“Fiscal Consolidation with Inclusive Growth” by His Excellency Goodluck Ebele Jonathan, GCFR President, Federal Republic of Nigeria, Delivered Before a Joint Session of the National Assembly, Abuja, Wednesday, 10th October 2012
PROTOCOL
1. It is my pleasure and honour to present the 2013 Federal Budget
Proposal before this esteemed Joint Session of the National Assembly. I
am particularly delighted to present this Proposal to you earlier in the
year, and soon after the commemoration of our national independence, to
signal our commitment to evolving a new Nigeria. This Proposal is the
product of extensive consultations with key stakeholders and would
further translate the Government’s development plans into concrete
actions.
2. When I presented the 2012 Budget, you will recall, I
emphasized the fact that it would be “a stepping-stone to the
transformation of our economy and country in our walk to economic
freedom …”. I am glad to report that we have made progress in this
regard. Today, in the face of critical resource constraints, the
defining moment of our work is in actualizing our promises to Nigerians.
We need to create a structured economy where everybody plays by the
same rules, and contributes their fair bit. That is the Nigeria our
heroes past craved for; that is the Nigeria we believe in; and that is
the Nigeria we are building together.
GLOBAL ECONOMIC DEVELOPMENTS
3. As we build this nation and walk the path of development, we must be
mindful of the realities of our circumstances and those of the changing
global economy. This Budget Proposal was therefore designed against the
backdrop of global economic uncertainty. By the end of the second
quarter of this year, the global economy was recovering but at a very
slow pace. Growth in a number of major emerging market economies, has
been lower than forecast. Overall, global growth is projected at 3.3% in
2012 and 3.6% in 2013.
4. The uncertainty surrounding the
global economy, which could have adverse effects on commodity prices,
highlights the downside risks for our economy. The oil market is well
known for its volatility. We recall the 2008 experience at the height of
the global economic downturn when oil prices fell almost overnight from
$147 per barrel to $38 per barrel. This threat of oil price volatility
remains constant and underscores the need to rely on a robust and
prudent methodology to estimate the benchmark price.
global economy, which could have adverse effects on commodity prices,
highlights the downside risks for our economy. The oil market is well
known for its volatility. We recall the 2008 experience at the height of
the global economic downturn when oil prices fell almost overnight from
$147 per barrel to $38 per barrel. This threat of oil price volatility
remains constant and underscores the need to rely on a robust and
prudent methodology to estimate the benchmark price.
5. The
global economic slowdown can also have far-reaching implications for the
demand for our export commodities, given that the Euro zone and the USA
account for over 50% of the nation’s crude oil exports. These global
developments are also being transmitted to our economy through a
dampening effect on foreign capital inflows and remittances by Diaspora
Nigerians. Fellow Nigerians, these are uncertain times in the world
economy, and my Administration is taking necessary steps to mitigate
possible adverse effects of the global economic slowdown on Nigeria. I
assure you that we are going to build up the necessary savings to
protect the economy against a possible global recession or a slow
recovery.
global economic slowdown can also have far-reaching implications for the
demand for our export commodities, given that the Euro zone and the USA
account for over 50% of the nation’s crude oil exports. These global
developments are also being transmitted to our economy through a
dampening effect on foreign capital inflows and remittances by Diaspora
Nigerians. Fellow Nigerians, these are uncertain times in the world
economy, and my Administration is taking necessary steps to mitigate
possible adverse effects of the global economic slowdown on Nigeria. I
assure you that we are going to build up the necessary savings to
protect the economy against a possible global recession or a slow
recovery.
DEVELOPMENTS IN THE DOMESTIC ENVIRONMENT
6. In
spite of the foregoing, our economy has done relatively well. Over the
past nine months, through a number of initiatives, we have created new
jobs directly and supported many young entrepreneurs running SMEs to
create jobs. Nigeria is looking to become more self-reliant again in
food security, and we are increasing local content in our manufacturing
processes and the oil and gas sector.
7. As at the end of the
second quarter, the economy recorded an impressive growth of 6.28%
compared to 5.4% forecast for sub-Saharan Africa. It is gratifying to
note that the non-oil sector remains the main driver of growth. There
are also improvements in other macroeconomic indicators. Inflation has
dropped from 12.9% in June 2012 to 11.7% in August 2012, and our goal is
to reduce it further. Our foreign reserves now stand at US$41.6 billion
– the highest it has been in over 2 years. We intend to continue with
our programme of fiscal discipline and prudent monetary policy in order
to continue to improve our country’s macroeconomic environment.
8. Furthermore, in addition to being upgraded last year by Fitch and
S&P rating agencies, Nigeria has now been included in the JP Morgan
Emerging Markets Bond Index, signifying increasing investor confidence
in our economy. In addition, the World Economic Forum has upgraded our
ranking from 127 to 115 in the global competitiveness index.
9.
