By Clara Nwachukwu, Okey Ndiribe, Henry Umoru, Inalegwu Shaibu & MICHAEL EBOH
ABUJA— PRESIDENT Goodluck Jonathan, yesterday, presented to the Joint National Assembly a total budget of N4.92 trillion as the aggregate expenditure for the 2013 fiscal year, just as he pegged the benchmark oil price at US$75 per barrel, an increase from the US$72 per barrel of 2012.
The 2013 budget, which is five per cent increase over the N4.749 trillion of 2012, is made up of N380.02 billion for Statutory Transfers , N591.76 billion for Debt Service, N2.41 trillion for Recurrent(Non-Debt) Expenditure and N1.54 trillion for Capital Expenditure.
In the budget proposal which is tagged “Fiscal Consolidation with Inclusive Growth,” Security comprising defene and Police gulped the highest allocation of N668.56bn with Education coming second with N426.53 billion; Health, N79.23 billion; Works, N183.5 billion; Agriculture and Rural Development, N81.41 billion and Power, N74.26 billion.
The government has proposed to reduce the nation’s annual domestic borrowing from N744 billion in 2012 to N727 billion next year, just as the share of recurrent spending in aggregate expenditure is expected to reduce from 71.47 per cent in 2012 to 68.7 per cent in the 2013 budget. Capital expenditure as a share of aggregate spending is set to increase from 28.53 per cent in 2012 to 31.3 per cent in 2013.
President Jonathan said against the backdrop that power and gas sectors require a lot of investments to sustain supply improvements, the government had set aside in the budget a Proposed Infrastructure Euro Bond of about $1 billion to complement available resources geared towards completing gas pipelines and other infrastructure investments, adding: ‘’We have also programmed other grants and soft credits critical to infrastructure and other sectors in our medium term external borrowing plan.”
Fiscal deficit to improve to about 2.17% of GDP
According to him, 2013 fiscal deficit is projected to improve to about 2.17% of Gross Domestic Product, GDP compared to 2.85% in 2012, adding: “Based on these assumptions, the gross federally collectible revenue is projected at N10.84 trillion, of which the total revenue available for the Federal Government’s budget is forecast at N3.89 trillion, representing an increase of about nine per cent over the estimate for 2012.
‘’Non-oil revenue is projected to continue to grow in 2013 as the ongoing reforms in our revenue collecting agencies, and the implementation of initiatives to further develop the non-oil sector continue to yield results.
‘’Based on the above, the fiscal deficit is projected to improve to about 2.17 per cent of GDP in the 2013 Budget compared to 2.85 per cent in 2012. This is well within the threshold stipulated in the Fiscal Responsibility Act, 2007 and clearly highlights our commitment to fiscal prudence. We are determined to further rein in domestic borrowing, and this way, ensure that our debt stock remains at a sustainable level.
‘’The SURE-P will continue with the expected resources of N180 billion in 2013 augmented by the projected 2012 unspent balances, bringing the total to about N273.5 billion. We hope to make further progress in the programme, providing additional infrastructure investments and social safety net schemes for Nigerians.
Foreign reserves now US$41.6bn
Jonathan who noted that the proposed benchmark price of oil was based on a well established economic method of estimating oil price moving averages, however, stressed that the projected Gross Domestic Product, GDP, growth rate is now estimated at 6.5 per cent compared to the 6.85 per cent in the Fiscal Strategy Paper.
According to him, inflation has dropped from 12.9 per cent in June 2012 to 11.7 per cent in August 2012, with plans by the government to reduce it further, just as he disclosed that the nation’s foreign reserves now stand at US$41.6 billion, noting that it was the highest in over two years.
“We intend to continue with our programme of fiscal discipline and prudent monetary policy in order to continue to improve our country’s macroeconomic environment,” he said.
Duty on machinery for local sugar manufacturing
As part of moves to diversify the economy, the President disclosed that machinery and spare parts imported for local sugar manufacturing industries will now attract zero per cent duty with a five-year tax holiday for sugarcane to sugar value chain investors, adding that import duty and levy on raw sugar will be 10 per cent and 50 per cent respectively, while refined sugar will attract 20 per cent duty and 60 per cent levy.
According to him, “A 10 per cent import duty and 100 per cent levy will be applied to both brown and polished rice. All commercial aircraft and aircraft spare parts imported for use in Nigeria will now attract zero per cent duty and zero per cent VAT. This will appreciably improve safety in our skies as newer fleet and less onerous maintenance will prevail. Machinery and equipment imported for use in the solid minerals sector will now attract zero per cent import duty and zero per cent VAT.
