President Goodluck Jonathan, yesterday, forwarded to the Senate a 2013-2015 medium term Expenditure Framework and Fiscal Strategy Paper, with a promise that the 2013 budget will be a continuation of his fiscal consolidation.
The government in the paper disclosed that following its initiatives and in line with the trend since 2011, the share of recurrent spending in aggregate expenditure is set to further reduce from 71.47 per cent in 2012 to 68.7 per cent in 2013 while capital expenditure as a share of aggregate spending is set to increase from 28.53 per cent in 2012 to 31.3 per cent in 2013.
He also put it that in line with the policy of consolidation, the fiscal deficit is expected to continue on a declining path from 2.85 per cent of GDP in 2012 to 2.17 per cent of GDP in 2013.
According to President Jonathan, the Federal Government will sustain its efforts to increase revenue as well as that of capital spending in total expenditure, reduce the fiscal deficit and the corresponding borrowing requirement to a more sustainable level.
President Jonathan noted that in light of the huge amount paid on petroleum subsidy in 2011, the government will streamline the management of the subsidy scheme through the strengthening of the audit and verification process, adding that these will yield results in 2013, just as the SURE-P instrument will continue to be used as an intervention window to mitigate the impact of the partial subsidy removal.
Though the paper was read to the Senators by Senate President David Mark, but a three paragraph letter without details was made available, but according to the document which Vanguard Newspaper obtained, the government said that in line with the oil-price based fiscal rule, a cautious oil benchmark price of $75 per barrel has been chosen for 2013-2015 period while oil production of 2.53 mbpd, 2.61 mbpd and 2.65 mbpd will be adopted for the 2013, 2014 and 2015 fiscal years respectively.
According to the document, “this is below the current world market price and is underpinned by our model of 10-year and five-year moving averages, with some adjustments. Revenue in excess of the benchmark price continue to be sent aside in the Excess Crude Account, ECA/Sovereign Wealth Fund, SWF. The fund has been designed to reduce pro-cyclicality and delink public expenditure from oil price volatility.”
Focus on security, agriculture
The government in the paper, plans to increase the contribution of tax revenue to the budget through continuous reforms to modernise and further improve tax administration.
The government is also planning within this period, focus on Security, Agriculture, Power, Water Resources, Health, Education, Works, Transport, Aviation, Federal Capital Territory and Niger Delta, just as it intends to reduce the infrastructural gap, thereby energising the economy as ways of creating employment and to ensure an inclusive growth.
The document read in part, “Although aggregate expenditure is increasing in absolute terms, the goal is for government expenditure as a share of GDP in the Nigerian economy to reduce in the medium to long term. This is in line with the desire to promote the private sector.
The reduction in the size of government will be achieved through stricter rationalisation of available resources including sustaining the reduction of overhead votes. The figure for overhead decreased from N536 billion in 2010 to N266 billion in 2012. It is expected to further decrease in 2013 to N230 billion or 4.67 percent of total expenditure.”