The first victims of the signing of the 2013 Budget by President Goodluck Jonathan will be Ministries, Departments and Agencies (MDAs) with overlapping functions.
The Federal Government has started implementing the Steve Oronsaye Report, which proposed the scrapping or merging of such MDAs. To this end, in the 2013 Budget, the Federal Government has reduced allocations to agencies with duplicate functions.
The expected result of this budgetary slash for the affected MDAs will be a saving of about N100 billion in 2013, the Coordinating Minister for the Economy and Minister for Finance Dr. Ngozi Okonjo-Iweala said yesterday at the 2013 Budget briefing in Abuja.
Mrs. Okonjo-Iweala said: “We are continuing the roll-out of Integrated Personnel Payment Information System (IPPIS)across all MDAs which will result in savings in personnel costs. In the spirit of the Oronsaye Report, we have started trimming down allocations to agencies with duplicate functions. For the 2013 Budget, this resulted in about N100 billion of savings, and we hope to have even greater savings in 2014.”
However, since some of these agencies with duplicate functions were established legally, the minister said the executive “will require the support of the National Assembly in reviewing the relevant legislations before we implement the rationalisation exercises”.
Giving a breakdown of the assumptions of the 2013 Budget, the minister said: “The gross federally collectible revenue is projected at N11.34 trillion, of which the total revenue available for the Federal Government’s Budget is forecast at N4.1 trillion, representing an increase of 15 per cent over the estimate for 2012.”
Some key allocations in the controversial budget are: critical infrastructure (including power, works, transport, aviation, gas pipelines, and Federal Capital Territory) – N497 billion; human capital development(i.e. Education and Health) – N705 billion; and Agriculture/Water Resources – N175 billion.
The minister said there was no tinkering with the over N950 billion allocated for national security purposes, comprising of: N320 billion for the Police, N364 billion for the Armed Forces, N115 billion for the Office of the National Security Adviser, and N154 billion for the Ministry of the Interior.
For 2013, the minister said the “SURE-P programme has a projected allocation of N180 billion, augmented by the 2012 unspent balances of N93.5 billion. This amount will be used to make further progress in the provision of social safety net schemes, maternal and child healthcare, youth development and vocational training for Nigerians.”
In the budget, fiscal deficit is projected to improve to about 1.85% of GDP compared to 2.85% in 2012. This, Okonjo-Iweala, said “is well within the threshold stipulated in the Fiscal Responsibility Act, 2007 and clearly highlights our commitment to fiscal prudence.”
While non-oil revenue is projected to sustain its growth in 2013, the Federal Government appears not to be happy with the performance of the Federal Inland Revenue Service (FIRS), which it said only “worked hard to achieve a 20 percent growth rate in non-oil tax revenues between 2007 and 2012.”
Though the minister commended the FIRS for this effort, she said she believed “that the gap between non-oil tax revenues currently collected and the full potential revenue remains significant.”
Therefore, government, she said, “will support FIRS this year to embark on further reforms such as improving auditing checks, increasing controls on exemptions, and enforcing repayment of arrears. Similarly, we will also pay greater attention to increasing internally generated revenues, and work with government entities to increase their remittances to the treasury.”
On debt management, Mrs. Okonjo-Iweala said the Federal Government is “committed to the implementation of a strong strategy for managing domestic debt which progressively scales down both the stock and flow of our domestic debts.”
To this end, she disclosed that the Federal Government “recently paid down N75 billion of maturing debt obligations last week, and have also set aside N25 billion in a sinking fund to be used for retirement of maturing debt obligations in the future.”
She added that “government has further reduced annual domestic borrowing to finance the budget deficit from N852 billion in 2011, to N744 in 2012, and now to N577 billion in 2013.”
In addition, the government is “making concerted efforts to defray the debts of our foreign missions, by making provision of N13 billion in the 2013 Budget to help clear accumulated debts as at the cut-off date of June 2012.”
Government has also established a committee under the Chairmanship of the Minister of Foreign Affairs, which will work out a system to better manage the assets of foreign missions, the finance minister said.
Government’s strategy in 2013 towards addressing the nation’s crippling infrastructure is to prioritise infrastructure investments in the budget, and also to leverage additional external financing for infrastructure investments in the country. As a result, Budget 2013 has some important infrastructure projects in the transportation sector, such as the second Niger Bridge.
Mrs. Okonjo-Iweala said government plans “to augment our domestic resources with a proposed $1 billion EuroBond as well as a Nigeria Diaspora Bond which will harness savings from Nigerians abroad”.
These additional financial resources will be invested in various infrastructure projects such as building the country’s gas to power infrastructure. The government also plans “to use Public Private Partnerships (PPPs) aggressively, working with the Sovereign Wealth Fund which will attract co-investors from home and abroad such as pensions funds, institutional investors and so on.”
To energise the construction sector, the minister stated that the Federal Government has decided to develop “a private sector led Nigerian Mortgage Refinance Company to help provide long-term mortgages to help kick-start our housing and construction sectors.”
On the performance of the 2012 Budget, the minister disclosed that her ministry “succeeded in releasing N1,017 billion for the implementation of various capital projects, and successfully cash-backed N739 billion. By the end of 2012, MDAs had utiliSed N686 billion or 92.8 per cent of the total amount cash-backed.”
The reason for this performance, she said, was because “the 2012 Budget was approved late, and so implementation occurred over a compressed time schedule.”
The budget, she said, has buffers against external shocks, such as the Excess Crude Account rising on the back of prudent oil revenue management and currently stands at about US$9 billion; and an external buffer for foreign reserves, which increased by $12 billion since 2011 and is now at about US$47.56 billion as at 4 March, 2013, the highest level for almost 3 years.