“In order to encourage the production of mass transit vehicles in Nigeria, duty on Completely Knocked Down components (CKD) for mass transit buses of at least 40-seater capacity, will now be zero per cent, down from five per cent. Government is desirous of supporting green growth and, in this regard, will explore options for providing incentives for energy efficient vehicles from the 2014 fiscal year.
Good incentives and package for women
Jonathan, who rolled out a lot of good incentives and package for women said: “This administration is gender-friendly and has worked to improve the position of women in society and empower them economically.
“Nevertheless, to further integrate women in the various sectors, we have developed an innovative approach to mainstreaming gender issues starting with five pilot ministries: Agriculture, Health, Communication Technology, Water Resources and Works. These ministries are signing MoUs with the Ministry of Women Affairs to deliver on specific services for women.
“The Ministry of Agriculture, for example, will work with the Ministry of Communication Technology to ensure that five million women farmers and agricultural entrepreneurs receive mobile phones to be able to access information on agro-inputs through an e-wallet scheme.
“The Ministry of Health, in addition to scaling up its ongoing “Save a Million Lives” initiative, plans to give back health and hope to one-third of the pool of young girls and women who have been waiting a long time for V.V.F repairs through surgery and economic rehabilitation. In addition, we are up_scaling routine immunization.
‘’For 2013, the Ministry of Works plans to increase the number of women that are employed in public works programmes as contractors, workers and project evaluators, setting itself a target of 35 per cent for women in FERMA rehabilitation work. In every geopolitical zone, at least three roads leading to areas where women’s socio-economic activities are concentrated, will be prioritised and completed.
“To support these activities, we have set aside N3 billion to be disbursed to participating MDAs as incentives for them to deliver on these targets. Our focus on empowering women is part of our agenda for improving the country’s human development indicators. In this regard, we shall not relent in our efforts to improve access and quality in our health and education sectors.”
‘2013 budget is anti development’
Early reactions to the 2013 national budget presented by President Goodluck Jonathan yesterday criticised the proposals as anti-development, and not pro-people, which they said is an indication that Nigeria is not in tune with global realities.
Critics who spoke with Vanguard based their assertions on the fact that as usual, Recurrent expenditure is proposed for the lion share of N2.41 trillion representing about 49 per cent of the total budget proposal, compared with the N1.54 trillion or 31 per cent set aside for Capital expenditure.
Recurrent expenditure had generated huge controversies last year, when it was revealed that the Senate President earned at least three times the American President’s salary, while other political office holders helped themselves to unbelievably high salaries, where regular Nigerian workers struggled to get approval for N8,500 monthly income, which is less than 10 per cent of the tea allowance for some political officeholders.
Former President, Society for Petroleum Engineers, SPE, and Managing Director/Chief Executive of International Energy Services, Dr. Diran Fawibe, stressed the need for government “to bring down the amount for recurrent expenditure to enhance development.”
President of the Trade Union Congress, TUC, Mr. Peter Esele, warned that if the recurrent expenditure was not reduced, “there will hardly be any development in 2013, and if any, it will be at snail speed, and until there is a change, we cannot move forward.”
Esele maintained that the high recurrent expenditure proposal indicated that government had not learnt anything from previous budgeting processes, adding that now here in the world is recurrent expenditure higher than capital expenditure, which impacts directly on the lives of the people.
Other respondents, some of whom spoke in confidence, noted that the strength of budgetary proposals are derived from their capital proposals, and in turn dictates the level of economic activities anticipated within the fiscal year, especially in terms of attracting new foreign direct investments, FDIs, which Nigeria is in dire need of.
However, they opined that government appeared to be more concerned with what goes to the political class as opposed to what is best for the masses.
In view of its anti-people tendencies, Esele warned that labour would not support the budget except the capital provisions were made to be higher.
Total Expenditure N4.92trn N4.88 trn
Recurrent Expenditure N2.41trn N2.472 trn
Capital Expenditure N1.54trn N1.32trn
Oil Price (Per Barrel) US$75 US$72
Oil Prod (Barrel P/d) 2.53m 2.48m
GDP Growth 6.5% 7.2%
Fiscal Deficit 2.17% 2.85 %
Statutory Transfers N380.02bn N398bn
Security N668.56bn N921.91bn
Education N426.53bn N400.15bn
Health N279.23bn N282.77bn
Works N183.5bn N180.8bn
Agric & Rural Devt N81.41bn N78.98bn
Power N74.26bn N161.42bn