Wed12142011
Last update10:43:46 PM GMT
Wednesday, 14 December 2011 00:05
Written by Oluwole Josiah, Abuja
President Goodluck Jonathan
SECURITY took the highest share of the N4.749tn budget estimates presented to the National Assembly on Tuesday by President Goodluck Jonathan. Jonathan classified security under “critical sectors” and proposed to spend N921.91bn to secure the country next year.
The bane of Nigeria’s economic growth, the power sector, gets N161.42bn; Works gets N180.8bn; Education (excluding Universal Basic Education Commission, Petroleum Technology Development Trust Fund & Education Trust Fund), N400.15bn; Health, N282.77bn; and Agriculture and Rural Development, N78.98 billion.
Others are Water Resources, N39bn; Petroleum Resources, N59.66bn; Aviation, N49.23bn; Transport, N54.83bn; Lands & Housing N26.49bn; Science and Technology, N30.84bn; Niger Delta, N59.72bn; Federal Capital Territory Administration, N45.57bn and Communications Technology, N18.31bn.
The Federal Government has, however, increased the levies and tariffs for the importation of wheat and brown rice to encourage the domestic production of the commodities as well as the utilisation of cassava for domestic use.
In the same vein, the government made all machinery imported for agricultural development and power generation duty free. Jonathan said the budget was based on the Federal Government’s aggregate revenue projection of N3.644trn within the fiscal year 2012, even though the total federally collectible revenue was put at N9.406trn.
The revenue profile as presented by Jonathan for 2012 will operate at a deficit of N1.105tn.
“The aggregate expenditure comprises N398bn for Statutory Transfers; N560bn for Debt Service underscoring the real need to address the rising domestic debt profile; and N2.472trn for Recurrent (Non-Debt) Expenditure. Capital expenditure has an allocation of N1.32tn, representing a 15 per cent increase over the amount approved in the 2011 budget. The emphasis is on the completion of critical infrastructure projects,” he said.
Jonathan also noted that the fiscal deficit was estimated at about 2.77 per cent of GDP in the 2012 budget, compared to 2.96 per cent in 2011, saying it was within the threshold stipulated in the Fiscal Responsibility Act, 2007.
According to the President, the budget is based on assumptions of daily crude oil production level of 2.48 million barrels, up from 2.3mbpd for 2011. He also put the oil benchmark at US$70/barrel, noting that the figure was a cautious revision from the US$75 per barrel approved in the 2011 amended budget.
The budget, he said, is also based on an exchange rate of N155 to US1$, a projected GDP growth rate of 7.2 per cent and a projected inflation rate of 9.5 per cent.
Jonathan said, “Based on the above assumptions, the gross federally collectible revenue is projected at N9.406tn, of which the total revenue available for the Federal Government’s Budget is forecast at N3.644tn, representing an increase of 9 per cent over the estimate for 2011.
“Non-oil revenue is projected to grow significantly in 2012 as recent efforts to reform revenue collecting agencies and the implementation of initiatives to further develop non-oil sectors are expected to yield results.”
Jonathan said the aggregate expenditure of N4.749tn for 2012 was a “modest increase” of 6 per cent over the N4.484trn appropriated for 2011.
“I am pleased to note, however, that the declining share of capital is being reversed so it will account for about 28 per cent of total expenditure in 2012 compared to 26 per cent in 2011. We intend to continue on this path so that by 2015, it will have risen to almost 33 per cent.
“This will also have a salutary effect on our domestic debt profile, which has risen significantly in recent years. We are determined to rein in domestic borrowing, and through this, ensure that our debt is at a sustainable level,” he said.
He also focused on the administration’s commitment to curtail recurrent expenditure, having adopted the policy of fiscal consolidation as evident from the Medium-Term Fiscal Framework.
He said the share of recurrent expenditure in the 2012 Budget proposal was 72 per cent down from the 74.4 per cent in 2011, adding that the government intended to continue on this downward trend up to 2015.
In the same vein, the President said the government was streamlining agencies with overlapping mandates as a way to realign public expenditure.
On the development of agriculture, Jonathan said fiscal measures had been introduced to support the sector, noting that the duty on machinery and certain specified equipment for the sector would, effective January 31, 2012, attract zero duty even as there are plans to put up supportive fiscal policies for the rice and wheat sectors to stimulate domestic production.
Jonathan said, “Government is also introducing policies to encourage the substitution of high quality cassava flour for wheat flour in bread-baking. Bakeries will have 18 months in which to make the transition, and will enjoy a corporate tax incentive of 12 per cent rebate if they attain 40 per cent blending. With effect from March 31st, 2012, importation of cassava flour will be prohibited so as to further support this programme.
“All equipment for processing of high quality cassava flour and composite flour blending will enjoy a duty free regime as incentive to bakers for composite flour utilization. Consultations with the sector to ensure a smooth transition are on-going.
“It is common wisdom that the best way we can grow our economy and create jobs for our people is for us to patronize Nigerian-made goods. This is why we are introducing enabling policies to drive this process. In this regard, we are introducing fiscal policy measures that will encourage the purchase and utilisation of locally produced commodities.
“From July 1, 2012, wheat flour will attract a levy of 65 per cent to bring the effective duty to 100 per cent, while wheat grain will attract a 15 per cent levy which will bring the effective duty to 20 per cent.
“Similarly, there will be a levy of 25 per cent on brown rice to bring it to 30 per cent. In addition, to encourage domestic rice production, a levy of 40 per cent will be placed on imported polished rice leading to an effective duty rate of 50 per cent.
“Effective December 31st, 2012, all rice millers should move towards domestic production and milling of rice, as the levy of 50 per cent will be further raised to 100 per cent. Let me add here that no waivers or concessions will be entertained for rice and wheat importation.”
On power, the President said the government had commenced the implementation of the power road map which aims to create a robust power sector through the privatisation of the generation and distribution of power as well as create an enabling environment for investment.
“Institutional arrangements have been made for a Bulk Trader company to intermediate between power producers and distributors in a market setting, thereby giving Independent Power Producers the confidence to invest in generation capacity.
“Government, in collaboration with our development partners has created a credit risk management initiated to provide partial risk guarantees to give comfort to gas producers in respect of payment. Similarly, effective January 31st, 2012, equipment and machinery in the power sector will attract zero duty,” he added.
Jonathan said the non-oil sector had continued to be the main driver of growth with increased crop production, growth in wholesale and retail trade and increased financial sector activities backed by the banking sector reforms.
He said contributions by the oil sector continued to improve as average daily oil production rose to 2.45 million barrels per day in the second quarter of 2011 compared to 2.35 million barrels per day in the corresponding period in 2010.
He said he had established a committee chaired by the Coordinating Minister for the Economy and Minister of Finance with a mandate to remove the bottlenecks at the ports and another committee made up of private sector users of the ports to monitor implementation.
“We also intend to work hard to improve the infrastructure at the ports. Other impediments such as those arising from bureaucratic and costly paperwork will also be removed,” he said.
Jonathan also said that the new fiscal policy was aimed at creating jobs and laying a solid foundation for sustainable economic growth which would deliver the dividends of democracy to the people.
He further noted that the Youth Enterprise with Innovation in Nigeria programme recently launched in Abuja would lead to the creation of 100,000 jobs through support to young entrepreneurs.