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Infrastructure takes lion share of N4 trillion 2010 budget

by Business News Report

*Senate passes N253bn Supplementary Appropriation
By Emmanuel Aziken and Inalegwu Shaibu
Abuja — Infrastructure development topped the Federal Government’s agenda in the N4.07 trillion budgetary proposal for 2010 laid separately before the Senate and the House of Representatives yesterday. It was the first time since the commencement of the fourth republic that the sitting President did not perform the ritual of personally laying the government’s financial plan before the National Assembly. It was also the first time that the two chambers separately received the budgetary proposals.
Special Adviser to the President on National Assembly Matters, Senator Mohammed Abba Aji performed the brief ritual in the two houses. He was welcomed into the Senate chambers at 11.28 a.m. after the Senate invoked order 17 of its standing rules to allow him and the Special Assistant to the President (Senate) Dr. Cairo Ojugboh into the Senate chambers.
Five minutes later, Abba Aji laid the budget estimates on the Senate table and bowed twice before taking his leave. He immediately proceeded to the chamber of the House of Representatives where he performed the same ritual only that he was followed this time by Alhaji Ibrahim Zailani, the Special Assistant to the President (House of Representatives.)

The proposed spending is 32 per cent higher than in 2009 and, if approved, will push Nigeria even further beyond a 3 per cent deficit target set under a 2007 fiscal responsibility act.
Around a third of the planned budget is non-recurrent spending targeting areas including critical infrastructure, the power sector and development in the Niger Delta, the restive heartland of the country’s mainstay oil industry.
“The purpose of the 2010 budget is to accelerate economic recovery through targeted fiscal interventions intended to further stimulate the economy and support private sector growth,” Yar’Adua said in a budget statement presented to parliament by one of his aides.
The statement said N1.37 trillion was budgeted for capital expenditure and N2.011 trillion for recurrent, non-debt expenditure. The spending plans for Nigeria, which vies with Angola as Africa’s biggest oil producer, assume oil output of 2.088 million barrels per day (bpd), a benchmark oil price of $57 and an exchange rate of N150 to the U.S. dollar.
“Although the deficit will likely exceed targets established under fiscal responsibility guidelines ‚Äì this is no surprise given that priority areas are infrastructure and the Niger Delta,” said London-based Knight Libertas analyst Richard Segal.
“The accountability of spending in these two areas will be crucial to sustain the confidence of local investors,” he said. Yar’Adua said improving power infrastructure was a top priority and that Nigeria aimed to double electricity capacity to 10,000 megawatts (MW) by the end of 2011. Intermittent power supply is seen as a major brake on economic growth. Yar’Adua said the utilisation of budgetary allocations for 2009 had been “below expectations”, raising questions about how effectively government would spend the additional funds.
Michael Hugman, emerging markets strategist at Standard Bank in London, said the expansionary budget would have some positive effects in the immediate term but noted there was an inflationary risk, particularly if the government goes ahead with plans to abolish fuel subsidies.
“In the short-term, the expansionary element, will be positive for growth, equities and also, somewhat perversely, bonds, which we believe are being driven by a combination of flight to quality by banks and pension funds together with repeated liquidity injections into the market,” he said.
“However, when combined with inflationary risks from fuel price deregulation and possibly poor food production over the next few months, there is a danger inflation can head back towards 15 per cent year-on-year by mid-2010.” The 2010 spending plans target economic growth of 6.1 per cent and headline inflation of 11.2 per cent.
Out of the N4.07 trillion budgetary proposed expenditure for 2010, N1.37 trillion is earmarked for capital expenditure, N2.011 is proposed as recurrent expenditure, N517.071 billion is proposed for debt service and N180 billion is allotted for statutory transfers. Among the beneficiaries of the statutory (first line charge) are the Niger Delta Development Commission (NDDC) N35.6 billion, the National Judicial Council N91 billion and Universal Basic Education, N44.3 billion.
Another N9.3 billion is earmarked as the NDDC’s share of excess crude distributed in 2009.
The National Assembly has an allocation of N127.7 billion in the budgetary proposal for the 2010 financial year.
Details of the budgetary estimate further show that the highest sectoral allocation was given to the Ministry of Works with N249.4 billion followed by Education with N249.08 billion, Defence N231.99 billion N216.4 billion; Health N161.84; Federal Capital Territory Administration N158.00 billion; Power N156.8 billion
The Ministry of Niger Delta Affairs has an allocation of N64.3 billion while
The benchmark for oil revenue is fixed at $ 57 per barrel while the exchage rate for the dollar is N150 to the dollar.
The Senate is expected to commence debate on the budget today.
Many Senators including Senator Ahmed Makarfi, chairman of the Senate committee on Finance were yet to study the budgetary proposals as at press time.
However, Senator Manzo Anthony (PDP, Taraba North) welcomed the budget as an ambitious effort to fast track infrastructure development.
“It is an ambitious budget with significant capital projects. It would appear that even greater emphasis is being placed by the President on infrastructural projects. The deficit is a concern but it is an issue that can be managed,’’ he said.

Senate passes N253bn Supplementary Appropriation
The Senate has admitted that it lacked the constitutional powers to pry into the health status of President Umaru Yar’Adua who is currently on a medical trip abroad.
The Senate’s admission followed the passage yesterday of N253 billion supplementary budgets for year 2009.
The new sum was jerked by N1.25 billion by the Senate from the N252 billion sent by the President Yar’Adua to the National Assembly.
Chairman, Senate Committee on Information and Media, Senator Ayogu Eze in response to questions from newsmen on the frequency of medical trips of President Yar’Adua dismissed the need to investigate the health status of the President.
Senator Eze said the constitution only empowers a health board of enquiry to ascertain the health status of the President following which the Senate can then act.
He said, “I went for medical check up and did the entire test that I needed to do. So what is strange about going for medical check up, why should we engage our attention?
“Unfortunately the constitution did not provide for you to stay in your house and estimate the health of the President. The health f the President is a constitutional issue and it is only a health board of enquiry that can determine the fitness or otherwise of the President, the composition of that board is very clear.
“And there is no indication for us whatsoever that the President is unable to discharge his responsibility. So far we do not have any evidence that the President cannot do his job so why should we pry into that.”
The highlight of the supplementary budget which was passed yesterday shows that from the total sum of N353, 600, 000, 000, the sum of N100, 050, 000, 000 billion is for recurrent expenditure.
While the sum of N253, 550, 000, 000 is for contribution to the Development Fund for additional Capital Expenditure for the year ending on the 31st of March, 2010.
Senate President, Senator David Mark before the passage of the supplementary appropriation charged the executive to ensure full implementation of the budget, stressing that the extension of the implementation period of the 2010 budget to 31st March, 2010, has given the executive ample time for full implementation.
He said, “Having extended the implementation period to 31st of March, 2010, I hope that that gives the executive to implement the budget.”

File Budget
November 24, 2009

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