Here in Nigeria, we do not join the debate on fiscal consolidation
versus growth because we believe in the need to do both; hence, we are
continuing our focus of fiscal consolidation with inclusive growth. The
fiscal consolidation policy has helped to strengthen our finances with a
programmed budget deficit of about 2.85% of GDP in 2012, now projected
to drop to 2.17% in 2013. Moreover, the share of capital expenditure in
the total budget is increasing as we gradually reduce recurrent
expenditures and also develop non-oil revenue sources.
REVIEW OF THE 2012 BUDGET IMPLEMENTATION
10. Fellow Compatriots, the 2012 Budget was focused on achieving Fiscal
Consolidation with Inclusive Growth using the budget balance as a
fiscal anchor. In that respect, while investing in key priorities, the
budget also ensured that the deficit followed a downward trend over the
medium term. This is being done through a more aggressive revenue
collection drive and prudent management of available resources.
11. On the expenditure side, the implementation of the 2012 Budget is
on track, having commenced effectively in April when it became law. We
have so far released N711.6 billion to MDAs for the implementation of
their capital budgets while further releases are to follow shortly for
the fourth quarter. The continued implementation of the 2011 capital
budget in the first quarter of 2012, clearly affected the implementation
of the 2012 Budget.
12. I have taken a personal interest in
the budget implementation since May by chairing weekly sessions with
Ministers and Heads of parastatals on their progress in this regard. We
are determined to use the instrument of the budget to improve the
welfare of Nigerians. You would recall my assurance to Nigerians that
subsequent budgets will be presented earlier to the National Assembly.
It is in this spirit that I lay this Proposal before this Assembly
today, to give sufficient time for deliberation on the Proposal and
approval of the budget, and to enable us commence implementation from
January 1st 2013.
13. Let me stress that Government remains
focused on the tangible outcomes from the implementation of the
Appropriation Acts, not just the amounts spent. In this respect, I have
signed Performance Agreement Contracts with my Ministers with a view to
ensuring delivery of projects and programmes in their respective
budgets. The Ministers in turn, are signing similar agreements with
their Permanent Secretaries, Heads of parastatals and Directors to
cascade down the need for responsibility and accountability. Key
government officials with responsibility for implementing different
aspects of the budget will be appraised based on these performance
agreements. My goal is to ensure optimal implementation of our annual
budgets.
14. Government is also determined to reduce the cost
of governance. We are reviewing the recommendations aimed at
rationalizing Agencies of the Federal Government with overlapping
functions. This has been taken into account in the preparation of the
2013 Budget, and we expect some modest cost savings from this exercise
in the course of the 2013 fiscal year. However, more significant
progress will be made in 2014, as we work with the Legislature to
harmonise those Agencies that have enabling laws, but which also have
duplicative mandates.
Subsidy Reinvestments and Empowerment Programme (SURE-P)
15. You will recall that we had assured Nigerians that the proceeds of
the partial withdrawal of petroleum subsidies will be applied to
implementing the Subsidy Reinvestment Programme (SURE-P). The
implementation of this programme is continuing over the medium-term.
16. In the 2012 fiscal year, we had voted N180 billion for the
implementation of social safety net programmes, road and rail
infrastructure projects. So far, N36.5 billion of this amount has been
utilized to support maternal and child health programmes as well as mass
transit, roads and rail projects and job creation through the Community
Services and Public Works programme. The SURE-P Board under the able
chairmanship of Dr. Christopher Kolade is presently working hard to
ensure the successful oversight of the implementation of this programme.
We are grateful to them for their hard work and patriotism.
KEY ACHIEVEMENTS IN THE 2012 FISCAL YEAR
17. In the 2012 Budget, Government outlined some projects and
programmes that were to be implemented in key sectors of the economy in
order to improve the livelihood of Nigerians. We have numerous
activities in various sectors such as: Power, Health, Agriculture,
Education, Housing, Transport, Aviation, etc. Let me highlight a few of
these sectors.
Power
18. The Power Sector Reform is on
course. Our efforts have begun to pay off as we have improved power
supply to various parts of the country. Our gas-to-power and other
initiatives are making this possible, but I acknowledge the fact that we
still have a long way to go. As you may be aware, the ongoing
privatisation of the generation and distribution companies has reached
an advanced stage. In some cases, Preferred Bidders have already
emerged. When completed, the programme will bring into the sector
significant private investment, along with the requisite power output.
19. We have accomplished a number of goals in the Power sector reform programme in line with the Roadmap, including:
a. Completion of new units at our thermal power stations, to increase generation;
b. Rehabilitation of existing power infrastructure, which has yielded up to 1,000 mega watts of additional electricity;
c. Fast-Tracking 3 NIPP projects, which will bring an additional 1,055 mega watts by the end of the year; and
d. Facilitating a power and gas financing package, which includes
Government Guarantees, proposed Infrastructure Bonds of about $1billion,
and $150 million of external funding from the African Development Bank
to support continued gas supply and the liberalization of the power
sector.
course. Our efforts have begun to pay off as we have improved power
supply to various parts of the country. Our gas-to-power and other
initiatives are making this possible, but I acknowledge the fact that we
still have a long way to go. As you may be aware, the ongoing
privatisation of the generation and distribution companies has reached
an advanced stage. In some cases, Preferred Bidders have already
emerged. When completed, the programme will bring into the sector
significant private investment, along with the requisite power output.
