The Nation Newspaper

Tag: MTEF

  • 2013 Budget: Reps propose $82 per barrel benchmark

    2013 Budget: Reps propose $82 per barrel benchmark

    • Disagrees with Fed Govt over $45b debt, Nigeria to borrow $12b next year

    The House of Representatives has asked that the benchmark for the 2013 budget be increased from $75 to $82 per barrel.

    The joint House committee on Finance, Legislative Budget and Research, National Planning and Economic Development and Loans, Aids and Debt, in a report obtained by The Nation, yesterday, recommended that “the oil benchmark of $75/barrel should be increased to $82/barrel.”

    The Committee’s position followed a review carried out on the 2013-2015 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) of the Federal Government in accordance with the mandate the House.

    One of the reasons the House gave for rejecting the proposed date of October 4 for the presentation of the 2013 budget by President Goodluck Jonathan was that it was yet to study the MTEF and FSP submitted to the House by the Executive.

    According to the report, the increase in the benchmark, “will lead to an increase in oil and gas revenue from N7,250.516 billion to N7, 963.436. The $7 increase in the benchmark will increase federal government’s share of revenue from N3,561.02 billion to N4,137.31 billion.”

    The report further recommended that the revenue target of the Nigeria Customs Service should be increased from N914.366 billion to N1,018.310 trillion, while the target for Federal Inland Revenue Service (FIRS) and Federal Government Independent Revenue (FGNIR), could be retained as proposed in the document. This increase will make Total Non-Oil revenue to rise from N3,298.46 billion to N3,523.82 billion.

    “The deficit portion of the budget should be reduced from N1, 307.19 trillion to N791.26 billion. Internal borrowing should be reduced from N727.19 billion to N381.25 billion, representing 52 per cent decrease. This is to enhance domestic access to credit by the private sector,” the committee stated in the report.

    The joint committee also recommended that measures that will “guarantee the projected revenue increase be adopted.”

    Meanwhile, the House raised the alarm over the mounting debt stock of the country put at $45 billion as at the end of June, 2012.

    But the Director-General, Debt Management Office (DMO) Dr. Abraham Nwankwo told a joint committee on Finance, Legislative Budget and Research, National Planning and Economic Development and Loans, Aids and Debt, while meeting on the 2013-2015 Medium Term Expenditure Framework and Fiscal Strategy Paper yesterday that there was nothing to be afraid of as the debts were within sustainable limits.

    But the committee disagreed with Nwanko wondering why the country is accumulating such huge debts after it paid dearly to exit the debt burden from the Paris Club during the regime of President Olusegun Obasanjo.

    The Joint Committe also summoned the CBN Governor, Sanusi Lamido Sanusi to appear before it within 24 hours for it to conclude its deliberation on the MTEF and FSP.

    The CBN sent a Director and nine Assistant Directors to the meeting of the committee but the committee insisted it wanted the CBN Governor, Sanusi Lamido Sanusi to defend the MTEF before them in person.

    While presenting the debt profile of the country before the committee, the DMO boss revealed the current debt stock of the country stands at a little over $45billion.

    According to him, the external debt stands at $6billion while the internal debt is $39.456billion. The Federal Government has projected to borrow $25billion by 2015, he added.

    While explaining Nigeria’s overall debt profile and expected borrowing between 2013 and 2015 Nwankwo said for 2012, Nigeria external debt is projected at $9,021.53billion while $12,165.10billion is expected to be borrowed in 2013.

    He also stated that by 2014, the country would be borrowing $14,585billion externally while $16,765billion was projected for 2015.

  • Fed Govt to scrap agencies next year

    Fed Govt to scrap agencies next year

    •Fuel subsidy scheme to be restructured

    Some federal agencies will go next year, it was learnt yesterday. The Federal Government has also initiated steps to streamline the management of the subsidy scheme in the next fiscal year.

    This is contained in the 2013-2015 Medium-Term Expenditure Framework and Fiscal Strategy paper submitted to the Senate by President Goodluck Jonathan.

    The government’s fiscal policy was read by Senate President David Mark, on the floor of the Senate yesterday.

    It said pursuant to sections 13, 12 and 11 of the Fiscal Responsibility Act, 2007, the preparation towards submission of the 2013 Budget to the National Assembly has begun with activities leading to the preparation of the 2013-2015 MTEF and Fiscal Strategy paper.

    On the scraping of agencies, it said reduction in the size of government would be achieved through stricter rationalisation of available resources, including sustaining the reduction of overhead votes.

    The MTEF said in furtherance of the reform agenda, the Federal Government would also “rationalise the large number of agencies based on the recommendations of the Oronsaye Committee.”

    The MTEF said the figure for overhead decreased from N536 billion in 2010 to N266 billion in 2012.

    It said overhead expenditure is expected to reduce in 2013 to N230 billion or 4.67 per cent of total expenditure.

    The paper said: “In addition, other measures that are being implemented including deferring the procurement of administrative capital: the establishment of a Treasury Single Account (TSA) to manage cash balances better, reduce corruption as well as inefficiency in allocation of resources.

    “Government has also introduced the Government Integrated Financial Management Information System (GIFMIS) to make the process of budget preparation and execution more efficient and transparent.”

    It said that the focus of government will continue to be on completing ongoing projects, particularly those with high rate of return.

    On fuel subsidy, it said that in the light of the huge amount paid on petroleum subsidy last year, the Federal Government has initiated steps to streamline the management of the subsidy scheme.

    The restructuring, it said, will include strengthening the audit and verification process to improve its governance, transparency and accountability.

    It said these are expected to yield full results next year, while the Subsidy Re-investment Empowerment Programme (SURE-P.) instrument will continue to be used as an intervention window to mitigate the impact of the partial subsidy removal.

    The document said as “government continues consultations regarding future policy on subsidy, some amount is being provided for petroleum product subsidy in the 2013 budget.”

    It said in recent times, the recurrent expenditure profile has tended to crowd out capital expenditure.

    The increase, it said, can be attributed largely to the rising personnel cost resulting from the increases awarded to civil servants, medical personnel and Academic Staff Union of Universities (ASUU) staff since the 2009, as well as the implementation of the Minimum Wage Act 2011.

    It described the personnel cost increase as a sensitive issue saying only a holistic approach can generate a viable and sustainable solution.

    It said that the diversification of the economy is a critical objective of government “as our over-reliance on oil revenue has hampered the growth of the non-oil segment of the economy.”

    On debt profile, it said that as at June 2012, the total external debt stock stood at $6.0 billion.

    The Federal Government share of the debt, it said, was $3.8 billion (63.3%), while the 36 states and FCT accounted for the balance of $2.2 billion (36.7%)

    Similarly, it said that domestic debt for the same period stood at N6.15 trillion, bringing the total debt to N7.11 trillion which is 17.8 per cent of GDP.