Nigeria Content Online

The
federal government said it plans to cut budget deficit from 4.1 percent
of deficit recorded last year to about 3.6 percent in 2011. Bright
Okogwu, director general in the budget office said the determination to
achieve this cut is at the heart of the non passage of the 2011 budget
into the second quarter of the year.

The
federal government had sent a budget proposal of N4.23 trillion to the
National Assembly for consideration. Out of this amount, N2.48 trillion
or 58.8 percent was earmarked for recurrent expenditure while N1.01 was
for capital expenditure. This figure was upped by 17.7 percent to N4.97
trillion, an increase of over N745 billion by the legislators, thereby
inflating the budget above the threshold set by government.

The
President had based his estimates on crude oil benchmark of $65 per
barrel which was raised to $75 by the Senate which also increased the
allocation to the National Assembly from N111.24 billion to N 232.74
billion, representing 4.7 percent of the total budget.

Trimming the budget

Answering
questions yesterday on the delay in the passage of the budget at the
regional economic outlook summit organised by the International
Monetary Fund (IMF) in Lagos, Mr Okogwu said the executive was still
meeting with the lawmakers on ways of trimming the budget to acceptable
level.

“We
are currently in negotiation with the National Assembly. The idea is to
restructure the budget. We believe that it needs to be changed to some
extent. As part of the fiscal consolidation, we proposed a budget
deficit of 3.6 percent of GDP (Gross Domestic Product) which means that
in reality, we are looking to come to about 3 percent of GDP.” He said
part of the fiscal consolidation of government includes improving the
revenue generation side and to block leakages. “What came out was about
4.1 per cent and that is why the minister for finance has said the
budget is not implementable. We had a meeting with the leadership of
the National Assembly and we have agreed that the budget will be
amended to some extent to a level that will fit in with our suggestion
about fiscal consolidation. The idea is not to spend all that comes to
you but to save some for the future years when things may not be so
good and for future generation,” Mr Okogwu said.

He
admitted that the election programme also affected the budget
negotiation adding that now that the elections are over, the parties
would return to finding the middle ground.

Increase interest rates

In
its outlook, the IMF said sub-Saharan African countries need to
increase interest rates in order to encourage foreign investment
inflows and stimulate growth, in the aftermath of the global financial
crisis. Abebe Selassie, divisional chief, African department of the IMF
said though many countries in the region have demonstrated resilience
during the crisis, it was time for them to move ahead. “Fiscal policies
should move away from supportive stance to more neutral stance. Rates
have been accommodative but now that there is recovery, rates should be
more neutral,” he said.