There is a brewing showdown between President Goodluck Jonathan and the Senate, as the latter has rejected the president’s oil benchmark of $74 per barrel and instead, raised it up to $76.50 per barrel.
The upper legislative chamber also directed that details of the Subsidy Reinvestment and Empowerment Programme, SURE-P, projects expected for execution in the 2014 budget be attached as addendum to the annual budget estimates for approval by the National Assembly.
But unlike the above, it approved the oil product daily oil production of 2.388mbpd, 2.5007mbpd and 2.5497mbpd for 2014, 2015 and 2016 respectively as proposed by the president.
These formed parts of the recommendations of the Senator Ahmed Makarfi’s led Senate Joint Committee on Finance and Appropriations on the Medium Term Expenditure Framework, MTEF and Fiscal Strategy Paper, FSP, which was passed yesterday, preparatory to next Tuesday’s 2014 budget presentation by President Goodluck Jonathan before the joint session of the National Assembly.
As seen in the MTEF and FSP, the 2014 Budget is predicated on crude oil production of 2.3883mbpd with a benchmark price of $74pb and a projection of aggregate expenditure of N4.77 trillion of which the capital expenditure is N1.45 trillion.
New borrowing of N572 billion projected for 2014 would increase the total of local and foreign debt to N8.25 trillion from N7.11 trillion in 2013. The status of bad loans absorbed by the Asset Management Corporation of Nigeria, AMCON, was not stated, and the details of the number of projects completed that have rate of returns were not also available. The contingent liability of AMCON could be in trillions of naira.
The Senate also approved that a total of N666.9 billion from the Excess Crude Account, ECA, be distributed to the tiers of government as proposed by the executive just as it okayed augmentation from the Excess Crude Account, should the projected crude production fall below the budget, provided there are funds in the account.
The Green Chamber gave the president the nod to peg Corporate Tax and VAT rate of 30 percent and 5 percent respectively, just as it approved average exchange rate of N160 per dollar for the next three years.
It urged the government to strengthen and consolidate its fiscal strategy to narrow the gap between projected and actual revenue for the period of 2014 to 2016 curtailing oil theft and diversifying the economy to increase tax bases so as to increase tax revenue.
It noted that oil theft came into prominence in 2012 with a daily loss of about 150,000 barrel per day, regretting that by July 2013, the loss had risen to about 400,000 barrels per day, saying government needed to take some drastic steps to halt the development.
“Furthermore, government needs to work seriously on some of the key macro-economic indicators such as the growth of GDP and its impact on unemployment, inflation rates, interest rates, the status of the Sinking Fund and Debt Sustainability Analysis of 2013 and 2014, the alarming rate of uncompleted projects, debt profile and their status and the future of AMCON equally of concern.
“If these issues are not effectively looked into or controlled, the economic and infrastructural development aspirations of the nation would remain a mirage.
“As can be observed, the key indices contained in the current MTEF/FSP do not show significant improvement in terms of their contributions to economic growth and development.
“Moreover, the continuous building up of the nation’s external reserve above the internationally recognized standard of three months national import, at the expense of the provision of critical infrastructure whose multiplier effect on GDP would boost national development, should not continue unchecked,” the Senate observed.
SURE-P projection for 2014 is the N180 billion annual allocation plus the N94.34 billion unspent in 2013, bringing the total allocation for SURE-P in 2014 to N274.34 billion.
In his remark after the passage of the 2014-2016 MTEF and FSP, Senate President, David Mark, however, cautioned his colleagues that discarding the report subjectively would imply rejection of the document which he noted was instrumental to the Senate’s input in the consideration of the much expected 2014 Appropriation Bill.
The Senate President admonished them to avoid regional and party sentiments as the document in question affects the economy of the nation.
He said: “We need a document that will help us make our input when we consider the budget. That is what this paper is all about. And it has given us all the highlights that we need when we are making our own input into the budget. So if you say ‘reject this paper’, then, you are saying ‘reject looking at this input when you are looking at the budget’.
“So, there is no question of rejecting the paper. It is a report from our own committee and it is saying that we should look at these issues when considering the budget.
“If you are saying that when we are looking at the budget, we should not look at the shortfall in oil production, it is saying, ‘look at the shortfall in oil production, remedy it when you are making your input’.
“It is not a matter of assumption. It has looked at all the figures.”