19. We have accomplished a number of goals in the Power sector reform programme in line with the Roadmap, including:
a. Completion of new units at our thermal power stations, to increase generation;
b. Rehabilitation of existing power infrastructure, which has yielded up to 1,000 mega watts of additional electricity;
c. Fast-Tracking 3 NIPP projects, which will bring an additional 1,055 mega watts by the end of the year; and
d. Facilitating a power and gas financing package, which includes
Government Guarantees, proposed Infrastructure Bonds of about $1billion,
and $150 million of external funding from the African Development Bank
to support continued gas supply and the liberalization of the power
sector.
Agriculture
20. My Administration has instituted
key policy reforms to establish staple crop processing zones aimed at
attracting the private sector into areas of high production, reducing
post-harvest losses, and adding value to locally produced commodities.
So far we have succeeded in attracting $7.8 billion investment
commitments to the agricultural sector. These investments and the value
chain approach being used to transform the sector have the capacity to
create 3.5 million additional jobs in the medium term by 2015.
•
You will recall that Government provided incentives to support cassava
value chains, including zero duty on machinery and equipment to process
high quality cassava flour. Cassava bread is increasingly commercially
available with 20% cassava flour content. In addition, a total of one
million metric tonnes of dried cassava chips, are being exported to
China this year.
• Achieving self-sufficiency in rice
production in 2015 remains our target. In response to our new fiscal
measures, 13 new private sector rice mills with a capacity of about
240,000 metric tonnes have been established. These mills buy and process
local paddy and create employment for Nigerians.
Housing
21. Fellow Nigerians, the provision of affordable housing is one of the
Administration’s strategic imperatives for guaranteeing our citizens’
productivity and well-being. We are creating an enabling environment for
the private sector to produce much needed housing, whilst creating jobs
in the process. To facilitate this, I will be holding a presidential
retreat on Housing in early November, to discuss policy and modalities
for dealing with land titling issues, developing an affordable mortgage
finance system and reducing the high cost of housing construction.
22. In the meantime, under various social housing programmes, close to
2,000 housing units have been completed, while over 24,000 housing units
are at various stages of completion. This is outside housing being
constructed for the use of the Armed Forces and Paramilitary services.
The Federal Government has entered into Partnership Agreements with
several States for the provision of 6,000 housing units. Another 600
housing units have already been completed under the direct construction
scheme of the Federal Housing Authority in these States. Gradually, we
are ensuring that more Nigerians enjoy the benefits of having their own
homes.
Transport
23. You are already familiar with the
improvement in the functioning of our ports, the details of which I
provided in my 52nd Independence Anniversary Speech. With regard to Rail
transport, in our continuing effort to boost infrastructure development
in the country, work is ongoing to rehabilitate the rail system across
the country. These include the Lagos-Kano line as well as the Port
Harcourt-Maiduguri line. Our people have started enjoying rail service
again.
24. Our railway modernisation programme is progressing
with the Abuja-Kaduna line now at 46% completion, while work on the
Lagos-Ibadan line is to commence soon. We also expect to complete the
Itakpe-Ajaokuta-Warri line in 2013. In the same vein, we are
fast-tracking the implementation of the mass transit Abuja Light Rail
system. When completed, it will improve transportation for all residents
in the FCT, especially workers living in the satellite towns.
25. Inland Waterways: Our inland waterways programme is on track to
boost commerce in the surrounding communities, and I had the pleasure of
commissioning the Onitsha Inland Port on 30th August 2012.
Aviation
26. We are working hard to improve the regulatory regime and safety of
the Aviation sector and will continue to look for ways to support its
development. This Administration identifies this sector as a key part of
the Transformation Agenda. As such, we have embarked on a comprehensive
programme to transform our airports to world-class standards and
improve air travel safety standards across the country.
27. For
instance, the remodelling of airport terminals and the upgrading of
airport runways are presently at advanced stages of implementation
across virtually all our airports. In addition, we have just concluded
arrangements to commence the construction of five brand new terminals in
Kano, Port Harcourt, Lagos, Abuja and Enugu, and six perishable cargo
terminals, early next year. In line with international best practice,
these new terminals will be private sector-managed.
28. Roads:
We know that Nigerians are disturbed about the state of our major
highways. We are addressing this issue frontally. With the rains
receding, the Ministry of Works will intensify the construction and
rehabilitation of major roads in the country, for example, the
dualization of the Abuja-Lokoja road, the Benin-Ore-Shagamu road, and
the Kano-Maiduguri road. Also, the Enugu-Port-Harcourt road
rehabilitation has been awarded to four contractors in order to
fast-track its completion. It is gratifying to note that resources from
the Petroleum Subsidy Reinvestment Programme are being used to
supplement the regular budget for these projects.
