By Emma Ujah, Luka Binniyat &Patience Saghana
ABUJA—PRESIDENT Goodluck Jonathan, yesterday, presented to the National Assembly, a budget proposal of N4.226 trillion which is 18 per cent less than the N5.1599 trillion budget proposal of 2010.
The proposal has a built-in deficit of N1.390 trillion. The proposed spending for 2011 is based on a benchmark oil price of $65 per barrel, production of 2.3 million barrels per day (bpd) and an exchange rate of 150 naira to the dollar.
President Jonathan’s revenue forecast indicates that the Federal Government would earn N2.836 trillion while planning to spend N4.226 trillion leaving a deficit of N1.390 trillion, which represents 3.62 per cent of GDP
Jonathan told the National Assembly: “This is a budget of fiscal consolidation, increasing economic growth and employment generation,” adding that just over one trillion naira of the proposed spending is earmarked for capital expenditure.
Govt’s spending plans
The President said the remainder would be spent on recurrent expenditure and debt servicing, noting that government spending plans were fiercely debated and often go through several amendments before being approved in their final form.
The 2011 oil production forecast is down slightly on the 2.35 million bpd assumed for this year, while the assumed exchange rate of 150 naira to the dollar remains the same. Despite the controversies generated by excessive recurrent budgets, the structure of the 2011 budget still tilted heavily towards the recurrent as it took N2.481 trillion, while only N1 trillion was earmarked for capital expenditure.
A separate $5.4 billion (about N810 billion) has been budgeted to be paid as Joint Venture Cash Calls to oil producing Joint Venture Partners.
The President noted the high expenditure outlay in the current fiscal year saying funding of Independent National Electoral Commission, INEC, voters’ exercise, as well as, the upward review of civil servants salaries and allowances were responsible.
He said that government has decided to cut next year’s budget in line with the prudent fiscal management policy of the administration. His words: “The rise in expenditure in 2010 was a result of the exceptional outlays to meet wage increases granted to civil servants as well as some other exceptional items, such as the INEC Voters exercise.
The implications of the increased recurrent vote for the deficit have informed government policy of gradual fiscal consolidation commencing in 2011 fiscal year. Accordingly, there is deliberate reduction in the budgetted expenditure from the N5,15966 trillion approved in 2010 amendment and supplementary budget.
“However, the N1.00599 trillion voted for capital expenditure compares favourably with the N919.5 billion actually utilised in the extended 15 months of the 2009 fiscal year, which is larger than any amount of capital resources utilised by our MDAs in any fiscal year to date.”
The President expressed optimism for a better Nigerian economy in 2011 with a stable Niger Delta region where he said he expected 2.3 million barrels per day with an oil bench mark of $65 per barrel.
He added that with various initiatives for higher power out_put, incentives for job creation, lower interest rates and better infrastructure, the GDP growth rate would be about seven per cent.
President Jonathan said: “Ordinary Nigerians should feel the tangible benefits of our economic growths by ensuring that gainful employment increases commensurately with inclusive economic growth and wealth creation.
Friendly investment environment
“This administration would initiate a new National Job Creation Scheme which we are kick-starting with seed funding of N50 billion provided for in the 2011 budget. The scheme interventions are multi_faceted, adopting short and medium term strategies to create thousands of new jobs in our urban and rural communities.
The government is accelerating real sector reform targeted at enhancing economic growth and addressing the infrastructural institutional impediments to a more competitive and business friendly investment environment. We are working hard to increase the allocation of cheap and long term credit to the real sectors of the economy.”
He also said that a separate $500 million facility would be made available to support small and growing businesses.
On power, President Jonathan said that a N500 billion intervention fund would be made available for power, manufacturing and aviation sectors, adding that a fund has also been established to refinance loan facilities at single digit interest rates. Furthermore, the president said provision was being made for the establishment of a Viability Gap Fund to kick_start the process and to encourage private sector participation.
According to him, a Nigerian Sovereign Investment Authoritywas being proposed to manage the Nigerian Infrastructure Fund, a Future Generations Fund and a Stabilisation Fund to reduce the countries vulnerability to external oil price shocks and ensure inter-generational equity in the management of the nation’s oil wealth.
Revenue N2.836 trillion
Expenditure N4.226 trillion
Deficit N933 billion (3.62% of GDP)
Capital N1.00599 trillion
Recurrent N2.48171 trillion
National Job Creation Scheme N50 billion
N500 million Power, Aviation Fund
$500m for small businesses.
N749.75 billion has been cashed back for capital as at the end of October
N900 billion will have been implemented by the end of year.
Average MDAs capital utilisation below 50%.
Oil production 2.3m mbpd
Oil benchmark $65
JVC N5.4 billion
Established Nigerian Sovereign Investment Authority