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Excess crude account hits $16.3billion

Posted by Oluyinka Akintunde, Abuja on 2006/03/07 | Views: 697 |

Excess crude account hits $16.3billion


The balance in the excess crude oil account stood at $16.3billion (about N2.12trillion) as at end-December 2005, out of which $13.4billion (about N1.74trillion) accrued last year alone, the Minister of Finance, Dr. Ngozi Okonjo-Iweala, disclosed on Monday in Abuja.

The balance in the excess crude oil account stood at $16.3billion (about N2.12trillion) as at end-December 2005, out of which $13.4billion (about N1.74trillion) accrued last year alone, the Minister of Finance, Dr. Ngozi Okonjo-Iweala, disclosed on Monday in Abuja.

The account build up is largely due to high oil prices in the past two years and the Federal Governments’ policy of pegging budget projections on crude prices much lower than market rates.

Also the three tiers of government are to share a total of N2.92trillion expected to accrue into the Federation Account in 2006, the minister said while giving a breakdown of this year’s budget at a special Budget Ministerial Briefing.

The Minister of Federal Capital Territory, Mallam Nasir el-Rufai; the Minister of State for Finance, Mrs. Nenadi Usman; the Chairman of the Economic and Financial Crimes Commission, Mallam Nuhu Ribadu, and the Director-General of the Debt Management Office, Dr. Mansur Muhtar, attended the briefing.

It also emerged that N11.19trillion was shared from the Federation Account between June 1999 and December 2005 among the three tiers of government.

Of the N11.19trillion shared in the six and half years, the Federal Government accounted for N5.14trillion, while the 36 states and the FCT got N3.80trillion and 774 local governments, N2.25trillion, according to information released from the minister’s office.

The Director-General of Budget Office of the Federation, Mr. Bode Agusto, also on Monday stated that the Federal Government had set aside N42billion in the 2006 budget to clear pension and contractors’ arrears, in line with promises made by President Olusegun Obasanjo in the initial budget proposal sent to the National Assembly.

Okonjo-Iweala disclosed that the sum of N1.52trillion revenue would accrue to the Federal Government from the Federal Collectible Revenue of N2.92trillion.

She explained that the 2006 Appropriation of N1.90trillion represented a six per cent increase over the N1.8trillion budget in 2005 and 32 per cent over the N1.4trillion budget in 2004.

Of the N1.90trillion total expenditure for 2006, she stated that capital expenditure accounted for N568.56billion while recurrent expenditure accounted for N950.32billion.

Education accounted for the highest chunk of the 2006 appropriation with N166.62billion (about 8.8 per cent of the total), comprising N129.23billion for recurrent expenditure and N37.389billion for capital expenditure.

The Health sector which was allocated N106.94billion (about 5.6 per cent), comprising N67.78billion for recurrent and N39.16bilion for capital took the second position.

Other top allocations include: Defence, N101.45billion; Works, N91.06billion; Police Formations and Command, N85.98billion; Water Resources, N80.25billion; Power and Steel, N78.09billion and the Presidency, N54.93billion.

She also noted that N289.5billion had been set aside for debt servicing in 2006, comprising N220billion for domestic debt servicing and N69.5billion for foreign debt servicing.

She added, “With this budget, we have continued the tradition of fiscal prudence by budgeting at an oil price of $35 a barrel while saving any amounts above that in the excess crude account. This practice helps us manage volatility of oil prices so we can maintain macroeconomic stability.

“At the budgeted price of $35 a barrel, the total projected revenue is N1.52trillion, which will result in a fiscal deficit of 2.6 per cent Gross Domestic Product. This is well within the three per cent range targeted in the National Economic Empowerment and Development Strategy.”

The minister listed other important Federal Government’s expenditures in 2006 as Petroleum Support Fund, N150billion; the Independent National Electoral Commission election, N54.4billion; public service reform, N43billion; the National Population Commission census, N10billion; and N1billion to fight Avian flu.

She said that the 2006 budget would be implemented to 90 per cent of the capital budget.

Reviewing the 2005 budget, the minister said the government did not realise its revenue forecast due to a number of factors, including the financing of N240billion petroleum subsidy.

She said, “In 2005, we had many problems with the budget not least of which was a very late start in implementation in April. We also had the problem of lower revenues than forecast because of the closure of some wells and a drop in production from a forecast 2.7million to 2.4million barrels per day.”

She said that the 2005 capital budget would be implemented up to 80 per cent by March 31, 2006 when the books on last year’s capital budget will be closed.

The government, she noted, recorded tremendous progress in 2005, which included seven per cent growth in agriculture due to various presidential initiatives, four million metric tonnes growth in cassava production from 35 to 39 million metric tonnes, rehabilitation of over 26,000 kilometres of roads, and modernisation of two out of the eight teaching hospitals, among others.

She said that the government ended the year 2005 with a consolidated fiscal surplus of 12 per cent of Gross Domestic Product as a result of prudent fiscal management and adherence to oil price-based fiscal rule.

She also stated that the foreign reserves stood at $28billion as at December 2005, out of which excess crude savings accounted for $16.3billion.

On foreign direct investments, the minister noted that an estimated $3billion inflow was recorded in the non-oil sector in 2005, comprising over $1billion in the telecoms sector, $500,000 in the banking sector and the balance in manufacturing, agriculture, construction and retail trade, and the power sector.

“With this inflow of investments, jobs are being created, sometimes in non-traditional fields for which we shall need to retain and reorient our university graduates,” she added.

Agusto said the government had earmarked N17billion and N25billion for the payment of pension and contractors’ arrears in 2006.

The Budget Office boss, who stated that the sum of N164billion was drawn down from excess crude savings to finance the 2005 budget deficit of over N250billion, disclosed that the 2006 budget deficit of N362billion would be financed by N258billion from excess crude savings and N45billion from the sale of government houses.

THE PUNCH, Tuesday March 07, 2006

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Okfold(Sobe, Edo, Nigeria)says...

I want the meaning of female owan name Ekeke (Edo state)

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Toluwalase Samuel Olufemi(Ijebu, Ogun, Nigeria)says...

Authority belongs to God, once He decrees it is final and binding

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Ikponmwosa Osamede(Edo, Nigeria)says...

Your meaning of Osamede is wrong. Osamede means God has given me a crown