The Federal Government has its decision to cut overheads in the 2011 Appropriation Act by about 30 percent is in line with its Fiscal Consolidation Policy to reduce budget deficit and avoid domestic debt accumulation.
Minister of Finance, Mr. Segun Aganga, at an interactive session with reporters in Abuja on the 2011 Budget proposal submitted to the National Assembly by President Goodluck Jonathan last week said aggregate expenditure in the 2011 proposal was reduced by 18.1 percent from N5.16 trillion to N4.226 trillion, while total non-debt recurrent expenditure, including overheads by both the executive and legislature, was cut by about 30 percent from N536 billion to about N381 billion.
Mr. Aganga also said that despite the impact of the increase in salaries by 53 percent in July 2010, non-debt recurrent expenditure was reduced by 7 percent to N2.41 trillion, while the N1.006 trillion capital expenditure in the 2011 proposal represents about 43 percent cut when compared to the figure last year.
He said “The N919.5 billion utilised by the MDAs in the 15 months, comprising the 2009 fiscal year, represents the largest amount of capital expenditure expended in any fiscal year.” The level of domestic debt, the Minister added has reduced by 38 percent to N865 billion.
On the low level of implementation of the budget by MDAs, the Minister said the circumstance of their poor performance at about 50 percent need to be considered, pointing out that this is what guided the National Assembly in agreeing to extend the budget year till March next year so that the MDAs will have enough time to utilize the money and improve the level of implementation of projects.
“Last year, the budget was not passed until April this year. It had to be amended and we had two supplements approved in August. If there was a new cabinet in April, the new ministers, they would need a minimum of a month or two to fully understand what they need to focus on. Before they start implementation, they need to prepare, with only five to six months left for them,” he said.
Government on its part to check the spate of abandoned projects in 2011 is planning a construction sector transparency initiative, that will function like the Nigeria Extractive Industries Transparency Initiative (NEITI), which will allow the public to monitor government projects, to be able to hold it accountable.
The plan, Aganga explained, is in line with performance-based budgeting process adopted by government to strengthen its monitoring and evaluation teams by bringing in programme managers to work with the heavy spending MDAs to monitor the projects included in the budget to avoid duplication.
Aganga, meanwhile disclosed that the Central Bank of Nigeria, (CBN) and revenue generating agencies under the Federal Ministry of Finance have submitted their 2011 budget proposals to the National Assembly for passage of the Federal Government’s 2011 Fiscal Appropriation.
Aganga also announced that following the approval of the 2010 foreign loans borrowing plan by the National Assembly recently, the Federal Government last week finally signed two Chinese lines of credit comprising $500 million for the Abuja–Kaduna Rail line Project and another $400 million National Security Project for the country.
He declared that the rail project, which has a three-year completion deadline, has commenced and is expected to provide about 4,300 jobs at full steam.
“These loans are concessionary ones; cheap money at just about two and a half per cent, with repayment period of 20 years and additional seven years moratorium for the rail credit and 10 years for the National Security projects.
“The projects will generate the cash flow to repay the loans. The projects are very dear to the people and we would ensure effective implementation.”
He said that over the years, government has been financing budget deficit through internally generated revenues (IGRs), sale of assets, signature bonuses by multinational oil companies and borrowing, pointing out that the utilization of the loan on the two projects is part of government’s new strategy to finance development projects.