2014 Budget: Finance Minister, Okonjo-Iweala tackles critics

Minister of Finance and the Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, yesterday tackled critics of the 2014 budget, saying that the high recurrent was compounded by the pension burden and the 53 per cent federal government salaries increases of 2010.

Okonjo-Iweala has been under fire by some critics who accuse her of being responsible for the high recurrent budget, rising debt profile and inadequate provisions for the social sectors.

But her Special Adviser, Paul Nwabuikwu said in a statement in Abuja, yesterday, “though government is continuous and the Minister has no desire to shirk her responsibilities, the effort to personalize these issues on the basis of inaccurate information must be roundly refuted.”

According to him, “the first point made by some Senators is that she is responsible for the rising recurrent expenditure, which according to them rose “from 69 per cent in the 2013 budget to 76 percent in the 2014”. This is inaccurate.” He said the decline in the budget base is one of the factors responsible for the upsurge in the recurrent budget.

His words, “total expenditure of N4.64 trillion in the proposed 2014 is about a 7% decline from the 2013 budget level of N4.98tr. From a mathematical standpoint, this reduction in the budget base will result in a slight increase in the weight of the recurrent expenditure in the budget, which in absolute terms, has increased from 2013 levels”.

On the pensions factor he said “it is also important to note that the country is yet to fully absorb pension’s implications of the 2010 wage increases. Starting in 2013 budget, this Administration commenced tackling the payment of outstanding military pensions, and Budget 2014 will further address civilian pensions. We have been under pressure from many quarters, including Senators, to integrate the civilian component of pension, and doing so will further increase the recurrent budget.

Will the Senators blame Okonjo-Iweala for this”?The data of the recent of recurrent budget indicated as follows: 2006 -70.1 % , 2007-64%, 2008-71.4 %, 2009-67%, 2010-64.7 %, 2011-74.4%, 2012- 71.5%, 2013-67.5% and the current year-74 %,

He explained further that the government awarded salary increases of 53% in 2010 across the board to the public service, which increased the wage bill from N856.9 billion in 2009 to N1.36 trillion in 2010.

“At the time, finances were inadequate to back this award, and the government had to increase domestic borrowing significantly to cover the shortfall. This rise in government domestic borrowing, from N524 billion in 2009 to N1.36 trillion in 2010, is clearly the singular cause of the country’s rising domestic debt profile, from 14.83% of our Gross Domestic Product, GDP, in 2009 to 17.98% of GDP in 2010.”

Nwabuikwu contended that Dr. Okonjo-Iweala was not in government when those events took place.

According to him, the President Goodluck Jonathan administration has focused on reversing this trend.

His words, “since 2011, various measures have been introduced, leading to a steady decline in recurrent expenditure from 74.4% in 2011, to 71.47% in 2012, and then to 67.5% in 2013 However, it is important to note that under the proposed 2014 budget, the recurrent expenditure will rise to 74%, for two reasons:

On the issue of excessive borrowing, Mr. Nwabuikwu said that domestic borrowing has reduced, from N852 billion in 2011 to N588 billion in 2013, a borrowing of N572 billion proposed in the 2014 budget.

“Furthermore, for the first time in the history of our domestic debt, the Finance Minister ensured the repayment of N75 billion of our domestic bonds. She further set up a sinking fund of N25 billion per annum to support the retirement of maturing bonds as above, rather than roll them over. This is directly contrary to the allegation that she is responsible for excessive borrowing within the economy”

He stated that a new strategy has been adopted with regard to foreign debts as external borrowing from multilateral finance organizations like the African Development Bank, China EXIM Bank, and the World Bank now come at “zero or very concessionary interest rates”

The spokesman said further, “while it is important for us to debate the budget, it is also behoves us not to misinform Nigerians, demonise individuals based on false information and mischaracterize the nature of budget development in the country. A large number of lies are being told against the budget by those who do not care about the impact of their falsehood on the economy and the image of the country.”