Long wait for 2015 budget

For the second time in two years, President Goodluck Jonathan delegated presentation of the nation’s an­nual budget to the federal legislature to one of his ministers, Mrs. Ngozi Okonjo-Iweala.

The Coordinating Minister for the Economy and Fi­nance Minister had performed a similar exercise same day in 2013. The reason given then was the possible heck­ling of the president should he present the budget in a joint session of both chambers.
Regardless, since 2008, in compliance with the Fis­cal Responsibility Act (FRA), an Act of the National As­sembly passed in 2007, the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP), which charts the government’s roadmap for the next three years must get to the legislature three to months to the end of the fiscal year.
In the MTEF/FSP, the Executive, in this context, the Presidency, is expected to present estimates of the na­tional budget which would carefully analyze the preced­ing year, and revenues expected in the next two years.
More than that, the MTEF/ FSP would also detail how much is expected in revenue, from which sector and how such funds would be deployed for the common good.
This year, the 2015-2017 MTEF/FSP arrived the two chambers in October, still within the stipulated time but this time around, figures kept changing in response to the volatility in the international oil market.
In the first projection sent to the National Assembly, government expected N7.286.89 trillion as total earnings on oil and gas sales for 2015 with N3.716.82 being pro­posed as crude oil sales.
Besides, N1.221.4 trillion was proposed as subsidies in the new year with N971.4 billion proposed as subsidy on and N250 billion would be spent as kerosene subsidy.
In the first N4.724 trillion 2014 budget, there was no provision for kerosene subsidy but in the revised MTEF/ FSP, N91.03 billion is budgetted for kerosene while Pre­mium Motor Spirit (PMS) otherwise known petrol was not even given any allocation.
In a December 12 letter to Senate President David Mark, the president explained why 2015 budget figures needed to be revised downwards. “As you know the first MTEF with the budget benchmark of $78 per barrel was submitted to the National Assembly on September 30 and discussion on the MTEF and budget construction based on those estimates began with the relevant Committees of the National Assembly.
“However, shortly after that submission, oil prices be­gan to fall precipitously leading to the revision of the oil benchmark price in the MTEF to $73 per barrel which was resubmitted to the National Assembly on November 18, 2014.
“Following this, the decision of OPEC on their meeting in Vienna on the 27th of November 2014, we want to cut production to support the price not to further precipitous fall in the oil price to below $70 per barrel, this led one more time to another downward revision of the bench­mark price to $65 per barrel and the revise MTEF which were again submitted to you on 2nd of December, 2014…
“We would like to confirm that having submitted these budget estimates, we are not proposing further revision of the oil benchmark price. Though prices continue to be extremely volatile and present and trend further down­wards , there are indications based on price intelligence we have this time that prices may range between $65 to $70 per barrel in 2015.”
Nevertheless, in the initial 22-page document, the fed­eral government projected N1.029 trillion as capital ex­penditure for ministries, departments and agencies while N1.801 trillion would be spent as personnel costs for the MDAs.
Service wide votes would gulp N376.05 billion while N570 billion is projected as new borrowings in 2015.
But in the revised estimates, capital expenditure in 2015 took a great hit having been reduced to N627.16 bil­lion and recurrent expenditure increased to N2.622.42 trillion.
Expectedly, the Subsidy Reinvestment and Empow­erment Programme (SURE-P) fell from an initial N250 billion to N102.50 billion raising the total 2015 budget to N4.460.46 trillion.
Domestic borrowings did not increase from the initial N570 billion with zero recorded for new foreign borrow­ings while 2.2782 million barrels per day is being project­ed for 2015.
As part of efforts to tackle crude oil theft and pipeline vandalisation, the security agencies are expected to start ground and aerial surveillance while the Federal Ministry of Justice would ensure speedy prosecution of oil thieves and vandals.
The activities of crude oil thieves and oil pipeline vandals remain the main risks to oil production. The potential implications of their activities are a reduction in government revenue with further impacts on govern­ment debts and fiscal deficits as well as pressures on the exchange rate.
Although the Senate and the House of Representa­tives are on the Yuletide recess, it is expected that some committees, particularly the Appropriation and Finance Committees would begin work on the budget estimates before it is committed to their various sub-committees in January.
But the first task that would confront lawmakers is to pass the 2015-2017 MTEF/FSP because without that, any work on the budget would simply be a futile exercise.