• FG commits $500m of planned Eurobond
•Releases N2.5trn of budget’s N6.08trn
Omololu Ogunmade and Damilola Oyedele
Members of the House of Representatives have hinged their approval for the $30 billion external borrowing plan request of the federal government and the Medium Term Expenditure Framework (MTEF) on a firm commitment by the executive to the release of funds for their constituency projects.
President Muhammadu Buhari early this week had written to the National Assembly, seeking approval for the loan to address critical infrastructure deficit, and for virement of N180 billion in the 2016 budget to fund capital and recurrent items.
Even as the request for external borrowing and MTEF is pending before the legislature, Reuters yesterday quoted the Minister of Finance, Mrs Kemi Adeosun, as saying that the federal government already had commitments for $500 million of the planned $1 billion Eurobond.
Her statement coincided with her Budget and National Planning counterpart, Senator Udoma Udo Udoma, deposition at the Senate yesterday that only N2.5 trillion of the N6.08 trillion of the 2016 budget had been released, two months to the end of the year.
A possible stalling of the loan request approval emerged yesterday as the scheduled debate on it was aborted. THISDAY gathered authoritatively that the leadership of the House took the decision to postpone the debate, following vows from members that no request from the executive would be honoured, until a commitment was secured for the funding of their constituency projects.
Alarmed by the looming defeat to the request and other Executive Bills, Speaker Yakubu Dogara and the Majority Leader of the House, Hon. Femi Gbajabiamila, had to meet with Adeosun, Udoma and the Director General of the Budget Office, Mr. Ben Akabueze, yesterday evening in the speaker’s office.
Adeosun and Udoma were expected to have taken the message of the lawmakers to Buhari and report back as soon as possible.
Execution of constituency projects are crucial to the lawmakers, who usually make such projects part of their campaign promises to their people.
THISDAY gathered that debates on the requests and MTEF would be suspended until a favourable response is received from the president.
Sources told THISDAY that the lawmakers might have finally found a way to commit the executive, particularly as several members of the executive had maintained that there were no funds for the constituency projects.
Some members of the executive had openly called to question, the legality of the constituency projects also known as the Zonal Intervention Projects.
“It is a simple matter, we can simply say no to the borrowing. Why does he want to make us debtors? We know there are conditionality attached to most foreign loans? What is he giving in return?” a member asked off the record.
Another member who is of the All Progressives Congress (APC), the same party as the president, admitted that no lawmaker was willing to rise up at plenary and say the requests were being rejected due to the refusal of the president to give approval for funding of their constituency projects.
“That would seem selfish, but the truth is these constituency projects are for the people who elected us, they elected us to better their communities. Most of them suffer exclusion from the government, the constituency projects are closer to the people, we consult and know exactly what our people need,” the lawmaker said.
“Does he want us to lose elections? Many of us already have our constituencies upset at us, but there is a limit to what you can do with your personal funds. Some members no longer go to their constituencies as often as required because of this. It is very unfair, this government seems bent on generally starving the legislature of funds. We are tired of playing nice, without benefits,” another lawmaker said.
But as the House stalls on the approval, its senior chamber, the Senate yesterday agreed to start debate on the matter next week.
The president in his letter to the two chambers last week had indicated that the $29.960 billion would be for proposed projects and programmes loan of $11.274 billion, $10.686 billion for Special National Infrastructure projects, Euro Bonds of $4.5 billion and federal government Budget Support of $3.5 billion.
The president also noted that the projects and programmes in the external borrowing plan were selected based on positive technical economic evaluations as well as contributions they would make to the socio-economic development of the country, including employment generation, poverty reduction and protection of the nation’s vulnerable population.
Nigeria Has Commitments for $500m of Planned Eurobond
Meanwhile, Nigeria already has $500 million of commitments from its planned $1 billion Eurobond it intends to issue before the end of the year and any decision to increase the size of the offer will depend on pricing, Adeosun said yesterday.
“At the moment, I am focused on the $1 billion,” Reuters quoted the minister to have said in a video recording to an investor conference in Lagos.
Adeosun said the country was “further along” with the African Development Bank (AfDB) for a $1 billion budget support loan than the World Bank due to scheduling issues.
“We have pushed World Bank funding into next year’s budget,” she said.
She said Nigeria was also interested in tapping funds at concessionary rates to develop its infrastructure and that most of the funding it was seeking would carry concessionary terms.
