By Henry Umoru
ABUJA—FORMER Vice President Atiku Abubakar, yesterday, wrote President Goodluck Jonathan, warning that if implemented, the 2011 budget will make Nigeria worse economically, just as said that Nigeria was broke.
Atiku alleged that Jonathan’s administration had been characterized with excessive borrowing which, according to him, was a negation of the Fiscal Responsibility Act.
Atiku, a Presidential aspirant on the platform of the Peoples Democratic Party, PDP, in an 11-page letter he personally sent to Jonathan, warned that any budget that was centred on consumption without corresponding investments in critical infrastructure, would in turn lead to a very serious economic disaster.
According to him, “at a time of unprecedented oil boom, you have presented Nigeria with a budget of consumption; a budget of debt accumulation to imperil the future; a budget that is rich in rhetoric and pedestrian initiatives but lacking in any bold step to lay the foundation for Nigeria’s next 50 years or even 20 years.
I almost wept for Nigeria
“I almost wept for Nigeria after reading your 2011 budget, which is your first budget as President of Nigeria.
In simple terms, it signals your vision for Nigeria and how you intend to govern. For effect, you proudly announced that this is the first budget of the National Implementation Plan, NIP, for Vision 20:20:20.
The rest of the world must be laughing at us. For a summary, you proposed a total expenditure of N4.22 trillion to be financed by a revenue estimate of N2.83 trillion, leaving a total deficit (new borrowing) of N1.4 trillion.
“Mr. President, you plan to borrow 33 per cent of the entire budget, or 3.62 per cent of GDP which is higher than the 3 per cent stipulated in the Fiscal Responsibility Act. Your total debt service is N542 billion (which is higher than your total capital spending on power, roads, health and education put together).
“Your total recurrent expenditure (including debt service) is N3.023 trillion, meaning that with a revenue of N2.83 trillion, your government plans to borrow money to finance recurrent expenditure even if capital budget is zero.
“Your recurrent budget is 107 per cent of total revenue. Put differently, your capital budget is N1 trillion whereas your deficit or planned borrowing is N1.4 trillion, meaning that even with a zero capital budget you plan to borrow about N400 billion to add to revenue to finance consumption. Mr. President, no one needs to be an economist to appreciate that this is a disaster.
“Mr. President, let me draw your attention to the simple meaning of your budget: not one kobo of our oil revenue (at a time of oil boom) is being spent on power and infrastructure. Rather, you plan to spend the entire oil revenue on consumption, and even borrow to consume. Every kobo of capital budget is to be borrowed.
If you continue to borrow at the average interest rate of 14 per cent by the 2012 budget, your borrowing in 2011 will add another N196 billion to debt service payment (and hence by 2012 debt service might be in excess of N738 billion). At the rate you are going, by 2015, debt service payment will be in excess of N1 trillion.”