The Petroleum Sector
29. The petroleum sector continues to play a crucial role in our
economy, even as we seek diversification. In this regard, we are taking
steps to modernise the sector. A robust Petroleum Industry Bill (PIB)
has been delivered as promised to the National Assembly for
consideration. When passed into law, the Bill will provide the new legal
framework that will govern Nigeria’s Oil and Gas industry. This Bill,
which encompasses major reforms, will encourage additional investments
in the sector, create accountability and transparency, and ensure that
the management of our petroleum sector is commercially driven.
30. Our gas to power initiatives are moving firmly ahead, with the
12-month gas supply emergency plan already yielding more than the
targeted volumes of gas for power generation.
31. With
respect to the Petroleum Subsidy Programme, Government is succeeding in
substantially cleaning up the management of the petroleum subsidy
regime. We are tightening up the payment regime, to weed out corruption
while working hard to recover monies fraudulently obtained from the
subsidy regime. The EFCC is prosecuting those found wanting and the
efforts to crack down on corruption in this sector will continue.
32. On Frontier Exploration, the Government’s drive to build up the
nation’s oil reserves through exploration of new frontiers for oil and
gas production is beginning to yield results with news of the discovery
of crude oil in some inland sedimentary basins in the country. These
include the Chad Basin, Benue Trough, Yola Basin and Anambra Basin
amongst others. We are determined to further develop on these findings
and expand the scope of such explorations. To support this, we have
raised the provision for frontier exploration services from N12 billion
in 2012 to N16 billion in 2013.
Job Creation
33. Fellow
Compatriots, in spite of the economic growth noted earlier, it is clear
that as a nation, we still face economic disparities across the country.
This constitutes an obstacle to sustainable development as it limits
improvement in living standards, output and social cohesion which are
key factors for achieving inclusive growth. Our challenge therefore,
transcends how to achieve growth. Our objective is to achieve inclusive
growth by identifying and developing job creation opportunities. We have
mentioned the 3.5 million jobs we aim to create in agriculture and more
jobs in the housing and construction sectors, solid minerals sector,
aviation and the creative industry.
34. In my Independence Day
Speech, I spoke of the 80,000-110,000 jobs we are supporting young
entrepreneurs to create through the YouWin programme. We have received
numerous testimonies from young men and women who have been able to
expand their businesses through the programme. We have just launched a
second round of the competition targeting only women entrepreneurs.
Across the country, our youth are developing new ideas and enterprises,
and we must support them.
35. I launched the Community Service,
Women and Youth Empowerment Programme (CSWYEP) under the SURE-P in
February 2012. This is now working in pilot phase in 14 states, and to
be replicated in other states in 2 weeks. We also have the Graduate
Internship Programme, in which participating private companies provide
one-year internships to 50,000 graduates, paid by the Federal
Government. So far, 700 firms, and 20,000 young graduates have applied
to participate in this scheme.
36. Fellow Nigerians, even as we
review our achievements in 2012, we are also conscious of the
unprecedented floods, which have ravaged many parts of our country,
displacing tens of thousands of fellow Nigerians, and causing massive
destruction of property, farmlands, and infrastructure across the
country. My heartfelt sympathy goes to the affected families and
communities.
37. Yesterday, I made a broadcast on the Federal
Government’s actions to deal with the situation. I authorized the
disbursement of N17.6 billion to States and MDAs to help bring succour
to our fellow citizens affected by the floods. This will complement
ongoing efforts by Federal and State agencies, and private initiatives.
38. A Presidential Technical Committee to properly assess the extent of
the impact, and propose a rehabilitation strategy, has submitted an
Interim Report and is continuing to visit all the affected communities. I
have also set up a National Committee on Flood Relief and
Rehabilitation to assist the Federal Government to raise funds to
mitigate the pains and ensure effective post-impact rehabilitation of
victims.
39. I have also directed that the Ministry of
Agriculture and Rural Development put in place a flood recovery food
production plan. This will include the provision of early maturing
varieties of maize, which mature in 60 days, to several flood affected
areas. In addition, flood-tolerant rice varieties are being procured
for flooded rice growing areas. We will also accelerate dry season
production of major food crops.
Compatriots, in spite of the economic growth noted earlier, it is clear
that as a nation, we still face economic disparities across the country.
This constitutes an obstacle to sustainable development as it limits
improvement in living standards, output and social cohesion which are
key factors for achieving inclusive growth. Our challenge therefore,
transcends how to achieve growth. Our objective is to achieve inclusive
growth by identifying and developing job creation opportunities. We have
mentioned the 3.5 million jobs we aim to create in agriculture and more
jobs in the housing and construction sectors, solid minerals sector,
aviation and the creative industry.
