Okonjo-Iweala: presents a revised budget that fails to cut recurrent expenditure

Ayorinde Oluokun/Abuja

The austerity measures that Nigeria has promised to introduce will not affect the current levels of spendings on salaries, wages and allowances of civil servants and the political office holders.

What has been slashed by more than 50 per cent is capital vote.

Co-ordinating minister of the Nigerian economy, Dr.Ngozi Okonjo-Iweala presented the revised budget to the National Assembly today at separate sessions of the two chambers.

The letter sent by President Goodluck Jonathan to the National Assembly, yesterday indicated that although the budget has been slashed after two revisions, from N4.8trillion to N4.35 trillion, Nigeria is retaining its estimated N2.62 trillion on recurrent expenses, a sign that the leadership is not willing yet to stop the regime of wastefulness and recklessness, that has made Nigeria’s governance, one of the most expensive in the Third world.

To show the disdain the leadership has for development, it slashed capital expenditure to N627 billion, from N1.2 trillion,initially estimated, almost 50 per cent reduction, meaning less and less money will be available to rebuild roads and provide infrastructure.

The new appropriation bill is based on $65 per barrel of oil benchmark, a revision from the initial $73 per barrel.

It was not clear the basis of the finance minister’s optimism, basing oil price at $65, as the price of the Brent crude, Nigeria’s oil type fell below $60 on Tuesday.

As contained in the revised budget, N627 billion will be spent on capital expenditure which includes N380 billion for the Ministries, Departments and agencies, N144 billion will be capital expenditure in statutory transfers and N102.03 billion for the Subsidy Re-investment Empowerment Programme, SURE-P.

A total of N2.62 trillion was earmarked for the recurrent expenditure which includes Personnel costs for MDAs that stands at N1,801trillion, Overheads, N216,56 billion, pensions N228,81 billion and N376.05 budgeted for other service wide votes.

Service on domestic debt is expected to gulp N894.61 billion while that of foreign debt will take N48.39 billion.

President Jonathan had in October indicated a 2015 budget proposal of N4.817 trillion with the oil benchmark put at $78 per barrel in the Medium Term Framework, MTEF presented to the National Assembly.

However, the budget was later cut down to N4.7 trillion with the benchmark at $73 per barrel before the latest revision of the oil benchmark to $65 per barrel with the total budget size of N4.4 trillion against N4,724.69 trillion budgeted in 2014.

Also, the previous budget estimate had N1,208.37 trillion for capital expenditure but it has been reduced to N627.16 billion which the President explained was as result of the drastic reduction in global oil prices while the recurrent expenditure remained N2,622.42 trillion.

The budget going by the Medium Term Expenditure Framework and the Fiscal Strategic Paper, FSP, was also predicated on the production of 2.2782mbpd for 2015, 2.3271 mbpd and 2.4067 mbpd for 2016 and 2017 respectively.

“Given further developments in the International oil market which have necessitated further revisions, amendment s have been made to some parameters as well as to some fiscal estimates in the MTEF,” the President said on the revision of the MTEF.

“I hereby forward copies of the revised 2015-2017 MTEF for the kind consideration of the Distinguished members of the Senate and hope that it will be considered and approved expeditiously in order to bring 2015 Federal Government of Nigeria budget preparation process to a quick closure.”

“In consonance with the provision of Section 81 Sub-section 1 of the constitution of the Federal Republic of Nigeria 1999 as amended, I write to request that the Distinguished Senate grant the Honourable Minister of Finance the slot of 11 am on Wednesday 17th December, 2014, to enable her lay before you the 2015 budget estimates,” the President said on the authority letter for the Minister of Finance to lay the budget estimates.

I am cognisant of the fact that the budget estimate are being presented before the passage of 2015-2017 Medium Term Expenditure Framework, MTEF. This is due to the extra-ordinary global circumstances that confronted us in the latter quarter of the 2014 fiscal year.

“As you know the first MTEF with the budget benchmark of $78 per barrel was submitted to the National Assembly on 30th September 2014, and discussion on the MTEF and budget construction based on those estimates began with the relevant Committees of the National Assembly.