Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala
By Muhammad Bello and Ndubuisi Francis
2013 BUDGET PROPOSAL
Projected Revenue – N3.891tr
Projected Expenditure – N4.929tr
Oil Benchmark - $75 per barrel
Crude oil Production - 2.53mnb/d
Recurrent Spending – 68.66%
Capital Spending – 31.34%
Fiscal Deficit – 2.17% (N727.19bn) of GDP
In line with the promise by the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, that the 2013 budget proposal would be delivered to the National Assembly in September, the Federal Government yesterday in Abuja considered the 2013-2015 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), which provides the broad fiscal framework and priorities of the 2013 budget.
Under the fiscal framework for next year’s budget, the Federal Government is projecting revenue of N3.891 trillion and expenditure of N4.929 trillion.
Okonjo-Iweala, accompanied by the Minister of State, Finance, Yerima Ngama, and Minister of Information, Labaran Maku, said at the end of the Federal Executive Council (FEC) meeting that the cabinet discussed a memorandum on the 2013-2015 Medium Term Expenditure Framework and Fiscal Strategy Paper.
Following this development, the FEC, presided over by President Goodluck Jonathan, also agreed that the fiscal framework should be submitted to the National Assembly before the end of September when the 2013 budget will be made available to the lawmakers.
Providing further details on the 2013 fiscal framework, Okonjo-Iweala said that the revenue projections for next year’s budget will be predicated on a crude oil benchmark price of $75 a barrel and production output of 2.53 million barrels per day.
When THISDAY demanded to know if the production figure was not too ambitious, the minister explained that the finance ministry was being conservative given that crude oil production had peaked at 2.7 million barrels per day as a result of the decline in illegal bunkering and crude oil theft in the Niger Delta region.
During the briefing at the State House, Maku assured Nigerians that the budget would be submitted early so as to stabilise the budget circle of January 1 to December 31.
According to Okonjo-Iweala, although the budget will be ready in September, it will actually be laid out in the first week of October at the National Assembly.
She said: “Everybody has agreed that the work on the budget for 2013 must start early this year that is why we have the fiscal strategy paper this early. Once we finish here, we are going to transmit the document to the National Assembly.
“The highlights of the budget are 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.”
Explaining that the budget, which has as its objective “fiscal consolidation with growth and job creation,” the finance minister added that the 2013 budget would enable the executive arm to deploy resources into sectors that will accelerate economic growth in a transparent manner.
“It will be targeted at loading the resources into key sectors like infrastructure, power, roads, rails, that is, physical infrastructure; growth areas like agriculture, water resources, but also into human capital like education and health; and, of course, encouraging other sectors like solid minerals with the potential to create jobs. So that is the basic outline that we will be managing prudently,” she said.
Okonjo-Iweala said the fiscal deficit next year would be slashed to 2.17 per cent (N727.19 billion) from 2.85 per cent (N744.44 billion) of GDP, which is well below the three per cent as prescribed under the Fiscal Responsibility Act.
She added that the 2013 budget would include a new approach to managing debt. “We have always told you that we have been managing to bring down the yearly domestic borrowing from N852 billion in 2011 to N744 billion in 2012 and we are projecting N727 billion in 2013,” she said.
But the ultimate objective she explained is to bring down domestic borrowing to N500 billion by 2015.
“We will achieve this through a sinking fund with Mr. President's approval, as we will be devoting about N25 billion into the sinking fund because we must start putting aside money to retire the debt that we have been building up.
“We will also put aside N75 billion to help retire a bond that will be due in February 2013.
“So the total effect is that we are going to have a sinking fund and we are going to be putting N25 billion each year starting from 2013 and retire a bond coming due with N75 billion early next year,” she explained.
The minister added that projected revenue for 2013 is put at N3.891 trillion while projected expenditure is N4.929 trillion.
She revealed that recurrent expenditure in the budget would also be cut from 71.47 per cent of the total budget in 2012 to 68.66 per cent and will continue in a like manner in the medium-term, stating “We are continuing the trend and in the same token we are increasing the capital expenditure from 28.53 per cent in 2012 to 31.34 per cent in 2013.
“This is in line with Mr. President’s promise to continue to reduce recurrent spending and increase capital expenditure, and for the first time in a long time we are breaking the 30 per cent barrier for capital expenditure.”
Okonjo-Iweala noted that while government was intensifying efforts to improve the implementation of the 2012 budget, which she said was already at 41.3 per cent as at June 20, the 2013 budget proposal would be anchored on the key goal of the 2013-2015 Medium-Term Framework, emphasising “fiscal consolidation with growth and job creation”.
She said in order to achieve this, the resources of the country would be managed prudently and transparently while ensuring priority is given to the key growth sectors of the economy and national security.
“Fundamentally, the focus of the Federal Government's proposal on Budget 2013 as reflected in the Medium-Term Expenditure Framework and Fiscal Strategy Paper is that the budget should make a practical impact on the areas that matter the most to the Nigerian people - job creation, power supply, roads, rail, other infrastructure and of course, agriculture,” she said.
The minister pointed out that “the proposal for the 2013 budget is based on a rigorous review of the performance of the global economy with regard to negative economic developments around the world which have the potential to negatively impact the country's economy.
“Based on a foundation of prudence, the proposals represent a robust response to these developments anchored on a strong macro-economic framework.”
Also, in a statement issued by the Senior Special Assistant to the minister, Mr. Paul Nwabuikwu, Okonjo-Iweala added that the president who is personally leading the drive for higher performance has been meeting with ministers to ensure that the momentum is maintained.
The 2013-2015 Fiscal Strategy Paper and Medium Term Expenditure Framework are statutory documents which articulate government’s fiscal plan and policy objectives over the period and are updated annually.
The MTEF includes the Medium-Term Revenue and Expenditure Frameworks, both of which outline principal components of the government’s public expenditure management plan.
The aim is to ensure that planned spending is set at prudent and sustainable levels and is consistent with government’s overall medium-term fiscal objectives.