December 3, 2008

FG unveils N2.87trillion … Recurrent expenditure – N1. 649 trillion … Capital expenditure – N796.7 billion

Less than four weeks to the end of the 2008 fiscal year, President Umaru Musa Yar’Adua finally presented the 2009 Appropriation Bill of N2,870,510,042,679 to the joint session of the National Assembly, with a promise to remain focus despite the global economic downturn.

President Yar’Adua who spent about 57 minutes reading the 30-paragraph speech with no specific title said that Nigeria’s economic growth remains on track just as it is buoyed by strong performance of the non-oil sector in spite of the global downturn.

The president further noted that growth in the non-oil sector particularly in agriculture, remains robust, at an estimated 9 per cent saying that as the administration moves to reposition the economy to meet the challenges as well as take advantage of the opportunities that the people are faced with at home and internationally, it has to be recognized that the global financial crisis has led to slowing growth across the world’s economies.

According to Yar’Adua; "The changing international oil market poses grave concerns for our fiscal outlook. The global financial crisis has led to slowing growth across the world’s economies, resulting in a lower demand for commodities, especially oil.

While speculative investment activities had helped to buoy oil prices in recent months, the reality of the global recession is beginning to be fully appreciated across the globe, and more poignantly in Nigeria by its adverse impact on the international price of oil."

He noted that the recent volatility of the oil price is apparent in the unprecedented decline of prices from record highs of about US$147/barrel in July this year to current prices of about US$50/barrel, adding that there is no guarantee that the prices will not further decline despite OPEC’s recent mitigating efforts, stressing that there was the urgent need to adopt a prudent outlook that does not invest misplaced confidence in the expectation of unrealistically high prices.

He further said; "Notwithstanding however, the oil sector’s GDP contracted in 2008 by about 2.5 per cent due to reduced production levels precipitated by the ongoing situation in the Niger Delta. Overall, real GDP growth for 2009 is estimated to be about 7.5 per cent which compares favourably with the 6.6 per cent recorded so far in 2008.

The budget is 4.45 per cent higher than the 2008 budget of N2.748 trillion as well as an increase of 8.42 per cent over the 2008 Amended budget expenditure of N2.647 trillion.
The budget was benchmarked on a $45 per barrel of crude oil as against $59 of last year and a deficit of N1.09trillion or 3.95 per cent of Gross Domestic Product (GDP) and a forecast production of 2.292million barrels of crude oil per day.
According to the President, the 2009 budget would seeks to tackle critical areas of national needs such as power supply, education, security, Niger Delta, human capital development, critical infrastructure, land reforms, food security and agriculture.

For critical infrastructure, the federal government planned to spend N361.2billion in 2009. This include N88.5billion for power, aviation N15.4billion, petroleum resources N26.5billion, works N129.3billion, transport N35.2billion and N48.7billion for critical infrastructure within the federal territory.

Others are human capital development for which N131.9billion was earmarked. This include N39.6billion for health, education N33.6billion, N32.6billion for MDGs conditional grants, N19.7billion for MDGs quick wins projects and N6.3billion for MDGs capacity building.
Federal Government also budgeted N91.8billion for land reforms and food security, focusing on agriculture and water resources, N67billion for security and N77.2billion on the Niger Delta.
Key projects that would be funded by the 2009 budget includes:

Mambilla Hydro-electric power generation project for which N3.5billion was budgeted, N21.5billion for other Generation projects (including N6.5billion for the completion of the Niger Delta Power Holding Company’s NIPP projects), N32billion for Transmission projects, and N19.25billion for Distribution projects.

Also, the Trans-Sahara Gas Pipeline received N903.9million, while the Calabar-Umuahia-Ajaokuta Gas Pipeline got N6.7billion and the Ajaokuta-Abuja-Kano pipeline received N10.3billion.
Equally, N10.7billion was budgeted for access roads to 6 NNPC refineries and ports while N56.86billion was voted for highway construction and rehabilitation.
The sum of N4.3billion was voted for the construction of the 2nd Niger Bridge at Onitsha and N3.6billion for the Guto-Bagana bridge across the River Benue.

The President also announced a vote of N12.4billion for the completion of the Ajaokuta-Warri railway line to the Delta Steel Jetty while N8.3billion was devoted for the modernization of locomotives, coaches and wagons, and N8.4billion for the dredging of the lower River Niger.
The health sector projects include, a N6.5billion on HIV/AIDS response, N3billion on Midwifery services scheme and N7.7billion Maternity and Children’s health while N6billion will go for Polio eradication.
The new ministry of the Niger Delta will invest N28.4billion in the East-West road to improve accessibility to the region while N92.8billion will be spent on projects to improve and restore the environment.

The President also voted N18.6billion on other projects in the Niger Delta particularly the establishment of two sophisticated skills acquisition centres to help the youths from the region to acquire skills relevant to the energy and petrochemicals industry.

Agriculture and water resources also received priority attention as N4.6billion was voted for the development of livestock development infrastructure, N15billion on the supply of fertilizer, N6.5billion on tractor service PPP schemes, N9.2billion on the construction and rehabilitation of dams, and N11.6billion on water supply and sanitation.

According to the President, the philosophy and thrust of the 2009 budget is on "delivering on the promises of the 7 point agenda of the administration by enhancing investment in critical physical infrastructure and human capital development, implementing socio-economic reforms and consolidating democracy."

The President said, the 2009 budget "is to give priority to the completion of ongoing projects, which will quickly deliver tangible results in service delivery. Accordingly, rather than embarking on new projects, this administration has opted to devote more resources to completing existing projects and discharging outstanding obligations from the 2007 and 2008 fiscal years. We will continue to ensure that all new projects are well articulated, properly costed, and sensibly prioritized, taking into account available resources and the implementation capacity of the MDAs."

"We must continue to improve national security and enhance the ability of the law-enforcement agencies to discharge their functions. As a responsible and people-centred government, we must continue to abide by the rule of law, promote transparency and accountability in governance, and relentlessly pursue our efforts to combat corruption. By remaining true to our vision, we will create a more prosperous and secure future for all the citizens of this nation," said the President.

The President also announced that the 2009 N1.09trillion deficit will be financed by outstanding signature bonuses, proceeds of ongoing privatisation, the recall of $200million from the Nigerian Trust Fund of the African Development Bank (ADB), any unspent balances from 2008 budget, domestic borrowing and a naira denominated international bond issue of US$500million.

According to the President, year-on-year headline inflation has exceeded single digit projections remaining at 14.7 per cent in October 2008 while core inflation remained in a single digit at 7.9 per cent. He blamed this on rising global cost of food and energy. " Our efforts to manage inflation will continue to build on increasing coordination between monetary and fiscal policy, and our emphasis on fiscal discipline and prudence in macroeconomic management."

On the global financial crises, the President said that Nigeria "is not immune to the challenges in the global financial markets arising from the acute contraction of credit and liquidity in the international financial markets. However, we have moved to protect the integrity of our nation’s financial markets and system by introducing several measures to strengthen our financial sector and restore investor confidence."
Unlike in the past, Vice President Goodluck Jonathan and most ministers were not present at the budget presentation that was witnessed by Governor Murtala Nyako of Adamawa and Governor Bukola Saraki of Kwara State.

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