34. In my Independence Day
Speech, I spoke of the 80,000-110,000 jobs we are supporting young
entrepreneurs to create through the YouWin programme. We have received
numerous testimonies from young men and women who have been able to
expand their businesses through the programme. We have just launched a
second round of the competition targeting only women entrepreneurs.
Across the country, our youth are developing new ideas and enterprises,
and we must support them.
35. I launched the Community Service,
Women and Youth Empowerment Programme (CSWYEP) under the SURE-P in
February 2012. This is now working in pilot phase in 14 states, and to
be replicated in other states in 2 weeks. We also have the Graduate
Internship Programme, in which participating private companies provide
one-year internships to 50,000 graduates, paid by the Federal
Government. So far, 700 firms, and 20,000 young graduates have applied
to participate in this scheme.
36. Fellow Nigerians, even as we
review our achievements in 2012, we are also conscious of the
unprecedented floods, which have ravaged many parts of our country,
displacing tens of thousands of fellow Nigerians, and causing massive
destruction of property, farmlands, and infrastructure across the
country. My heartfelt sympathy goes to the affected families and
communities.
37. Yesterday, I made a broadcast on the Federal
Government’s actions to deal with the situation. I authorized the
disbursement of N17.6 billion to States and MDAs to help bring succour
to our fellow citizens affected by the floods. This will complement
ongoing efforts by Federal and State agencies, and private initiatives.
38. A Presidential Technical Committee to properly assess the extent of
the impact, and propose a rehabilitation strategy, has submitted an
Interim Report and is continuing to visit all the affected communities. I
have also set up a National Committee on Flood Relief and
Rehabilitation to assist the Federal Government to raise funds to
mitigate the pains and ensure effective post-impact rehabilitation of
victims.
39. I have also directed that the Ministry of
Agriculture and Rural Development put in place a flood recovery food
production plan. This will include the provision of early maturing
varieties of maize, which mature in 60 days, to several flood affected
areas. In addition, flood-tolerant rice varieties are being procured
for flooded rice growing areas. We will also accelerate dry season
production of major food crops.
Security
40. Fellow
Compatriots, we are conscious of the fact that without security, no
meaningful development can take place in our land; and our collective
efforts at building the nation would only amount to little. This is why
we channelled a great deal of resources to security in the 2012 Budget.
We remain conscious of the impact of security challenges facing the
country and are determined to bring the situation under control.
41. I commiserate with all our citizens who lost loved ones in the
recent Mubi killings and all the other acts of senseless destruction of
lives and properties in the country. We have already made arrests in the
Mubi case, and I want to assure Nigerians that all the culprits will be
made to face the full weight of the law. I want to thank our brave men
and women of the security services for their commitment. I also want to
acknowledge and thank the various state Governors for their cooperation
and untiring effort to ensure peace in their domains. The unity of
Nigeria is not negotiable
Compatriots, we are conscious of the fact that without security, no
meaningful development can take place in our land; and our collective
efforts at building the nation would only amount to little. This is why
we channelled a great deal of resources to security in the 2012 Budget.
We remain conscious of the impact of security challenges facing the
country and are determined to bring the situation under control.
41. I commiserate with all our citizens who lost loved ones in the
recent Mubi killings and all the other acts of senseless destruction of
lives and properties in the country. We have already made arrests in the
Mubi case, and I want to assure Nigerians that all the culprits will be
made to face the full weight of the law. I want to thank our brave men
and women of the security services for their commitment. I also want to
acknowledge and thank the various state Governors for their cooperation
and untiring effort to ensure peace in their domains. The unity of
Nigeria is not negotiable
THEME OF THE 2013 BUDGET
Theme
42. Distinguished Ladies and Gentlemen, you will recall that in
furtherance of my Administration’s efforts to transform our economy, the
2012 Budget was established on four main pillars – Macroeconomic
stability; Structural reforms; Governance & institutions; and
Investing in priority sectors. The 2013 Budget promotes continuity of
these pillars and is designed with the theme: fiscal consolidation with
inclusive growth. We will remain prudent with our fiscal resources but
also ensure that the Nigerian economy keeps growing and creating jobs.
To this end, the government will continue with the medium-term theme and
interventions that are consistent with the objectives of the
Transformation Agenda.
Macroeconomic Stability
43. One key
plank upon which our economic transformation is based is the achievement
of macroeconomic stability. My Administration has made significant
progress in putting the finances of the nation on a sound footing and
laying the foundation for rapid and sustainable growth. We will stay
focused on maintaining macroeconomic stability in Nigeria.
plank upon which our economic transformation is based is the achievement
of macroeconomic stability. My Administration has made significant
progress in putting the finances of the nation on a sound footing and
laying the foundation for rapid and sustainable growth. We will stay
focused on maintaining macroeconomic stability in Nigeria.
Budget Structure
44. Now let me turn to the structure of the 2013 Budget. In recent
years, recurrent expenditure has tended to crowd out capital expenditure
in the national budget. Over the 2013-2015 medium-term, my
Administration will continue to implement measures aimed at correcting
this imbalance in the budget structure in a viable and sustainable
manner.
