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Poverty Alleviation
Is A Serious Challenge N470b budget to relieve poverty, says Obasanjo Guardian 1999-11-25 CONTAINING the scourge of mass poverty is a principal objective of the N470 billion proposed by the Federal Government for its fiscal operations next year, President Olusegun Obasanjo said yesterday. He told the National Assembly members in Abuja that more than 70 per cent of the Nigerian population live below poverty line, despite "abundant natural and human resources that have been bestowed on our great nation." This, according to him, must be seen by all citizens as a major source of embarrassment. It is for that reason, he added, that a major objective of the current administration is to reduce the poverty level. Presenting the government's proposals on next year's budget to a joint sitting of the federal legislature, the president said: "The extent of poverty has reached frightening proportions primarily due to the neglect of past governments." He called on the National Assembly, state governments and councils to join in the resolve to conquer that scourge, saying: "We must today pledge to wipe out this scourge in the medium term, beginning from this budget." The N470 billion expenditure being proposed by the government comprises N300 billion for recurrent projects, and N170 billion capital vote. The total is an increase of N129.4 billion, or 38 per cent over the N340.6 billion for this year. Projected revenue for the new year, however, is N387.3 billion - indicating a deficit of N82.7 billion, 17.6 per cent of the total expenditure, or 22 per cent of the Gross Domestic Product (GDP). The proposed vote for recurrent expenditure comprises N170 billion for personnel emoluments, to "make-up for the observed under-funding in public service pay in 1999, and the additional expenditure on members and staff of the National Assembly." The president justified the proposed expenditure by saying: "All democratic institutions, legislative and executive, have to be adequately provided for. The provision also gives room for some negotiated wage increases during the year." According to him, overhead expenditure for next year would be N60 billion, as against N45.1 billion for this year, while the vote for domestic debt service is being raised to N70 billion next year, from N16.3 billion. This year's deficit, estimated at over N256 billion for the first five months, has been securitised. On domestic debts, President Obasanjo said: "In the last four years, government had made substantial provisions for the settlement of debts owed by ministries and agencies to local contractors and suppliers. The exercise was intended to be a short term measure. It would appear that ministries and agencies are being encouraged by the provisions to disregard extant rules and regulations, and keep incuring extra-budgetary commitments. "This practice must stop. Disciplinary action will henceforth be taken against any ministry or officer involved in the award of any contract without ensuring that sufficient funds are available to pay such a commitment." Elaborating on the capital expenditure profile, the president said N20 billion had been earmarked for the settlement of debts owed on the National Priority Projects. According to him, total monies set aside for this purpose may increase to N50 billion if the N30 billion already earmarked for this same item in this year's Supplementary Appropriation Bill with the National Assembly, is approved. As from January next year, government, he said, would transfer all projects classified as national priority projects to the appropriate ministries to form part of their capital project. He added: "An inter-ministerial committee has been set up under the chairmanship of the Federal Ministry of Finance to verify, reconcile and recommend appropriate payment procedure for all the debts incurred on the projects up to September 30, 1999. "Work done by the various contractors after that date will also be covered under the allocation to the relevant ministries for the capital programme for the year 2000." Explaining the capital vote, Obasanjo said N20 billion would be used to fund special capital items of strategic importance to the machinery of government. An additional N10 billion is to be used to offset Petroleum Trust Fund (PTF) liabilities, through the appropriate ministries while the balance of N130 billion will be allocated to the various ministries and agencies in accordance with government priorities. The entire capital project is focused on poverty alleviation using inter-sectoral approach, to complement one another. States and local councils are projected to receive N709.5 billion from the Federation Account, using the existing allocation formula. Changes will only occur when the Revenue Mobilisation Allocation and Fiscal Commission has completed its work and the National Assembly approves the enabling law. States, according to the president, will receive N170.3 billion, councils will get N141.9 billion, special funds N53.2 billion, while N61.7 billion is provisionally earmarked to cover the minimum 13 per cent derivation. Also in the 2000 budget, Value Added Tax is estimated to generate N60.7 billion. In line with the sharing formula, states will receive N30.4 billion and local councils N21.2 billion. Total projected revenue accruable to government is, however, a whopping N1.26 trillion. Oil still remains the main stay of the economy, contributing N1,014.1 billion out of the entire income profile, while non-oil sources account for N245.9 billion. The total revenue is N274.8 billion or 27.9 per cent above the revised estimates for this year. About N512.9 billion is expected from the sale of crude which is predicated on $18 per barrel at an estimated export volume of 1.836 billion barrels per day. Of the federally collectible revenue, petroleum profit tax is expected to yield N100 billion while oil royalties are expected to generate N112.2 billion. According to Obasanjo, government is making available 300,000 barrels of crude oil per day for local consumption, same as this year's. But this is valued at the same budget benchmark of $18 per barrels and therefore estimated to rake in N187.8 billion during the year. Upstream gas and other miscellaneous earnings from oil are projected to earn N41.3 billion, compared with N3.6 billion for this year. This over 1047 per cent variance is attributable to the projected sale of gas feedstock to the Nigeria Liquefied Natural Gas (NLNG) project which is expected to generate N20 billion next year. This, the president said, would be complemented by expected increase in internal gas consumption. Even with this massive revenue, the Federal Government is expected to retain N387.3 billion compared with N301.7 billion this year, which is an increase of N85.6 billion or 28.4 per cent. Making up the Federal Government portion is N344.1 billion from the Federation Account, while VAT is to rake in N9.1 billion. Independent sources would generate N19.1 billion while privatisation is expected to beef it up by N15 billion. |
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