President Umaru Yar’Adua yesterday signed the 2009 Budget bill of N3.101 trillion passed by the National Assembly, but expressed reservations that the huge increment made by the legislature made it unrealistic.
The Appropriation Bill which the President submitted to the National Assembly last year stood at N2.87 trillion but the lawmakers raised it to N3.101trillion.
With the increase in the budget, the original deficit of N654 billion (2.36 per cent of Gross Domestic Product) has jumped to N836 billion, representing 3.02 per cent of GDP.
While signing the Budget bill at a ceremony attended by the Senate President, Chief David Mark and Speaker of the House of Representatives, Dimeji Bankole, as well as members of Finance and Appropriation Committees of the two chambers, at the State House, Abuja, President Yar’Adua said the bloated budget was out of tune with economic realities.
He said current economic indices, especially dwindling prices of oil in the international market, presently at $40 per barrel from the projected $45 per barrel, as well as oil production cut due to the activities of militants in the Niger Delta did not support the budget as passed by the legislature.
His words: “In December 2008, I presented a budget proposal with an aggregate expenditure of N2.87 trillion with a deficit of N1.09 trillion or 3.95% of GDP.
“We had a deficit of N654billion or 2.36% of GDP. After due consideration of the Budget Proposal, the National Assembly passed a N3.1018 trillion budget with a deficit of N836.6billion or 3.02% of GDP.
“As passed, the 2009 Budget projects higher oil revenues than in the original proposal. However, I must express some reservations regarding these higher forecasts given the current realities of declining international oil prices and production constraints. Due to militant activities in the Niger Delta, our production has sometimes declined to as low as 1.6mbpd from a projection of 2.209mbpd.
“Should this low production turn out to be our average for the year, and the average price falls to $40/barrel from the original budget projection of $45/barrel, our fiscal deficit would increase to N1.35 trillion or 5.24% of GDP, which is well above the three percent allowable limit under the Fiscal Responsibility Act. Financing such a large fiscal deficit will have with its own challenges.
“Our revenue base is dwindling with the drastic fall in the price of crude oil. As at today, the Naira has lost about 25 percent of its value against the United States Dollar. Our stock market, once a choice investment destination, has not escaped the adverse effects of the economic downturn.”
The President warned that the above scenario has grave implications for macro-economic stability, economic growth and sustainable development in the country.
Our goals remain clear, says Yar’Adua
In spite of the situation, President Yar’Adua said the guiding philosophy of his administration remained clear and that his team would work assiduously to ensure that Nigerians were better off in the months and years ahead.
“Right from the outset, we have predicated our actions on having a clear, structured plan and measurable targets. The aim is to ensure effective and targeted implementation of critical projects, while at the same time instituting efficiency and accountability in the management of scarce public resources.
“For us, therefore, the present global economic crisis offers an opportunity to re-examine the structure of our economy and implement strategies that will reposition our nation for the global economic order that will emerge from the current experience. With our collective aspiration to make Nigeria one of the world’s 20 leading economies by 2020, we see this global crisis as an obstacle we must overcome and not a reason to abandon what we consider a worthwhile journey.
“We will not embrace the exigencies of the moment and sacrifice the burdens that the future imposes on us and we have to strike the requisite delicate balance”; saying that “as a government, we are committed to doing everything possible to minimize the impact of the current global crisis on the people of this country”, he said.
On the controversial deregulation of the downstream sub-sector of the petroleum industry, the President said it was inevitable but that steps would be taken to reduce the burden of low-income earners under a deregulated regime.
“To this end, I have directed that representatives of Labour be co-opted into the Presidential Steering Committee on the Global Economic Crisis under my chairmanship, which is tasked with considering the various dimensions of this crisis and evolving workable strategies”, he said.
President Yar’Adua also called on state governors to follow his example by reducing the salaries of political office holders, to reflect the economic realities of the time.
His words: “More importantly, it is to ensure that the salaries and allowances of all public officials reflect the reality of the times. I do hope that the sub-national governments will take a cue from this.”
He also explained that the decision to adopt the e-payment policy was to ensure a more transparent regime in the transaction of all government businesses as a means of enhancing accountability and ensuring value for money.
The budget signed by the President yesterday placed priority on sectors which he said were critical to the re-invigoration of the economy with emphasis on power supply, transportation and other critical infrastructure.
President’s concerns noted, say Mark, Bankole
In their reactions, Senator Mark and Hon. Bankole said they noted the concerns of the President with regard to increment in the budget but that the lawmakers would monitor the budget along with the executive and ensure a successful implementation.
Senator Mark’s words: “I think once we start the implementation, we will see how far we can go in terms of how much of it we can implement; I mean going from 2.29 million barrels per day to 1.8 million per day is a lot of difference, there is no doubt about that. And the fact even that is being reduced to 1.6 million because of the actions of the militants even makes it much more difficult.
And the benchmark we had before was $45 for the budget and it’s been fluctuating between $40 and $41 as at today that makes it even much more difficult. But the fact of the matter is that Nigerians are very determined to make the best of the situation.
“Really who can see the future; if we all can, we will be more than happy. But because we didn’t foresee this and they have come now, who knows what the dollar is going to be to the Naira tomorrow, do you know? Nobody. We can’t really predict that, there is no accurate or specific way of doing it.
“Let’s start. When we start, we will know exactly what to do next. But definitely I am sure that both the National Assembly and the executive are making plans to at least cushion the effect of our inability to implement some of it”.
“I agree with him I have raised those concerns as well with some members of the National Assembly, we are just as concern as he is on the fact that we have falling revenue, we will project accordingly to make sure that if we have to do some necessary supplementary budget and varmints in future we are up to the task in the face of the realities of the world.
Asked if we are likely to see more review of the budget, he said “I’ll say the review will be entirely dependent on what happens very soon”, Hon Bankole also said.