Posted by By Chijama Ogbu, Business Editor on
Only 46 per cent of this year's capital budget has been implemented, Finance Minister Shamsudeen Usman has said.
Only 46 per cent of this year's capital budget has been implemented, Finance Minister Shamsudeen Usman has said.
He promised that the level would rise up to 50 per cent by the end of this month.
The minister, who was reacting to criticisms about the slow pace of the Federal Government at a press briefing in Lagos, said the delay was caused by the government's insistence on due process and transparency.
All the capital votes had been released 100 per cent by November, but the ministries, departments and agencies were required to comply with certain due process procedures before spending the money, he said.
Already, the developments in the international crude oil market have put the 2009 budget under pressure, the minister hinted.
He said that with the current OPEC quota for Nigeria, which stands at 2.05 million barrels per day (bpd), and prices of oil declining rapidly to close at $42 a barrel, it would be difficult to realise the revenue targets of the budget. The budget was built on expected crude oil production of 2.292 million bpd and $59 a barrel benchmark.
According to Usman, the government is projecting that the 2008 budget would end up with a shortfall of N500 billion by the end of the year. This could be much higher, he said, if oil prices continue to decelerate.
The minister said that the government, in its effort to facilitate budget implementation, decentralised the Due Process office. Under the new arrangement, each ministry is required to set up a unit of the office, which is required to get final approval from the head office.
The minister said that incidentally most of the ministries were slow in responding to the new arrangement, resulting in the usual delay in budget implementation, which the government intended to cut out through the decentralisation of the Due Process Office.
Usman, however, said that the government was projecting N330 billion unspent balances from the capital vote by the end of the year. He said this would be ploughed back to the federal treasury and would form part of the resources for financing next year's budget.
The minister said that hitherto such funds were not captured in the following year's budget, adding that the MDAs simply rolled them over to the following year as they continued to spend from them.
The minister said it was unfortunate that the government was being vilified for low-level of budget implementation instead of being commended for the steps taken to ensure accountability.
On why the government built in a huge deficit of 3.95 per cent in the 2009 proposed budget, Usman gave two primary reasons: to ensure that infrastructure receives adequate attention in 2009 and to prevent the economy from going into recession.
Major economies, such as the United States and Japan, are already in recession, which means that many jobs will be lost as production declines, compounded by poor purchasing power of the consumers.
President Yar'Adua in the budget speech at the National Assembly last Tuesday made provision for N1.092 trillion deficit.
Usman, in reaction to criticisms trailing the deficit, which exceeds the 3 per cent limit provided for the by the law, said that there was hardly any country not running up deficits in the face of the global financial crisis. He said that the law provided for conditions for exceeding the limit, adding that the government would work with members of the National Assembly to ensure that the law is amended to accommodate the increase.
He said the government was working to ensure that all sources of funding for the deficit were fully realised to avoid resorting to ways and means (i.e. printing of paper money), which would dislocate macroeconomic stability.
The government plans to fund the deficit through domestic and international debts, recall of $200 million Nigeria Trust Fund (NTF) window of the ADB, $100 million from privatisation proceeds, and outstanding signature bonuses.
"We looked at what is available at the NTF and it was over $400 million. And when we discussed with the African Development Bank (ADB), it indicated that $200million would be sufficient, given the level of lending that they are doing now," the minister said, trying to justify the decision to recall the fund..