Govt borrows N473bn to meet up with recurrent expenditure, says Okonjo-Iweala

The Minister of Finance and Co-ordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, yesterday, put to rest fears of immediate removal of fuel subsidy, as she confirmed that N145.2 billion provision was made for it in 2015 budget.



Speaking to newsmen in Abuja, she said: “I want to clarify that there has been some misinformation that has gone around in the media about the fact that the National Assembly passed the 2015 budget without provision for fuel subsidy. It is not true.

“It is important that you note that the National Assembly approved provisions of N100 billion for PMS (Petroleum Motor Spirit, otherwise called petrol) and N45.2 billion for kerosene subsidy. So, it is not true that they passed the budget without provision for subsidy.”

How that budgetary provision would meet the needs would be a challenge for the in-coming Gen. Muhammadu Buhari administration in the months ahead.

Managing tough cash flow

The minister emphasized that managing the economy since the crash in oil prices had been very tough for her team which had to adopt various strategies to keep the economy running.

She said: “As you know, I have been honest with you since the current economic problems started. I would like to repeat: we have serious challenges, things have been tough since the beginning of the year and they are likely to remain so till the end of the year. We have serious challenges but we also have strengths and if we do the right things we can keep a steady course and emerge out of the current situation.

“As a result of the 50 per cent decline in oil revenues, the country has faced a difficult cash crunch and the Federal Government has focused on keeping the economy stable and the government running through a series of measures. We have front-loaded the borrowing programme to manage the cash crunch in the economy.

“In January we had a deficit in terms of the money we had and the expenditure we had to carry out. So we had to borrow to add to what we had. In February, it was the same.

“In March, we were able to have more internally generated revenue that enabled us to offset but in April, we had to borrow to cover up some gap. This is how we have been managing the economy on a month-by-month basis.”

Okonjo-Iweala said the Federal Government had already utilised more than half of the budgetary provisions for borrowing in the year, in the first four months to pay salaries and provide funds for overheads.

Govt borrows N473bn to meet up with recurrent expenditure

She said: “Of the N882 billon budgetary provision for borrowing, the government has borrowed N473 billion to meet up with recurrent expenditure, including salaries and overheads. No capital release so far.

“Traditionally, the first part of the year witnessed low revenue because tax receipts come in from the middle of the year. This has compounded the challenges caused by the steep drop in revenues due to the oil price fall. As a consequence of the revenue challenges, there has been no capital budget release so far this year but we have kept the recurrent expenditure going.”

…keeps the economy stable

Okonjo-Iweala, added however, that in spite of the cash flow challenge, government has managed to keep the economy stable to the point that the Nigerian economy which is projected to grow by 4.8 per cent this year, according to respected analysts, is doing much better than many other oil producing countries.

“One positive feature despite the clear challenges is the fact that food prices, though inching up, are still quite stable. Also, inflation is still in single digit. This has helped reduce some of the pressure that Nigerians are going through.”

The budget provides for N882 billion borrowing for this year, which was a rise in the trend compared to the N570 billion of the previous year.

Budget highlights

lThe National Assembly passed a budget of N4.493 trillion (up from the N4.425 trillion proposed by Mr. President). This represents an increase of N67.43 billion.

lThe NASS passed a benchmark oil price of $53 per barrel ($1 higher than the budget proposal; generating an extra revenue of N54.25 billion for FGN).

lIt, however, retained the oil production volume of 2.2782m bpd and exchange rate of N190/$. While other components of non-oil revenue were also retained as proposed, FGN Independent Revenue was raised by N39.294 billion, from N450 billion to N489.294 billion.

lGross Federally Collectible Revenue increased by N169.845 billion, from N9.61 trillion to N9.78 trillion, as a direct result of raising the benchmark price.

FGN Budget Revenue: N3.452 trillion, up from N3.358 trillion.

Expenditure

The aggregate expenditure passed was N4.493 trillion, N67.43 billion higher than the proposed aggregated expenditure of N4.425 trillion.

Debt Service: Debt service remains unchanged at N943.62 billion.

Statutory Transfers: Statutory transfers was increased by N9.34 billion, from N366.28 billion to N375.62 billion.

Niger Delta Development Commission budget was increased from N45.78 billion to N46.72 billion (an increase of N940 million), while UBE increased from N67.30 billion to N68.38 billion (an increase of N1.08 billion.

NASS allocation was raised by N5 billion, from N115 billion to N120 billion. Human Rights Commission was raised by N316 million, from N1.2 billion to N1.516 billion.

Capital expenditure

Aggregate capital expenditure (inclusive of transfers and SURE-P) was increased to N722.20 billion, from N663.67 billion (an increase of about N58.57 billion). This comprises an increase of N37.77 billion in MDAs’ capital and N20.80 billion for MDGs under capital supplementation. IPPIS capital (N5 billion) was completely removed from the Appropriation Bill, while capital development of National Institute for Legislative Studies was increased by N4 billion (from N2 billion to N6 billion), and N1 billion was provisioned for a new project, National Assembly Clinic