Ngozi Okonjo Iweala, Finance Minister
•Recurrent expenditure to gulp N2.43tn, capital N1.1tn
Omololu Ogunmade and Muhammad Bello
The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, Thursday laid the budget of N4.6 trillion for the 2014 fiscal year separately before both chambers of the National Assembly.
The move ended months of stalemate and intrigues on the oil benchmark, which delayed the budget’s presentation since November 12 when President Goodluck Jonathan postponed the scheduled exercise over differences in the benchmark by both chambers of the National Assembly.
Under the 2014-2016 Medium Term Economic Framework and Fiscal Strategy Paper (MTEF/FSP), the executive had proposed $74 per barrel as the oil benchmark for next year’s budget, but the Senate and the House differed, proposing $76.5 and $79 respectively, until a conference of the National Assembly arrived at $77.5 at the beginning of the week.
The president had directed that Okonjo-Iweala present the budget to the legislature.
But contrary to the usual tradition when the president makes the presentation before a joint session of the National Assembly, yesterday, the finance minister laid the budget separately at different sessions in the two chambers.
The N4.6 trillion budget proposal for 2014 represents a decrease by six per cent, compared to the N4.987 trillion in the 2013 budget.
Of the N4.6 trillion total, N1.1 trillion was proposed for capital expenditure representing 27.29 per cent of the budget, down from 31.9 per cent in 2013.
This reflected the increased allocation to pensions as well as the high wage bill. Personnel cost increased slightly from N1.718 trillion in 2013 to N1.723 trillion in 2014.
Accordingly, the share of recurrent expenditure of N2.43 trillion of total spending was 72.71 per cent, down from N2.80 trillion in 2013, while the provision for SURE-P was N268.37 billion.
As part of the expenditure projections in the Appropriation Bill, the federal government estimated an aggregate expenditure (Net of SURE-P) of N4.642 trillion and statutory transfers of N399.7 billion
The provision for debt service was put at N712 billion, up from N591.8 billion in 2013.
However, the budget estimates showed the desire of the federal government to expand its revenue base as it proposed gross federally collectible revenue of N10.88 trillion in 2014.
A breakdown of gross federally collectible showed that oil and gas is expected to contribute N7.16 trillion, while gross federally collectible non-oil revenue was put at N3.29 trillion.
The federal government’s budgeted revenue was estimated at N3.73 trillion.
The country has suffered persistent revenue shortfalls due to oil theft and pipeline vandalism. This had resulted to a decline in the federation account allocation to the three tiers of government as well as the Excess Crude Account, which currently stands at $3.2 billion.
The 2014 budget is also estimating a fiscal deficit of N911.96 billion. The deficit as share of GDP was put at 1.90 per cent.
The budget estimates also put the new borrowing requirements in the 2014 fiscal year at N571 billion, a decrease from N577 billion in 2013.
But the total deductions, including cost of crude oil production, subsidy payments and domestic gas development, was estimated at N2.15 trillion, same as in 2013; just as subsidy payments were maintained at the 2013 level of N971.1 billion.
Speaking to the press after laying the budget, Okonjo-Iweala said the Appropriation Bill whose focus is on job creation, infrastructure development and a reduction in the cost of governance, was based on a benchmark oil price assumption of $77.5 per barrel; oil production of 2.3883mbpd; average exchange rate of N160 to a dollar; and a real Gross Domestic Product (GDP) growth rate of 6.75 per cent.
She said the budget estimates were designed to further drive the transformation agenda of the administration of President Goodluck Jonathan, enhance agriculture and support manufacturing.
“This is a budget for jobs and inclusive growths, the budget supports policies that would continue to push agriculture because we know that that is where most jobs are created, it would continue to push manufacturing so that our youths can have modern jobs,” the finance minister said.
Okonjo-Iweala, was accompanied to the National Assembly by her counterparts in the Ministry of Information, Mr. Labaran Maku; Transport, Senator Idris Umar; Niger Delta, Godsday Orubebe; Communications and Information Communications Technology, Mrs. Omobola Johnson; and Minister of State for Federal Capital Territory (FCT), Ms Jumoke Akinjide, as well as Director General of Budget Office, Bright Okogwu.
Also addressing the press after the minister’s presentation, the Deputy Chairman, House Committee on Media, Hon. Victor Ogene, said the oil benchmark for the 2014 budget was arrived at by looking at the prevailing price of crude oil in recent times, adding that $77.5 per barrel was the lowest price crude oil had sold in the last three years.
This information, he said, guided the Makarfi-Ajayi Conference Committee to arrive at the current benchmark.
“Hence the committee decided on a middle ground between the Senate's proposal of $76.5 per barrel and the House's $79 per barrel," he said.
Commenting on the 2014 budget proposal, the Managing Director/Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane said: “I think it is a conservative budget and it is in line with reality because there is likely going to be a downturn in crude oil price next year.”
On his part, the Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, who appealed to members of the National Assembly to ensure that the bill is passed into law next month, stressed the need for proper supervision of the budget.
“The challenge we have is that the drive towards reducing the recurrent expenditure seems to have been compromised by political exigencies. Next year is an election year and that means there will be challenges in managing the expenditure profile,” Chukwu added.
However, a mild drama ensued some two hours after the budget presentation when Okonjo-Iweala returned to a hearing on the state of the economy organised by the House Committee on Finance.
In his opening preamble, the chairman of the committee, Hon. Abdulmumin Jibrin, informed the minister that the committee had 50 questions bordering on allegations of financial infractions levelled against the federal government, to which she had to provide answers.
But the minister replied that she was exhausted from lack of sleep the previous night, but could manage to answer the questions to the best of her ability, adding that where she stumbles, her aides would come to her aid.
Rejecting her proposal, the committee chairman, however, offered to hand the questions to her, suggesting that she should take them with her and prepare a written reply preparatory to a verbal defence in two weeks' time.
But the minister insisted she could manage, which made Jibrin to reject her plea, accusing her of always resorting to antics whenever she was invited to a hearing in the House.
The exchange between the minister and Jibrin degenerated to a heated brick bat and at a point, Jibrin, rapped his gavel, indicating that he has ruled on the matter, stating: “This is not the Ministry of Finance where you are in charge.”
Visibly shaken but composed, Okonjo-Iweala replied: “You can rap your gavel all you want but I demand to be heard as Nigerians are watching what is happening here.”
As she insisted on being given the chance to respond to questions he had drafted for her, Jibrin became adamant, sticking to his guns, at which point she quietly walked out, leaving the committee to hold a closed-door meeting.