Says part of $322m recovered Abacha loot to fund specific projects
Admits it held wide consultation on new tariffs on beverages
By Ndubuisi Francis in Abujaâ€¨
The federal government admitted yesterday that the late passage of the 2018 budget would pose some hard challenges, but expressed its preparedness to roll out options to mitigate the possible negative impacts.
It also disclosed that besides social safety nets and pro-poor programmes, part of the $322.51 million Abacha loot returned by the Swiss Government would be earmarked for specific projects.
The Minister of Finance, Mrs. Kemi Adeosun, who made the disclosures in response to media inquiries, said it would amount to insincerity on her part to declare that the late passage of the 2018 Budget will not have some negative fiscal consequences.
The National Assembly had only on May 16, 2018 passed the 2018 Budget, six months after the Appropriation Bill was submitted to the National Assembly by President Muhammadu Buhari .
The minister said: â€œOf course, there will be some and it will be insincere of me to say that the delay in the budget passage has no impact. It does because the cost of money in the markets change and so there will be an impact. But we are going to try and mitigate that impact as much as possible and focus on completing projects.
â€œMany of the projects like the rail projects, power projects are multi-year projects, so we will continue working. We didnâ€™t close down our system. Normally, the system closes down on December 13 and the Ministries, Departments and Agencies (MDAs) canâ€™t spend anymore. But we left the system open to enable MDAs continue with the execution of their projects.
â€œYes, there will be an impact but it could have been better had we got the 2018 Budget running in January.I remain optimistic about the budget. We have to realign our priorities since five months are gone already.
â€œWhat has helped us is that the 2017 budget was passed late last year and what we have done was to carry on with those projects. We will close the 2017 Budget with capital expenditure in excess of N1.5 trillion which is higher than the previous yearâ€™s figure of N1.3 trillion.
â€œThe provisional figure as at last week was N1.491 trillion and there are some postings still to come in. So, I am quite confident that we will close the 2017 Budget in excess of N1.5 trillion for capital expenditure. As you know, many of these projects are multi-year projects so hopefully there wouldnâ€™t be too much disruption.
On the recovered Abacha loot, she said: â€œThe US$322.51 million Abacha funds returned by the Swiss Government were earmarked for social safety nets. That is the conditional cash transfers that the poor get.
â€œAs announced by the president, we are also going to earmark some of the recovered funds for specific projects where the people can actually point and say these projects were funded with recovered funds.â€
Giving further insight, the minister noted: â€œUp till the present moment, we are still uncovering government funds hidden in banks which no one knew about. Through the TSA (Treasury Single Account), the government has saved billions of naira in bank charges. We can see every account on TSA and where we see suspicious pattern, we ask the agency some questions to know what is going on. Let me talk about recovery of funds and what we have done.
â€œWe have recovered money but a lot of what we recovered was properties. People used stolen money to buy assets and the challenge we had was when the figure of the recoveries was released, people assumed the recoveries were only cash. Most often, the recoveries were properties.
â€œThrough the Efficiency Unit (E-Unit), many of the properties were allocated to government agencies which were renting buildings they occupied. The cash recoveries were earmarked for specific projects,â€ the minister stated.
Reacting to last weekâ€™s motion in the Senate asking the federal government to halt the proposed adjustments in excise duties on alcoholic beverages to enable consultations with stakeholders, she said extensive consultations were held with stakeholders â€œbefore we came up with that proposal which the president approved.â€
She listed such stakeholders as the Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and members of the private sector.
â€œWe had a lot of stakeholdersâ€™ engagement before we came up with that policy and itâ€™s been widely accepted by the industry. What we eventually recommended was lower than when we started.
â€œIt was when we engaged with stakeholders and we began to consider all the possible impacts because we donâ€™t want to lose jobs and thatâ€™s why we took a three-year phased approach rather than overnight increase in the rate,â€ the minister said but could not say whether the June 4 commencement date is sacrosanct.
The minister also reacted to concerns by the International Monetary Fund (IMF) and others on Nigerianâ€™s burgeoning public debt, saying there was no cause for concern
â€œI have said this before and I am saying it again, there is no cause for worry. Nigeriaâ€™s debt-to-GDP ratio is 20 per cent and it is one of the lowest in Sub-Saharan Africa. Ghana is at 68 per cent, Ethiopia is at 50 per cent, and Nigeria is at 20 per cent. Chinaâ€™s-debt-to GDP is at 250 per cent.
â€œThey had a particular strategy which is go and borrow, sort out the infrastructure and sort out how to pay. â€œThere was room in the global economy for them to do that to become an industrial hub and to grow that way. We are not pursing that strategy.
â€œWe are pursuing a very measured strategy. We are running a budget deficit; the size of that deficit is coming down now. Nigeria is not among the countries IMF is worried about.
â€œWe do have a challenge on debt-service-to revenue. That is because the interest cost is quite high and that is a function of two things. One is the fact that most of the debts were short-term so we are paying interests and compounding it.
â€œWe have been refinancing treasury bills and issuing bonds. We have been refinancing treasury bills in the domestic market and replacing them with longer term debt in the international market.
â€œAnd this is reducing our cost of borrowing. This time last year, Nigerian government was borrowing at an average cost of about 18 per cent but now it is 13 per cent.
â€œWe are working very hard on the debt service cost and of course revenue. The other leg of the equation is revenue. Debt service as a percentage of revenue, you reduce your debt service and you increase your revenue,â€ she argued.