45. In the 2012 Budget speech, I noted that Government
was going to focus on cutting recurrent expenditure to sustainable
levels through reduction of waste, corruption and duplication in the
functions of government agencies. In this respect, the biometric
verification of employees is being extended to all agencies of
Government, while the process for rationalizing public agencies and
reducing duplication of mandates among different government agencies has
begun, following the Report of the Oronsaye Committee.
46. I
am therefore pleased to announce that the share of recurrent spending in
aggregate expenditure is set to further reduce from 71.47% in 2012 to
68.7% in the 2013 Budget, while capital expenditure as a share of
aggregate spending is set to increase from 28.53% in 2012 to 31.3% in
2013.
Public Debt Management
47. Government will
continue to exercise fiscal prudence and limit its borrowing
requirements in compliance with the Fiscal Responsibility Act, 2007.
Consequently, we have developed a responsible domestic debt management
strategy that, for the first time, seeks to start paying off our
domestic debt rather than rolling it over. In this respect, a sinking
fund of N100 billion is being established in the 2013 fiscal year to be
used for repaying Government’s maturing debt obligations and to curb the
rising domestic debt profile. We have further reduced our annual
domestic borrowing from N852 billion in 2011, N744 billion in 2012, and
to N727 billion in 2013.
continue to exercise fiscal prudence and limit its borrowing
requirements in compliance with the Fiscal Responsibility Act, 2007.
Consequently, we have developed a responsible domestic debt management
strategy that, for the first time, seeks to start paying off our
domestic debt rather than rolling it over. In this respect, a sinking
fund of N100 billion is being established in the 2013 fiscal year to be
used for repaying Government’s maturing debt obligations and to curb the
rising domestic debt profile. We have further reduced our annual
domestic borrowing from N852 billion in 2011, N744 billion in 2012, and
to N727 billion in 2013.
THE 2013 BUDGET
48. The 2013
Budget is underpinned by the following parameters which reflect
Government’s prudent economic policies in an uncertain global economic
environment:
• Oil production of 2.53 million barrels per day, up from 2.48 million barrels per day for 2012.
• Benchmark oil price of US$75/barrel, a modest increase from the
US$72/barrel approved in the 2012 Budget. This benchmark price is based
on a well established econometric methodology of estimating oil price
moving averages.
• Projected GDP growth rate which is now estimated
at 6.5% compared to 6.85% in the Fiscal Strategy Paper. The revision is
underpinned by the fact that the severe floods experienced over large
parts of the country are expected to impact on economic activity in
2013, especially agriculture. However, the growth prospects may improve
with the plan to boost dry season farming.
Budget is underpinned by the following parameters which reflect
Government’s prudent economic policies in an uncertain global economic
environment:
• Oil production of 2.53 million barrels per day, up from 2.48 million barrels per day for 2012.
• Benchmark oil price of US$75/barrel, a modest increase from the
US$72/barrel approved in the 2012 Budget. This benchmark price is based
on a well established econometric methodology of estimating oil price
moving averages.
• Projected GDP growth rate which is now estimated
at 6.5% compared to 6.85% in the Fiscal Strategy Paper. The revision is
underpinned by the fact that the severe floods experienced over large
parts of the country are expected to impact on economic activity in
2013, especially agriculture. However, the growth prospects may improve
with the plan to boost dry season farming.
Revenue
49.
Based on these assumptions, the gross federally collectible revenue is
projected at N10.84 trillion, of which the total revenue available for
the Federal Government’s Budget is forecast at N3.89 trillion,
representing an increase of about 9% over the estimate for 2012. Non-oil
revenue is projected to continue to grow in 2013 as the ongoing reforms
in our revenue collecting agencies, and the implementation of
initiatives to further develop the non-oil sector continue to yield
results.
Based on these assumptions, the gross federally collectible revenue is
projected at N10.84 trillion, of which the total revenue available for
the Federal Government’s Budget is forecast at N3.89 trillion,
representing an increase of about 9% over the estimate for 2012. Non-oil
revenue is projected to continue to grow in 2013 as the ongoing reforms
in our revenue collecting agencies, and the implementation of
initiatives to further develop the non-oil sector continue to yield
results.
Expenditure Proposals
50. An aggregate expenditure
of N4.92 trillion is proposed for the main budget of the 2013 fiscal
year, representing a modest increase of about 5% over the N4.7 trillion
appropriated for 2012. This is made up of N380.02 billion for Statutory
Transfers, N591.76 billion for Debt Service, N2.41 trillion for
Recurrent (Non-Debt) Expenditure and N1.54 trillion for Capital
Expenditure.
51. Based on the above, the fiscal deficit is
projected to improve to about 2.17% of GDP in the 2013 Budget compared
to 2.85% in 2012. This is well within the threshold stipulated in the
Fiscal Responsibility Act, 2007 and clearly highlights our commitment to
fiscal prudence. We are determined to further rein in domestic
borrowing, and this way, ensure that our debt stock remains at a
sustainable level.
