President Goodluck Jonathan
By Onwuka Nzeshi and Dele Ogbodo
President Goodluck Jonathan Wednesday presented the 2013 Appropriation Bill to the joint session of the National Assembly with a disclosure that the Federal Government will be giving priority attention to education and security in next year’s spending.
The budget proposal has an aggregate expenditure of N4.92 trillion, representing an increase of about five per cent over the N4.7 trillion appropriated in the 2012 budget.
Revenue projections in the budget bill were based on an oil benchmark of $75 per barrel and an exchange rate of N160 to $1.
Domestic borrowing for the coming year has been scaled down to N727 billion, while about N16 billion will be devoted to oil exploration in the inland basins across the country.
The bill made a provision of N380.02 billion for Statutory Transfers, N591.76 billion for Debt Service, N2.41 trillion for recurrent (Non-Debt) expenditure and N1.54 trillion for capital expenditure.
In terms of allocations to key sectors of the economy, Education led the pack with N426.53 billion. Others include Works, N183.5 billion; Power, N74.26 billion; Health, N279.23 billion; Defence, N348.91 billion; Police, N319.65 billion; while Agriculture and Rural Development got N81.41 billion.
Jonathan, who was accompanied to the National Assembly for the budget presentation by Vice-President Namadi Sambo; Secretary to the Government of the Federation, Senator Anyim Pius Anyim; and ministers, among a retinue of aides, said the budget was prepared in line with government's prudent economic policies and bearing in mind uncertain global economic environment.
In specific terms, the budget is also based on crude oil production of 2.53 million barrels per day, up from 2.48 million barrels per day for 2012.
The benchmark oil price of $75 per barrel, which is $5 below the $80 per barrel that the House of Representatives is pushing for, Jonathan said, was based on a well established economic method of estimating oil price moving averages.
However, the House insisted yesterday that its recommended oil benchmark price of $80 per barrel would have been a more appropriate parameter for the budget.
The Gross Domestic Product (GDP) growth rate is now estimated at 6.5 per cent as against the 6.85 per cent in the Fiscal Strategy Paper earlier sent to the National Assembly.
According to Jonathan, the revision became necessary following the severe floods experienced across several parts of the country and the likely impact of such natural disaster on economic activities, especially agriculture.
“Based on these assumptions, the gross federally collectible revenue is projected at N10.84 trillion, out of which the total revenue available for the Federal Government's budget is forecast at N3.89 trillion, representing an increase of about nine per cent over the estimate for 2012.
“Non-oil revenue is projected to continue to grow in 2013 as the ongoing reforms in our revenue collecting agencies and the implementation of initiatives to further develop the non-oil sector continue to yield results.
“Based on the above, the fiscal deficit is projected to improve to about 2.17 per cent of GDP in the 2013 Budget compared to 2.85 per cent in 2012. This is well within the threshold stipulated in the Fiscal Responsibility Act 2007 and clearly highlights our commitment to fiscal prudence. “We are determined to further rein-in domestic borrowing, and this way, ensure that our debt stock remains at a sustainable level,” he said.
The Federal Government is also planning to complement the financing of the power sector with an Infrastructure Euro Bond of about $1 billion that will be used to complete gas pipelines and other infrastructure investments in the sector.
In addition, the Subsidy Reinvestment Programme (SURE-P) will continue with the expected resources of N180 billion in 2013 augmented by the projected 2012 unspent balances bringing the total to about N273.5 billion.
In order to promote agriculture and industry, Jonathan said the government would continue to implement supportive fiscal measures for some priority areas.
He announced that with effect from January 2013, machinery and spare parts imported for local sugar manufacturing industries will now attract zero per cent duty and there will be a five-year tax holiday for "sugarcane to sugar" value chain investors.
Similarly, import duty and levy on raw sugar will be 10 per cent and 50 per cent respectively, while refined sugar will attract 20 per cent duty and 60 per cent levy.
On rice, the president said there would be 10 per cent import duty and 100 per cent levy on both brown and polished rice.
In addition, all commercial aircraft and aircraft spare parts imported for use in Nigeria will now attract zero per cent duty and zero per cent Value Added Tax (VAT). This is to improve air safety and ensure that airline companies maintain their fleet with relative ease.
“In order to encourage the production of mass transit vehicles in Nigeria, duty on Completely Knocked Down components (CKD) for mass transit buses of at least 40-seater capacity, will now be zero per cent, down from five per cent.
“Government is desirous of supporting green growth and, in this regard, will explore options for providing incentives for energy efficient vehicles from the 2014 fiscal year,” he said.
The president, who also reviewed the performance of the 2012 budget, said so far, the executive had released N711.6 billion to ministries, departments, and agencies (MDAs) for the implementation of their capital budgets, while further releases would follow shortly for the fourth quarter.
In an apparent defence of the implementation of the current budget, he said the continued execution of the 2011 capital budget in the first quarter of 2012, affected that of the 2012 budget.
He explained that it was in a bid to avoid the overlapping in the implementation of the budget that the executive had striven to present the 2013 budget proposal early, culminating in yesterday’s exercise, which he said, would pave the way for the implementation from January 1, 2013.
However, he told the lawmakers that his administration was trying to shift emphasis from statistics on the implementation of budgets by providing the citizenry concrete evidence, beyond amounts spent, on the budget implementation.
“In this respect, I have signed Performance Agreement Contracts with my ministers with a view to ensuring delivery of projects and programmes in their respective budgets.
“The ministers in turn, are signing similar agreements with their permanent secretaries, heads of parastatals and directors to cascade down the need for responsibility and accountability. Key government officials with responsibility for implementing different aspects of the budget will be appraised based on these performance agreements,” he said.
Proposed Federal Government’s expenditure for 2013, a modest increase by five per cent from that of N4.697 trillion for 2012.
For recurrent (Non-Debt) expenditure, which reflected a reduction in recurrent spending from 71.5 per cent in 2012 to 68.7 per cent in 2013.
For capital expenditure, representing an increase from 28.53 per cent in 2012 to 31.34 per cent in 2013.
What the Federal Government intends to borrow to finance its expenditure in 2013
2.53 million barrels per day
Daily oil production quota on which the Federal Government is basing the nation’s projected revenue earning.
The controversial projection for oil price benchmark per barrel that is causing disagreement between the executive and the House of Representatives that is pushing for the adoption of $80 per barrel.
The figure of GDP by which government plans to narrow the budget deficit in 2013, as against 2.85 per cent in 2012.
Projected GDP growth for the 2013 fiscal year as against the 6.85 per cent contained in the Fiscal Strategy Paper. The revision was because of the negative impact the severe floods experienced in many parts of the country is expected to have on economic activities in 2013.
The Sinking Fund set aside for the repayment of government’s maturing debt obligations, which is also aimed at curbing the nation’s rising domestic debt profile.