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FG proposes N1.9trillion budget for 2006

Posted by Chiawo Nwankwo, Sena John Murray and Ibanga Isine on 2005/12/07 | Views: 638 |

FG proposes N1.9trillion budget for 2006

The Federal Government will spend N1.88trillion in 2006 out of total expected revenues of N3.7trillion, President Olusegun Obasanjo, announced on Tuesday.

The Federal Government will spend N1.88trillion in 2006 out of total expected revenues of N3.7trillion, President Olusegun Obasanjo, announced on Tuesday.

Presenting the 2006 federal budget to the National Assembly in Abuja, the President said the proposals were based on assumed average price of $33 per barrel of crude oil while a deficit of N367billion is envisaged in the fiscal plan compared to N201billion in 2005.

In company with Vice-President Atiku Abubakar, ministers and leaders of the Peoples Democratic Party, Obasanjo said the proposed spending was 23 per cent higher than the N1.5trillion for 2005.

Of the proposed expenditure, N841billion or 56 per cent is earmarked for recurrent expenditure made of N648billion for salaries and pensions, and N193billion for overheads. An estimated N540billion or 36 per cent is set aside for capital projects.

Among other highlights, the President said that the N100billion saved from the external debt servicing would be ploughed as promised, into extra-ministerial spending including health (N21billion); education (N21billion); water resources (N20billion); power (N15billion); works (N10billion); agriculture (N10billion); environment (N1.5billion); women affairs (N1billion); Youth (N1 billion); and Housing and Urban Development (N500million).

Federal ministries, departments and agencies will spend N1.5trillion while statutory transfers will include the Niger Delta Development Commission (N21billion); Universal Basic Education Commission (N30billion); and the National Judicial Council (N35billion), among others.

President Obasanjo listed other parameters as a targeted single-digit inflation rate of nine per cent, although the Central Bank of Nigeria put it at 23 per cent as at September 2005; an exchange rate of N129 to one United States dollar; $4.2billion (N542billion) from the Joint Venture Cash calls, and a Gross Domestic Product growth rate of seven per cent.

While the World Bank Group pegged GDP growth rate at 4.2 percent in 2004, the Federal Government has insisted that GDP grew at six per cent.

Apart from the budget details, the presentation was not without its drama. Twenty minutes into his speech to a joint session of the National Assembly, Alhaji Bashir Nadabo, from Katsina State, interrupted the President, and accused him of not faithfully implementing budgets since 1999.

Also in the course of his address, Obasanjo accused the National Assembly of delaying the implementation of the 2005 budget.

But, the Senate indicated that it would pass the 2006 Appropriation Bill by February 9, 2006, barely ten minutes after the President departed the venue.

The President also said that N150billion would be spent to alleviate the effects of the current high prices of petroleum products with the Federal Government providing N75billion while he said he “hoped” the states and the local governments would jointly provide the balance of N75billion.

But he was emphatic that there would be no further increase in the pump prices of petroleum products in 2006.

He said the budget was the third since the inception of NEEDS policy and therefore continued to support reforms and development agenda of government.

He said that N55billion had been provided for the Independent National Electoral Commission “for modern voting and electoral equipment and techniques” for 2007 polls.

Also, N9billion was provided for the 2006 census; N50billion to cushion the impact of public service reforms and N50billion for monetisation in parastatals and restructuring.

“I have pledged that there shall be no further increase in the prices of petroleum products for the year 2006. “This explicit and transparent provision in the budget is meant to reassure Nigerians that this pledge will be sustained,” the President said.

On oil proceeds, he said that his government’s fiscal regime for two years had succeeded in de-linking the budget from oil price, through prudent fiscal planning.

“As a result, of budgeting at prudent oil prices, we were able to save from all tiers of government $11billion in 2005. If you add to that the $2.95billion that was saved from 2004 and not factored into the budget, we have a total of $14billion excess crude savings at the end of 2005,” he said.

