Oluyinka Akintunde, Sam Akpe, Gbade Ogunwale and Chiawo Nwankwo, Abuja
President Olusegun Obasanjo, at a Joint session of the National Assembly on Tuesday, presented a total budget of N1.618 trillion for the year 2005.
This represents an increase of 24.5 per cent over the 2004 budget of N1.3 trillion.
The proposed budget was based on $27 per barrel revenue from crude oil, which is eight per cent higher than the 2004 budget price of $25 per barrel.
Crude Oil prices have, however, in recent times soared to an all- time high level of about $54 per barrel.
A breakdown of the proposal showed that the Federal Government has set aside N636 billion for recurrent expenditure; N544 billion for capital expenditure; N360 billion for foreign and domestic debt servicing; and N76 billion for statutory transfers.
According to the President, pension payments would account for the largest share of the proposed budget at 11.6 per cent; Education, (8.3 per cent); Defence, (8.6 per cent); Police, (7.2 per cent); Works, (7.6 per cent); Power, (7.2 per cent); Health, (5.5 per cent), and Agriculture, (1.7 per cent).
Under the proposed budget, the federally collectible revenue has been estimated at N3.619 trillion, out of which N2.902 trillion has been projected as oil revenue, N563 billion as non-oil taxes and N100 billion as independent revenue.
President Obasanjo gave the projected federally retained revenue under the existing revenue sharing formula as N1.304 trillion; made up of Federal Government share of the federation account of N1.179 trillion, share of Value Added Tax of N25 billion, and independent revenue of N100 billion.
�An aggregate expenditure ceiling of N1.618 trillion is being proposed. This results in a deficit of N314 billion or 2.9 per cent of Gross Domestic Product.
�The deficit will be financed with excess crude savings of N158 billion (being the Federal Government�s share of the 50 per cent of the excess crude oil fund for 2004); privatisation proceeds, N4 billion; sales of government property in Abuja and around the federation, N15 billion; looted fund recovery, N10 billion; access to long term funds from the capital market, N70 billion.
�This modest borrowing is really to help develop Nigeria�s capital market for medium to long term funding and give it depth, which is very much in line with good government practice elsewhere,� the President explained.
He listed the parameters for the 2005 budget as: crude oil production of 2.68 million barrels a day (including 150,000 barrels of condensate); Nigeria Liquefied Natural Gas and upstream gas revenues of N53 billion; a prudent oil price of $27 billion per barrel; Joint Venture Cash Calls of $4.23 billion, and a target inflation rate of no more than 10 per cent.
In the 2004 budget, the government projected a federally collectible revenue of N3.02 trillion; federally retained revenue of N1.12 trillion; capital expenditure of N350 billion, recurrent expenditure of N539.3 billion and N369.4 billion.
The total capital spending of N544 billion in the proposed budget however represents an increase of 55 per cent over the 2004 budget of N350 billion.
Out of the N544 billion capital budget, President Obasanjo disclosed that N50 billion was earmarked as payment of local contractor debts.
According to him, 33 per cent of the capital budget would be used for roads, water supply, power, education, health, and agriculture.
�The focus on power and roads is important for both private sector development and for our households, and will be sustained through the medium term so that Nigeria can steadily make up for its infrastructure deficit.
�The idea is to try to double the present generation capacity within the next three years and to substantially rehabilitate, repair and maintain all Federal roads, whilst completing those that are far advanced, that is past 70 per cent completion point.
�It also provides equity of $80 million for the National Petroleum Development Company, one of the Nigerian national Petroleum Corporation�s subsidiaries to take off,� he explained.
The President stated that the large size of the recurrent expenditure of N636 billion was due to several factors, such as: recruitment of 40,000 additional police with attendant salaries and allowances; monies for capacity building in the civil service as part of the public service reforms; anticipated redundancy payments; some arrears of professional allowances to teachers, doctors, researchers and others that were not paid in the past.
The Federal Government allocated N119 billion to pensions in next year�s budget, as against the N70 billion allocated to it in the 2004 budget.
