Coordinating Minister of the Economy and Finance Minister, Dr. Ngozi Okonjo-Iweala, yesterday said N145.2bn had been provided for subsidy payments on petroleum products in the 2015 budget.
Making the disclosure during a media briefing on the N4.493trn 2015 budget in Abuja, the minister hinted that N100bn was provided for subsidy payments on premium motor spirit (petrol) while N45.2bn would cover kerosene subsidy claims during the fiscal year.
This is just as she also disclosed that prior to the passage of the budget by the National Assembly last week, the Executive had borrowed N473bn out of the N883bn borrowing provision in the budget to meet up with recurrent expenditure, including salaries and overheads, since the Constitution allows the Executive to explore the financing option pending the passage of yearly budgets.
She said: “I want to clarify some of the information in the media that the National Assembly passed the budget without the subsidy. This is not true. I also want to share with you that we have sent in a budget with a benchmark price of $52 per barrel, the National Assembly passed a benchmark oil price of $53 per barrel. That is one dollar higher than the budget proposal.
“This generated an extra revenue of N54bn for the Federal Government; they retained the production volume of 2.2782 million barrels per day and exchange rate of N190 to a dollar.’’
Giving a breakdown of the budget, she said gross federally collectible revenue was raised by N169.845bn, from N9.61trn to N9.78trn due to increase in the benchmark price by a dollar.
In addition, Okonjo-Iweala explained that the budget revenue provisions were raised by the legislature to N3.452trn up from the N3.358trn earlier proposed by the Executive.
Similarly, she reported that on the expenditure side, the aggregate expenditure passed was increased to N4.49trn by the National Assembly as against the aggregate expenditure of N4.425trn proposed by the Executive.
The minister, who pointed out that the debt service provision was unchanged at N943.62bn, however, said that statutory transfers were increased.
Specifically, she said that NDDC transfer was increased from N45.75b to N46.72bn; UBE from N67.3bn to N68.3bn; National Assembly from N115bn to N120bn; Human Rights Commission, from N1.2bn to N1.516bn.
She said pension was slightly reduced from N231.4bn to N231.06bn, adding that other categories were removed and some moved to other sections of the budget.
On the expenditure, the minister clarified that aggregate capital expenditure, including transfers and SURE-P, was increased to N722.2bn from N663.67bn; while the fiscal deficit was decreased from N1.067trn to N1.041trn with the deficit from the GDP decreased from 1.119 per cent to 1.09 per cent.
Making further clarification on the revenue projections, Okonjo-Iweala said the drop in oil revenue which began in 2014 had impacted negatively on gross federally collectible revenue.
For instance, she disclosed that the country experienced about 50 per cent drop in collectible revenues largely due to the drop in oil prices as well as low revenue receipts from non-oil sources over the past 10 months, thereby compelling the government to resort to borrowing.
Making further clarification on the fiscal position of government this year, the minister explained that despite efforts by government to reduce the level of borrowing, such could not be achieved due to cash flow problems.
For instance, she said government’s borrowing was brought down to about N570bn last year but that the figure had to be jacked up in the current fiscal year to about N882bn in order to cushion the negative impact of revenue decline.
The minister said: “We have tried to work within the budget. The budget provides for N882bn in borrowing and we have had to increase the borrowing budget this year as compared to last year when we have actually brought it down. If you all recall, we said we will be bringing down borrowing to finance the budget and we have been doing that steadily.
“Last year, the borrowing came down to about N570bn but this year, because of the very difficult cash flow situation, we provided N882bn in borrowing. About N380bn of that is external borrowing and the balance of N502bn slated for domestic borrowing. So, what we’ve had to do to manage this first half is to front load the borrowing programme which is a normal reaction that you have because the cash crunch situation has been very difficult.
“In the budget, we provided for N882bn and all we have borrowed is within the budget. What we have borrowed so far is N473bn and so we still have more room for borrowing.”