Out of the N3.7trillion that would accrue to the Federation Account, the President said that N2.8trillion would come from crude oil sales, oil tax and income from gas and N230billion from companies’ income tax.

Further, N197billion would be generated from Customs and Excise duties, while N540billion would be proceeds from the Value Added Tax.

He said that the Federal Government’s share from the Federation Account was N1.57trillion but its disposable revenue was put at N1.52trillion after deductions had been made for Ecological Fund, Stabilisation Fund, Federal Capital Territory and Development of Natural Resources.

Obasanjo who described the 2006 budget as “attempt to be responsive to the concerns of the key sectors of the economy and society,” said N25billion would be used to pay contractors owed up to N100million, while debts more than N100million would be issued as bonds spanning between two and five years.

Barely 10 minutes after President Obasanjo presented the proposed budget, senators retired to their chamber and commenced deliberations on the bill.

An obviously elated President of the Senate, Chief Ken Nnamani, said, “Something that has never happened before is happening today. We are actually going to have full details of the budget within the next 10 minutes as copies are being made as I speak to you.

“Of course, in the past, we would have had to wait for months to get the details, but today, we will all have the detailed proposed budget. This was something I drew the President’s attention to in my speech and it appears to be working already.”

Introducing a draft timetable the Senate had drawn up for consideration of the budget, the Senate Majority Leader, Dalhatu Tafida, explained that such a timetable was necessary to guide the upper legislative chamber towards a speedy passage of the 2006 Appropriation Bill.

After a few alterations to the timetable, which was proposed by the Senate Committee on Appropriation, the senators approved the document with a resolve to strictly adhere to it.

Under the timetable, the second reading or debate on the general principles of the budget will commence on Wednesday, December 7 (today).

Between Thursday, December 15 and Tuesday, December 20, government ministries and departments will defend their sectoral allocations before the various subcommittees of the Appropriation Committee.

However, there will be a lull between Wednesday, December 21 and Monday, January 16 when the Senate will be away on Christmas recess.

Government ministries and departments will continue their budget defence for another six days when the senators resume on Tuesday, January 17.

Between January 27 and Tuesday, February 6, the Senate Committee on Appropriation is expected to collate and consider reports from its sub-committees before presenting a composite report to the Senate Committee on Supply.

On Thursday, February 9, the senators hope to receive the final report on the budget, which is expected to pass through a third reading and final passage on the same day.

Earlier at the joint-session of the National Assembly, the President of the Senate had reminded Obasanjo that “the budget [was] a powerful tool of governance and an economic template for equitable and efficient allocation of resources.”

Nnamani who captioned his speech, “Co-Managing the National Economy Through the National Budget”, observed that, “national budgets have been a source of conflict in the past because of gaps in learning about the principles of co-management.”

Obasanjo had earlier pointedly told members of the National Assembly that their delayed passage of the 2005 Appropriation Act made it difficult for the government to adhere to its spending plans, particularly on capital votes.

According to him, the lawmakers had authorised an aggregate spending of N1.8trillion against expected revenue of N1.63trillion, representing 38 per cent expenditure growth over the 2004 budget.

In the course of implementation, the President explained revenue projection was reviewed to N1.4trillion due to shortfall in crude oil production and the implementation of petroleum subsidy in response to public outcry against increase in the price of fuel.

He however agreed that the level of implementation of the budget was poor compared to the 2004 budget, which was 90 per cent.

On the anti-corruption front, Obasanjo said, “It is now becoming clear to Nigerians at home and abroad that corrupt behaviour when proven will not be allowed to go unpunished. The era of impunity is over.”

He noted that independent assessments by global organisations showed that the country was making progress in tackling the menace of corruption.

The President said that following the recapitalisation exercise of the CBN, 25 mega banks have emerged with $500million direct investment flowing into the sector.

The PUNCH, Wednesday, December 07, 2005

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Comments (9)

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Olusola Okhiria Nee Sodunke(Newport, Newport, UK)says...

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