The Federal Government has extended the execution of the capital components of the 2014 budget by three months from the initial end date of December 31, 2014 to the last day of March 2015.
Our correspondent learnt from the Budget Office of the Federation in Abuja on Monday that the extension became imperative owing to the late passage of the fiscal document by the National Assembly.
The Senate had on April 9, 2014 passed the budget, raising the amount in the fiscal document from the N4.642tn submitted by President Goodluck Jonathan to the National Assembly on December 19, 2013 to N4.695tn.
Highlights of the 2014 budget as passed by the legislature and signed by Jonathan are statutory transfers, N408.68bn; debt servicing, N712bn; recurrent expenditure, N2.454tn; capital expenditure, N1.119tn; and aggregate expenditure, N4.695tn.
The lawmakers had tinkered with the original budget proposal, raising the recurrent expenditure from the original N2.43tn submitted by the executive to N2.454tn.
The National Assembly also raised the capital expenditure to N1.119tn from the original N1.10tn earlier proposed. The budget was signed by Jonathan on May 21 this year.
It was learnt that since the budget was passed almost in the middle of the year, it would be difficult for the capital components to be fully implemented within a six-month period.
A top official in the budget office, who spoke with our correspondent on the condition of anonymity as he was not officially permitted to speak on the matter, said since the process of awarding contracts was cumbersome, it would only be reasonable to grant the extension of the budget implementation cycle in the light of the late passage of the budget.
The official also said that the difficulties being encountered in the government’s quest to raise revenue owing to the massive drop in oil prices since June might have affected the release of funds.
The official said, “You know that the budget was passed almost in the middle of the year and before that time, nothing tangible was happening as regards capital spending. For instance, we had the first capital vote released almost in March; this is rather late considering the fact that such allocation should have come at the beginning of the year.
“Even as we speak, the fourth quarter capital allocation has not been released to the Ministries, Departments and Agencies of government. What we have so far released is just for three quarters and we can’t be closing the books when the fourth quarter allocation is still pending.
“So, all these are factors that affect budget execution and it is because of these that we have, as was done in the past, agreed to move the deadline for capital vote implementation to March ending.”
Findings further revealed that out of the N1.1tn budgeted for capital expenditure in 2014, only N610bn had been released to the MDAs two days to the end of the year.
The Director-General, Budget Office of the Federation, Dr. Bright Okogu, confirmed the figure in his review of the performance of the 2014 budget.
He said, “For the 2014 budget implementation, recurrent releases are on track. For capital, N610bn has been released, most of which has been fully cash-backed and being utilised.
“This level of implementation is coming amidst various challenges to the 2014 budget.”
Okogu listed some of the challenges facing the economy in terms of revenue generation to include quantity shocks (average oil production of 2.2 million barrels per day as against 2.38mbpd budgeted); price shocks (oil price falling from about $114 per barrel in June to about $60 presently).
The director-general also said that under remittance of Internally Generated Revenue by some MDAs was affecting the raising of the revenue needed to execute the budget.
According to figures obtained from the Ministry of Finance, a total amount of N4.03tn was collected as gross federally collected revenue in the first six months of this year.
The amount was generated from two major revenue sources. They are mineral revenue made up of crude oil sales, oil and gas royalties, rent, gas flared penalty, petroleum profit tax and gas tax; and non-mineral revenue such as Value Added Tax, corporate taxes, Customs import, excise and fees. Punch