Adeosun said expected taxes collected as a percentage of GDP which is currently at five per cent is to hit seven per cent within three-years and further up to 10 per cent within five years.
The federal government recently expressed optimism that it would sell Eurobond worth around $1 billion to be issued before the end of the year. Adeosun had said the government was in the process of appointing managers for the sale.
The Eurobond is part of Nigeria’s plans to borrow a total of N1.8 trillion ($5.8 billion) from abroad and at home to fund an expected budget deficit of N2.2 trillion this year.
“We are appointing parties this week, we are hoping to come before the end of the year,” Adeosun said at an investment conference at the London Stock Exchange recently. She gave no details.
“We have headroom and we are very fortunate in that regard, we have very low debt to GDP ratio,” she told the conference.
Adeosun informed her audience that Nigeria had started a journey, which would take its economy from being dependent on oil as a primary commodity, to a more productive economy.
She said the Nigerian economy had moved from spending 90 per cent of its budget on recurrent items and only 10 per cent on capital expenditure, to 70 per cent on recurrent expenditure and 30 per cent on capital expenditure.
N2.5trn of N6.08trn Budget Released
At the Senate yesterday, Udoma disclosed that only N2.557 trillion of the total N6.08 trillion 2016 budget had been released as at August.
Udoma, who made this disclosure while appearing before the Senate Committee on Appropriation in the National Assembly along with Adeosun, gave a breakdown of the releases so far.
According to him, N753.6 billion of the sum was for capital expenditure, N117.8 billion was for statutory transfer, N135.4 billion as service wide votes, N108 billion released for overhead, N142 billion as consolidated pension and personnel cost of N1.299 trillion.
Udoma further told the committee that the federal government was diligently exploring all sources of revenues with a view to ensuring accountability, adding that the federal government was contemplating amending the Fiscal Responsibility Act 2007 in pursuit of the agenda.
Udoma said the government had come to the National Assembly with the request for N180 billion virement to take care of critical issues such as personnel expenditure, adding that the government chose the option of virement instead of supplementary budget because of inconsistencies in revenue generation as a result of economic downturn.
In her submission, Adeosun disclosed that the government would secure N900 billion foreign loan once the National Assembly approved the request for borrowing before it. She also disclosed that in no time, the nation would be restored to the level of its N2.2 trillion budget projection in the 2016 budget.
The minister further disclosed how the government had discovered a number of leakages in the revenues of ministries, department and agencies (MDAs). She listed such discoveries to include huge capital expenses, huge medical expenses and staff training that were not under budgetary control, among others.
According to her, a mechanism would be put in place to compel the MDAs to make full disclosures of their revenues and expenses including the number of assets they sold. She said the agencies’ managers would be made to answer such questions.
She bemoaned lack of accountable spending among the agencies, citing instances of how some agencies have 20 drivers to only one vehicle, adding that a measure was being conceived to ensure that agencies put all their revenues “on the platform so that we can ask questions”.
Furthermore, she said the budgetary process would be tightened ahead of the next fiscal year as she disclosed further that the use of treasury single account (TSA) did not place any limitation on the agencies’ spending, saying they have access to their monies as the only difference is that the accounts are no longer in commercial banks while the signatories to the accounts remain the same.
Adeosun revealed further how some revenue-generating agencies inflated their expenses, vowing that the directors of such agencies would soon be handed over to the Economic and Financial Crimes Commission (EFCC) for investigation and possible prosecution.
She also explained that looted funds being recovered were coming into government purse daily but added that she did not know the actual amount recovered so far. Adeosun also told the committee that the federal government was facing some obstacles in its bid to recover the loot stashed in foreign accounts in Switzerland and United States.
She also said the federal government was still in the process of finalising the realisation of the loan it sought from China’s NEXIM Bank to fund rail projects.
In his closing remarks, the Chairman of Appropriation Committee, Danjuma Goje, said he was encouraged to hear from the ministers that the releases made so far were cash-backed.
Goje also expressed optimism that with the level of releases, the 2016 budget could be fully implemented, threatening that nothing but 100 per cent implementation of the budget would be acceptable to the committee.
He also tasked the ministers to be fair to all MDAs in the release of funds, noting that a situation where some agencies have 10 per cent release while others have 1 per cent would be unfair.