http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/18248-fg-broke-cant-meet-obligations-to-contractors-capital-projects
Nigeria is facing crippling financial constrains that have already seen net aggregate expenditure for 2010 balloon to N900 billion as the Federal Government struggles to pay contractors and finance on-going capital projects.

The recent 53 percent increase in wages and the pending increased minimum wage, in addition to the 2009 and 2010 budget cuts, among other commitment constraints, compounded the financial pressure on government such that it was twice forced into reviewing civil servants’ salaries between 2009 and 2010.

Sanusi Daggash, Works minister, said under the circumstance, the Federal Government may not fully meet its obligation on capital projects, huge wage bills and other competing demands on its finances.

“The government is going through a very difficult period right now and that is due to one or two decisions that were made,” he said in an exclusive interview with BusinessDay.

Other demands on government finances are the N78 billion released to the Independent National Election Commission (INEC) for the April 2011 elections, the N200 billion monetisation arrears, and the N65 billion payment made to the Power Holding Company of Nigeria (PHCN) workers.

“The implication of this on the net aggregate expenditure for 2010 was an increase of almost N900 billion from the 2009 to the 2010 budget framework”, Daggash said. He added that this led to the unacceptable cut in the capital vote to fund the recurrent expenditure in the budget.

According to him, “that was the first shock”.

Daggash reckoned that the second shock was the issue of cash flow. He said that even as the Federal Government reviewed the budget for 2010, they were confronted with the issue of cash-backing contracts.

“We could not effectively cash-back the reviewed framework. Because of this, we could not carry out our operations, meet government’s obligations, pay contractors and then deliver on essential and needed critical road projects, new investment, and even speed up maintenance”.

“The inability to cash-back affects the Ministry of Works, because in the construction of road works, you need planning and programming. The contractors for the period 2010 to 2011 would have done their planning from 2010, but somewhere around May/June in 2010, we reviewed the budget downward by 40 percent. That effectively suggested that every contractor had to slow down and in some cases, stop work”.

The Works minister said huge money had gone into recurrent expenditure and this has affected delivery on capital projects and payment of contractors for certified projects.

“The contractors are not ready to work on credit, and many of them have actually accumulated certified certificates for outstanding payments. They are just waiting for payment whenever there is cash release. For now, no magic could really be done because in the budget framework, what is first is the recurrent expenditure”.

Another way to mitigate the problem and trigger more releases to the capital side, according to Daggash, would have been to resort to the oil revenue which picked up following the rise in oil price.

Daggash said that did not happen because effectively, the budget was running on a major deficit which was initially in the range of about N1.7 trillion to N1.8 trillion.

“The Finance minister, after the 40 percent cut, expected the budget deficit to be halved to about N800 to N900 billion. But even after the review, the budget was still reflecting a N1.3 trillion deficit profile. So, in as much as the ministry of finance had released over N900 billion or so in capital releases, they still had another funding gap of about N400 to N500 billion. This adversely affected the major spending sectors of the economy”, the minister stated.

To be surprised is an under statement.

75% recurrent expenses

25% capital projects.

On top of that - GEJ made the following promises

$200 Mill - nollywood
500billion for SE
500Billion for aviation fund.

350billion agric fund


abeg help me ask where all this money go come from.

v