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2006: FG proposes N1.57trillion budget

Posted by Oluyinka Akintunde, Abuja on 2005/08/08 | Views: 362 |

2006: FG proposes N1.57trillion budget


The Federal Government is proposing a budget of N1.57trillion for 2006.

The Federal Government is proposing a budget of N1.57trillion for 2006.

The amount, which is 12.8 per cent lower than the 2005 budget figure of N1.8trillion approved by National Assembly for 2005, is based on oil benchmark of $33 per barrel.

The proposed benchmark is the highest in the last three years as the government had previously predicated the annual budget on $22, $25 and $30 per barrel.

A breakdown of the proposal shows that about N1.174trillion will go to the ministries, departments and agencies.

The National Judicial Council, the Niger Delta Development Commission and Universal Basic Education Scheme will receive N84billion as against the N91billion they got in 2005.

The government will spend N312billion on foreign and domestic debt servicing as against the N356billion appropriated for the same purpose in 2005.

The estimate indicates that N86billion will go to foreign debt servicing and N226billion to domestic debt servicing.

The Director-General, Budget Office of the Federation, Mr. Bode Augusto, who disclosed these in Abuja on Monday, also said the Federal Government had decided to halt the sharing of excess earnings from crude oil.

Augusto, at an interactive session on the 2006-2008 Federal Government Medium Term Expenditure Framework with Civil Society Organisations and the private sector, also said that the government hoped to put N1.907trillion additional revenue into the Excess Crude Account in 2006.

The Federal Government, according to him, will not spend more than N1.6trillion for 2006 because of its limited revenue sources.

He said,“If you begin to hear N1.7trillion or N1.8trillion budget for 2006, just note that there is no way the government can implement such a budget.”

Augusto said that the government planned to realise a budget deficit of N108billion in 2006, compared to a deficit of N285billion proposed for 2005.

He explained that the 42 per cent of the total deficit (about N45billion) would be financed from domestic borrowing, thereby leaving outstanding a deficit of N63billion.

The details of the Consolidated Revenue Account for 2006 show an expected revenue of N1.131trillion from oil revenue, N60billion from VAT, N107billion from Income Tax, N89billion from Customs and Excise Duties and N75billion from independent revenue.

On the key assumptions and targets of the budget proposal, Agusto said the projected oil price of $53 per barrel at the international market informed the choice of $33 per barrel as benchmark for the 2006 budget.

He said the government also pegged the average exchange rate at N134 to a dollar, which is one naira higher than the N133 to a dollar used in the 2004 and 2005 budgets.

He added, “We have assumed that the National Assembly will approve an increase in the rate of Value Added Tax from five per cent to 10 per cent before the end of the year. However, we shall review our revenue forecast on this line should this not happen.

“We also assumed that the new tariff book will be implemented in 2005. This means that the weighted average rate of duty will drop from 25 per cent to 17 per cent. Again, if this is not implemented we shall review revenue forecast along this line.”

He also said that the government foreclosed the sharing of excess earnings from crude in 2006.

He said, “Nothing shall be distributed from the Excess Crude Account, in 2006 because all the savings of the 2005 and the undistributed half for 2004 will be set aside to repay the Paris Club.”

The Paris Club had on June 29, 2005 cut Nigeria’s $30billion debt to $18billion.

The club approved the debt relief on the conditions that Nigeria will pay arrears of $6billion within six months and the outstanding of $6 billion through a debt buy-back scheme, which would be agreed upon in September.

Giving details of the Excess Crude Account, Augusto said $6.04billion was realised in 2004 by the government, which was expecting $16.7 billion; while $16.4billion, $18.5billion and $17.8billion were being expected in 2005, 2006, 2007 and 2008.

He added that N1.096 trillion would be shared in 2007 among the three tiers of government from the Excess Crude Revenue Account.

The PUNCH, Tuesday, August 09, 2005

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Fay(Katy, Texas, US)says...

Actually translates to bravehearted.