By Gabriel Omoh, Emmanuel Aziken & Inalegwu Shaibu
ABUJA â€” INFRASTRUCTURE development topped the Federal Governmentâ€™s agenda in THE Capital Expenditure of the N4.07 trillion budgetary proposal for 2010 laid separately before the Senate and the House of Representatives yesterday.
It was the first time since the commencement of the Fourth Republic that the sitting President did not perform the formality of personally laying the governmentâ€™s financial plan before the National Assembly. It was also the first time that the two chambers separately received the budgetary proposals.
Special Adviser to the President on National Assembly Matters, Senator Mohammed Abba Aji performed the brief ritual in the two houses. He was welcomed into the Senate chambers at 11.28 a.m. after the Senate invoked order 17 of its standing rules to allow him and the Special Assistant to the President (Senate) Dr. Cairo Ojougboh into the Senate chambers.
Five minutes later, Abba Aji laid the budget estimates on the Senate table and bowed twice before taking his leave. He immediately proceeded to the chamber of the House of Representatives where he performed the same ritual,Â followed this time by Alhaji Ibrahim Zailani, the Special Assistant to the President (House of Representatives.)
The proposed spending is 32 per cent higher than that of 2009 and, if approved, will push Nigeria even further beyond a 3 per cent deficit target set under a 2007 fiscal responsibility act.
Around a third of the planned budget is non-recurrent spending targeting areas including critical infrastructure, the power sector and development in the Niger Delta, the restive heartland of the countryâ€™s mainstay oil industry.
â€œThe purpose of the 2010 budget is to accelerate economic recovery through targeted fiscal interventions intended to further stimulate the economy and support private sector growth,â€ Yarâ€™Adua said in a budget statement presented to the lawmakers.
The statement said N1.37 trillion was budgeted for capital expenditure and N2.011 trillion for recurrent, non-debt expenditure. The spending plans for the country, which vies with Angola as Africaâ€™s biggest oil producer, assume oil output of 2.088 million barrels per day (bpd), a benchmark oil price of $57 and an exchange rate of N150 to the U.S. dollar.
Yarâ€™Adua said improving power infrastructure was a top priority and that Nigeria aimed to double electricity capacity to 10,000 megawatts (Mw) by the end of 2011. Intermittent power supply is seen as a major blow on economic growth.
Yarâ€™Adua said the utilisation of budgetary allocations for 2009 had been â€œbelow expectationsâ€, raising questions about how effectively government would spend the additional funds.
Out of the N4.07 trillion budgetary proposed expenditure for 2010, N1.37 trillion is earmarked for capital expenditure, N2.011 trillion is proposed as recurrent expenditure, N517.071 billion is proposed for debt servicing and N180 billion is allotted for statutory transfers. Among the beneficiaries of the statutory (first line charge) are the Niger Delta Development Commission (NDDC) N35.6 billion, the National Judicial Council, N91 billion and Universal Basic Education, N44.3 billion.
Another N9.3 billion is earmarked as the NDDCâ€™s share of excess crude distributed in 2009.
The National Assembly has an allocation of N127.7 billion in the budgetary proposal for the 2010 financial year.
Details of the budgetary estimate further show that the highest sectoral allocation was given to the Ministry of Works with N249.4 billion followed by Education with N249.08 billion; Defence N231.99 billion; Police Formation N216.4 billion; Health N161.84; Federal Capital Territory Administration N158.00 billion; Power N156.8 billion
The Ministry of Niger Delta Affairs has an allocation of N64.3 billion while the benchmark for oil revenue is fixed at $57 per barrel and the exchange rate for the dollar is N150 to the dollar.
The Senate is expected to commence debate on the budget today.
Many Senators including Senator Ahmed Makarfi, chairman of the Senate committee on Finance were yet to study the budgetary proposals as at press time.
However, Senator Manzo Anthony (PDP, Taraba North) welcomed the budget as an ambitious effort to fast track infrastructure development.
â€œIt is an ambitious budget with significant capital projects. It would appear that even greater emphasis is being placed by the President on infrastructural projects. The deficit is a concern but it is an issue that can be managed,â€™â€™ he said.
Michael Hugman, emerging markets strategist at Standard Bank in London, said the expansionary budget would have some positive effects in the immediate term but noted there was an inflationary risk, particularly if the government goes ahead with plans to abolish fuel subsidies.
â€œIn the short-term, the expansionary element, will be positive for growth, equities and also, somewhat perversely, bonds, which we believe are being driven by a combination of flight to quality by banks and pension funds together with repeated liquidity injections into the market,â€ he said.
â€œHowever, when combined with inflationary risks from fuel price deregulation and possibly poor food production over the next few months, there is a danger inflation can head back towards 15 per cent year-on-year by mid-2010.â€Â The 2010 spending plans target economic growth of 6.1 per cent and headline inflation of 11.2 per cent.
â€œAlthough the deficit will likely exceed targets established under fiscal responsibility guidelines â€“Â this is no surprise given that priority areas are infrastructure and the Niger Delta,â€ said London-based Knight Libertas analyst Richard Segal.
â€œThe accountability of spending in these two areas will be crucial to sustain the confidence of local investors,â€ he said.
Senate passes N253bn 2009 Supplementary Appropriation
Meantime, the Senate yesterday passed N253 billion supplementary budget for 2009.
The new sum was jacked up by N1.25 billion by the Senate from the N252 billion sent by the President Yarâ€™Adua to the National Assembly.
Chairman, Senate Committee on Information and Media, Senator Ayogu Eze in response to questions from newsmen on the frequency of medical trips of President Yarâ€™Adua dismissed the need to investigate the health status of the President.
Senator Eze said the constitution only empowers a health board of enquiry to ascertain the health status of the President following which the Senate can then act.
The highlight of the supplementary budget which was passed yesterday shows that of the total sum of N353,600 billion, N100,050 billion is for recurrent expenditure, while the sum of N253,550 billion is for contribution to the Development Fund for additional Capital Expenditure for the year ending on the 31st of March, 2010.
Senate President, Chief David Mark before passage of the supplementary appropriation charged the executive to ensure full implementation of the budget, stressing that the extension of the implementation period of the 2010 budget to 31st March, 2010, has given the executive ample time for full implementation.
He said, â€œHaving extended the implementation period to 31st of March, 2010, I hope that that gives the executive time to implement the budget.â€