The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Wednesday, last week submitted the Fiscal Framework for the 2013 Federal Government, four and a half months to the end of the year.

It was the first time that the federal executive would start its budget process at that level this early. It also indicated a clear statement by Dr. Okonjo-Iweala that she indeed means to deliver the 2013 budget early and pursue a transparent implementation of the federal budget, next year.

According to the minister, her team is working round the clock to ensure that the budget proposal is presented to the National Assembly next month.


Okonjo-Iweala
Highlights of 2013 budgets are : projected revenue 2013 – N3.891 trillion; projected expenditure 2013 – N4.929 trillion; Oil price Benchmark: $ 75 pbl- (Bonny Light currently hovers around $93 -$95 pbl); Oil output: 2.35 million bpd; Deficit – 2.17 per cent

The 2013 Budget is her first budget in her second coming, since the process for the 2012 budget had indeed begun before she assumed office last year. An early presentation of the budget to the national Assembly and a subsequent early passage of the Appropriation Bill will be critical to the level of the performance of the budget. In the past, the practice was to sent the budget late to the legislature, followed by a squabble over its content between the executive and the law makers before it is eventually passed. Even after the budget had been passed, disputes usually emerge over the inclusion of a series of projects and items by the legislature.

This is perhaps it is most appropriate for Dr. Okonjo-Iweala to consult with the legislature well-enough on the fiscal framework, even before present the detailed budget for passage.

Poor budget implementation has become a subject of serious face-off between the National Assembly, especially the House of Representatives and President Goodluck Jontahan, with the former threatening to impeach the latter. There have been various figures quoted to indicated what the legislators referred to as “abysmal” budget performance. Some claimed the executive has implemented a mere 21 per cent to date. Some said 30 per cent. But the Minister of Finance has cleared the air, putting performance at about 41.3 as at the end of June.

In her presentation to the Federal Executive council, she declared stated that the priorities of next year’s budget will be: job creation, infrastructure, security, increase in capital budget and prudent management of the economy.

This indicates that the 2013 budget will essentially be a continuation of the this year’s budget, a strategy which is critical for an orderly implementation of programmes and projects earlier captured in the administration’s development agenda.

“The highlights of the budget, the first is that we are working on the basis of crude oil production projection of 2.53 million barrels a day, against 2.48 million barrels a day in 2012 and benchmark price of $75 a barrel against $72 a barrel in 2012”, the minister told the president and her colleagues in the cabinet. The parameters adopted by the minister for the 2013 budget can be described as modest, considering the uncertainties at the international global economy. The economies of most developed nations of the world, and especially the consumers of Nigeria’s crude oil are struggling to keep their heads above the waters and therefore a cautious oil income projection is necessary to avoid a deep shock should the global economic performance worsen further.

It is in line with this consideration that the decision to put oil price benchmark at $75 per barrel can better be appreciated. The 2013 price is only a $ 3-increase above this year’s $72 pbl. Indeed this year’s budget benchmark had to be reduced to $72 when it became apparent that oil prices did not stand the chances of increasing.



Increasing

capital vote



According to the minister, “fundamentally, the focus of the Federal Government’s proposals on Budget 2013 as reflected in the Medium Term Expenditure Framework and the Fiscal Strategy Paper is that the budget should make practical impact on the areas that matter most to the Nigerian people – job creation, power supply, roads, rail, other infrastructure and, of course, agriculture.

“To help achieve this central objective, a key proposal of the Fiscal Strategy Paper is the continuation of the downward trend in recurrent expenditure and upward trend in capital expenditure. Specifically, recurrent expenditure will decline from 71.47% in 2012 to 68.66% in 2013 and continue to decline in the medium-term. Within the same period, capital expenditure is expected to rise from 28.53% in 2012 to 31.34% in 2013 and will continue in like manner in the medium-term.”

If indeed, the strategy of increasing the amount of money available for capital expenditure is to be realized then the on-going bio-metric data capturing of all government employees must be carried to its logical conclusion, in spite of distractions fuelled by the corrupt people who have for many decades, benefitted from the pay-roll corruption.

The Task force with the mandate to clean up the federal government pay-roll has been unable to achieve the task with the speed required of it owing to deliberate efforts to stop it or at least distract it.

Ghost workers have been discovered in almost all Ministries, Departments and Agencies so far covered by the exercise, with about N200 billion saved from what would have gone into the pockets of corrupt civil servants. No one knows the exact number of Nigerians in the employ of the federal government as the keeping the public in the dark serves the purpose of those who benefit from the rot.

Debt management: Even though the joint World Bank-IMF low-income country debt sustainability analysis, DSA, says that Nigeria remains at a low risk of debt distress and that in the baseline scenario and in the case of the standardized stress tests, Nigeria’s debt outlook remains robust, Dr. Okonjo-Iweala cannot but keep her eyes on the nation’s debt profile.

The creation of a sinking fund of N25 billion yearly to accumulate money for paying off bonds is commendable but the volume of borrowing from the bond market should be reduced with a view to further reducing the domestic debt stock. If there must be borrowing, at all, the minister, working with the Debt management Office, DMO, has to pay particular attention to the activities of state governments to avoid borrowing from the capital market for projects that are not clearly bankable.

Prudent resource management: In spite of the pressure from the legislature and MDAs for the release of funds, it is extremely important for the minister to ensure that the nation’s resources are managed prudently and transparently while ensuring priority is given to the key growth sectors of the economy and national security. This is particularly critical at the year gradually moves to the end with heightened spending by the MDAs in their bid to exhaust their budgetary allocations. The Bureau of Public Procurement, BPP, has a major role to play in this regard. Dr. Okonjo-Iweala, must resist the attempt by the MDAs to stampede her and the BPP into releasing funds for contracts that fail to meet laid down procedure as outlined by the BPP Act. It is better not to attain 100 per cent budget implementation if it will be to siphon public money into private pockects.

Budget implementation

Similarly, President Jonathan doesn’t need to worry himself about threats by any legislator(s) over the administration’s inability to achieve 100 per cent budget implementation. Nigerians know better than to expect a 100 per cent budget performance when the budget was passed by the National Assembly at a time in the year when the entire first quarter had been lost.

Expectations from the National Assembly: Perhaps now is the time for the law makers to prove their earnest desire for a 100 per cent budget implementation. They can pass the Approptiation Bill latest December and then get the president to sign it into law. By so doing, we can have a budget which implementation begins on January 1, 2013. When this happens, even the president will know that no excuse would be tenable because he owes it a duty to mobilize the entire executive towards complying with the BPP process, in full, to enable his administration create a record of a full budget implementation.

The law makers should also resist the temptation of “helping” MDAs to increase their allocations from what the executive presents through the insertion of projects and programmes which were not originally captured and for which funds were not allocated from available revenue as such could distort the budget. There is equally a need for the legislators to tone down on their insistence on constituency projects which often creates conflict between them and the executive.

http://www.vanguardngr.com/2012/08/budget-2013-okonjo-iwealas-fresh-push-for-transparent-full-budget-implementation/