52. Our focus on critical economic and
social sectors continues. Some of these sectors are largely driven by
private sector activity, while others require a great deal of public
sector support. Some key allocations are as follows: Works – N183.5
billion; Power – N74.26 billion; Education – N426.53 billion; Health –
N279.23 billion; Defence – N348.91 billion; Police – N319.65 billion;
and Agriculture & Rural Development – N81.41 billion.
53.
The power and gas sectors require a lot of investments to sustain our
supply improvements. We shall therefore complement available resources
with a proposed Infrastructure Euro Bond of about $1 billion in order to
complete gas pipelines and other infrastructure investments. We have
also programmed other grants and soft credits critical to infrastructure
and other sectors in our medium term external borrowing plan.
54. The SURE-P will continue with the expected resources of N180 billion
in 2013 augmented by the projected 2012 unspent balances bringing the
total to about N273.5 billion. We hope to make further progress in the
programme, providing additional infrastructure investments and social
safety net schemes for Nigerians. I am pleased to also lay before this
esteemed Assembly, the 2013 Budget for the SURE-P.
of N4.92 trillion is proposed for the main budget of the 2013 fiscal
year, representing a modest increase of about 5% over the N4.7 trillion
appropriated for 2012. This is made up of N380.02 billion for Statutory
Transfers, N591.76 billion for Debt Service, N2.41 trillion for
Recurrent (Non-Debt) Expenditure and N1.54 trillion for Capital
Expenditure.
51. Based on the above, the fiscal deficit is
projected to improve to about 2.17% of GDP in the 2013 Budget compared
to 2.85% in 2012. This is well within the threshold stipulated in the
Fiscal Responsibility Act, 2007 and clearly highlights our commitment to
fiscal prudence. We are determined to further rein in domestic
borrowing, and this way, ensure that our debt stock remains at a
sustainable level.
52. Our focus on critical economic and
social sectors continues. Some of these sectors are largely driven by
private sector activity, while others require a great deal of public
sector support. Some key allocations are as follows: Works – N183.5
billion; Power – N74.26 billion; Education – N426.53 billion; Health –
N279.23 billion; Defence – N348.91 billion; Police – N319.65 billion;
and Agriculture & Rural Development – N81.41 billion.
53.
The power and gas sectors require a lot of investments to sustain our
supply improvements. We shall therefore complement available resources
with a proposed Infrastructure Euro Bond of about $1 billion in order to
complete gas pipelines and other infrastructure investments. We have
also programmed other grants and soft credits critical to infrastructure
and other sectors in our medium term external borrowing plan.
54. The SURE-P will continue with the expected resources of N180 billion
in 2013 augmented by the projected 2012 unspent balances bringing the
total to about N273.5 billion. We hope to make further progress in the
programme, providing additional infrastructure investments and social
safety net schemes for Nigerians. I am pleased to also lay before this
esteemed Assembly, the 2013 Budget for the SURE-P.
Fiscal Policy
55. To promote Nigerian agriculture and industry, we will continue to
implement supportive fiscal measures for some priority areas. You will
recall that in my 2012 Budget speech, I announced fiscal measures on
rice, cassava, wheat, and machinery for the agriculture and power
sectors. In this regard, I am pleased to announce the following
additional measures which will be effective from 1st January 2013:
a. Sugar: Machinery and spare parts imported for local sugar
manufacturing industries will now attract 0% duty; there will also be a
5-year tax holiday for “sugarcane to sugar” value chain investors.
Furthermore, import duty and levy on raw sugar will be 10% and 50%
respectively, while refined sugar will attract 20% duty and 60% levy;
b. Rice: A 10% import duty and 100% levy will be applied to both brown and polished rice;
c. Aircraft: All commercial aircraft and aircraft spare parts imported
for use in Nigeria will now attract 0% duty and 0% VAT. This will
appreciably improve safety in our skies as newer fleet and less onerous
maintenance will prevail;
d. Solid Minerals: Machinery and
equipment imported for use in the solid minerals sector will now attract
0% import duty and 0% VAT; and
e. Public Mass Transit: In
order to encourage the production of mass transit vehicles in Nigeria,
duty on Completely Knocked Down components (CKD) for mass transit buses
of at least 40-seater capacity, will now be 0%, down from 5%. Government
is desirous of supporting green growth and, in this regard, will
explore options for providing incentives for energy efficient vehicles
from the 2014 fiscal year.
Gender Empowerment
56. This
administration is gender friendly and has worked to improve the position
of women in society and empower them economically. Nevertheless, to
further integrate women in the various sectors, we have developed an
innovative approach to mainstreaming gender issues starting with 5 pilot
ministries – Agriculture, Health, Communication Technology, Water
Resources and Works. These ministries are signing MOUs with the Ministry
of Women Affairs to deliver on specific services for women.
a.
