations of Dr. Chidi Anslem Odinkalu as Chairman and Prof. Ben Angwe as the Executive Secretary. Other approved nominees include Mr. Kayode Komolafe, Mr. Dave Obidi C. Ezeigwe, Ranti Bosede Dauda, Saadatu Mahdi and Olufunmilayo Falana as members. There were also nominations representing the Nigeria Labour Congress and Ministries of Justice, Foreign Affairs and Interior.
However, two nominees, Mr. Osim Jones Osim and Mrs. Cynthia Ene Olofu Ogbe, were rejected. According to the committee, Osim, who hails from Abia State, was rejected for lack of exposure and experience in human rights issues.
“In response to questions put to the nominee by the Committee and going by the provision of the National Human Rights Act and the Paris Principles, which sets international standards for the composition of membership of national human rights institutions, it was established that the nominee failed to display sufficient knowledge of the nature of responsibilities and functions of the commission.
Ogbe, the Senate noted, failed to demonstrate knowledge and sufficient experience in human rights issues and therefore, was not capable to represent women on the Board of the Commission. Three other nominees, including the Nigerian Television Authority (NTA) broadcaster, Mrs. Eugenia Abu, Sully Abu as well as Olawale Fapohunda did not turn up for the screening.