The Ministry of Agriculture, for example, will work with the Ministry
of Communication Technology to ensure that 5 million women farmers and
agricultural entrepreneurs receive mobile phones to be able to access
information on agro-inputs through an e-wallet scheme.
b. The
Ministry of Health, in addition to scaling up its ongoing “Save a
Million Lives” initiative, plans to give back health and hope to
one-third of the pool of young girls and women who have been waiting a
long time for V.V.F repairs through surgery and economic rehabilitation.
In addition, we are up-scaling routine immunization.
c. For
2013, the Ministry of Works plans to increase the number of women that
are employed in public works programmes as contractors, workers and
project evaluators, setting itself a target of 35% for women in FERMA
rehabilitation work. In every geopolitical zone, at least 3 roads
leading to areas where women’s socio-economic activities are
concentrated, will be prioritised and completed.
57. To support
these activities, we have set aside the sum of N3 billion to be
disbursed to participating MDAs as incentives for them to deliver on
these targets. Our focus on empowering women is part of our agenda for
improving the country’s human development indicators. In this regard, we
shall not relent in our efforts to improve access and quality in our
health and education sectors.
administration is gender friendly and has worked to improve the position
of women in society and empower them economically. Nevertheless, to
further integrate women in the various sectors, we have developed an
innovative approach to mainstreaming gender issues starting with 5 pilot
ministries – Agriculture, Health, Communication Technology, Water
Resources and Works. These ministries are signing MOUs with the Ministry
of Women Affairs to deliver on specific services for women.
a.
The Ministry of Agriculture, for example, will work with the Ministry
of Communication Technology to ensure that 5 million women farmers and
agricultural entrepreneurs receive mobile phones to be able to access
information on agro-inputs through an e-wallet scheme.
b. The
Ministry of Health, in addition to scaling up its ongoing “Save a
Million Lives” initiative, plans to give back health and hope to
one-third of the pool of young girls and women who have been waiting a
long time for V.V.F repairs through surgery and economic rehabilitation.
In addition, we are up-scaling routine immunization.
c. For
2013, the Ministry of Works plans to increase the number of women that
are employed in public works programmes as contractors, workers and
project evaluators, setting itself a target of 35% for women in FERMA
rehabilitation work. In every geopolitical zone, at least 3 roads
leading to areas where women’s socio-economic activities are
concentrated, will be prioritised and completed.
57. To support
these activities, we have set aside the sum of N3 billion to be
disbursed to participating MDAs as incentives for them to deliver on
these targets. Our focus on empowering women is part of our agenda for
improving the country’s human development indicators. In this regard, we
shall not relent in our efforts to improve access and quality in our
health and education sectors.
Sports
58. The performance of
our sportsmen and women continues to strike an important chord for all
Nigerians across the country. We want to take our sports to great
heights again. We all recall our disappointment with our performance in
the recent Summer Olympics games in London. At the same time, we were
very delighted with the success of our Paraolympics athletes.
59. My Administration is committed to addressing the challenges faced by
our sports men and women. Later this month, I will be hosting a
Presidential retreat on sports in order to strategise on ways to support
our sports sector to achieve greater heights.
our sportsmen and women continues to strike an important chord for all
Nigerians across the country. We want to take our sports to great
heights again. We all recall our disappointment with our performance in
the recent Summer Olympics games in London. At the same time, we were
very delighted with the success of our Paraolympics athletes.
59. My Administration is committed to addressing the challenges faced by
our sports men and women. Later this month, I will be hosting a
Presidential retreat on sports in order to strategise on ways to support
our sports sector to achieve greater heights.
CONCLUSION
60. Mr. Senate President, Mr. Speaker, Distinguished and Honourable
Members of this esteemed Assembly, Fellow Nigerians, the Budget Proposal
I lay before you today represents our continued drive for real and
sustainable growth for the well-being of Nigerians.
61. It is a
budget that gives priority to our concerns for security,
infrastructure, food security and human development sectors. It is a
Budget that introduces a series of innovative features. This Budget is a
push in the right direction borne out of our well thought-out and
articulated developmental policies.
62. This is a budget for
every Nigerian. It belongs to the farmer, the investor, the
entrepreneur, the youth and the elderly. Yes, we have challenges, but
also incredible opportunities. Ours is the task of transforming these
opportunities into real, tangible outcomes which all our people can
experience and call their own. We need the cooperation of everyone to
make it work, to grow the economy, and to create jobs for our people. I
continue to call on all Nigerians to act. Making Nigeria work begins
with you and me.
63. Finally, I must restate my appreciation of
the contributions and cooperation of the Legislature in discharging our
collective responsibility to build the nation of our dreams.
64. I look forward to an expeditious consideration and passage of this
Proposal, as we strive to guarantee positive socio-economic
transformation for the benefit of our people.
65. May God bless the Federal Republic of Nigeria.
66. I thank you.
”The truth might be hard to say, painful to bear or even drastic for the truth sayer but still needed to be said”. ALISON.
