The expected deficit arising from the above would be financed by additional borrowing of N1.601trillion through the debt management office.
In a letter to Senate President, Dr Bukola Saraki, President Muhammadu Buhari said the supplementary budget would be predicated on oil production of 2.2003 million barrels per day, with benchmark price of $48 per barrel and an exchange rate of N190 to $1.
The breakdown of the supplementary budget shows that N413.36 billion would be for fuel subsidy payment while N10.62 billion was earmarked for the payment of outstanding severance gratuity and allowances of outgone and incoming legislators and legislative aides.
Also, the fight against Boko Haram in the North-East code named “Operation Zaman Lafiya” has been billed for N29.96 billion for the third and fourth quarters of 2015.
President Buhari, in the letter, recalled that the 2015 budget was predicated on oil production of 2.2782million barrels per day, benchmark oil price of $53 per barrel and an exchange rate of 190 to $1.
Based on these key assumptions, the following fiscal budget was projected: FGN budget revenue N3.452 trillion, made up of share of oil and minerals revenue- N1.645trillion; share of non oil revenue, N1.215 trillion; FGN Independent revenue, N489.3 billion.
Federal Government’s aggregate expenditure was estimated at N4.485 trillion, comprising statutory transfers,N354.34 billion; debt service, N953.6 billion; recurrent non-debt (personnel costs), N1.828 trillion; recurrent non debt overhead, N791.2 billion; capital expenditure, N536.6 billion.
In the letter, President Buhari noted that “the implementation of the FGN2015 budget has been fraught with significant revenue shortfalls due to continuous decline in oil price, oil production shortfall and non full non oil revenue.
“You may wish to further note that owing to the need to sustain the current progress in addressing the security challenges and other important obligations of government, emergency expenditure items required urgent funding is projected at N465.64 billion
“Given this new level of expenditure and revenue constraint, the 2015 budget, which has a projected fiscal deficit of N1.041 trillion or 1.09 per cent in GDP, with the deficit largely financed by the domestic borrowing of N502.1 billion and foreign borrowing of N380 billion, making a total borrowing amounting to N882.12 billion.”
According to President Buhari, the expected deficit arising from the above is projected at N2.103 trillion or 2.19 per cent of GDP would be financed by additional borrowing of N1.601 trillion through the Debt Management Office.
Zero-based budgeting’ll block financial leakages —Udom
Meanwhile, the Minister of Budget and Planning, Sen. Udoma Udo Udoma, said, yesterday, that the Federal Government’s plan for zero-based budgeting from 2016 would block all financial leakages and bring accountability into government spending. Udoma said this at an event to commemorate the 2015 evaluation year declared by the UN as well as the inauguration of the Association of Evaluators, Nigerian chapter.
He said when adopted, the zero-based budgeting would help government to adopt a management framework on how to manage funds.
He said: “Steps are being taken to review and update our long term strategic framework so that Nigeria can key into the 2015 sustainable development goals. We are embarking on the reformed budgeting/planning process by adopting the zero base budgeting policies driven approach for appropriating 2016 budget.
“Efforts are being made to block financial leakages through measures that include the operation of single treasury accounts to grow the size of government revenues especially from the non oil sources.”
Senate okays World Bank loan of $200m for Lagos
In a related development, the Senate, yesterday, approved a loan of $200 million for Lagos State Development Policy Operation II (DPO II) for the construction of a bridge to link Lekki and Ikoyi, Cardiac and Renal Centres at Gbagada General Hospital, among other projects.
The approval that came under the Federal Government External Borrowing Plan (2015-2017) was sequel to the report of the Senator Kabiru Ibrahim Gaya-led Senate ad-hoc Committee on Local and Foreign Debts.
President Buhari had on Tuesday, September 29 sent a letter to the Senate through the Senate President, Dr Saraki, requesting a special approval of Lagos DPO III, for the third tranche of $200 million of the Development Policy Operation (DPO) from the World Bank.
According to the Senate Committee report, the key objective of the DPO facility from the World Bank’s International Development Association, IDA, would be to support the Lagos State in building systems and infrastructure and strengthen investment climate while maintaining fiscal sustainability.
In the report, the committee said the facility which had totalled $600 million was being released in tranches to control the application of funds by the beneficiary government and ensure accountability and judicious utilization of funds, adding that the terms of the loan are 25 years tenor; grace period of five years; interest of 1.5 per cent per annum payable on un-disbursed balance and service charge of 0.75 per cent payable on disbursed amount.
Lekki-Ikoyi link Cable bridge
According to the report, the Lekki-Ikoyi link Cable bridge was constructed at the cost of N29 billion; just as the loan would be applied to the completion of the 27 kilometre Light Rail Mass Transit (LRMT), among others.
The report read: “The Lagos State Development Policy Operation DPO (Budget Support) for $600 million, was approved by World Bank in 2010 to be disbursed in three tranches of $200 million each.
“The first tranche of $200 million was approved by the National Assembly in the 2010 Borrowing Plan. And the projects were implemented in 2011.
“The second tranche of $200 million was approved by the National Assembly in 2012-2014 Borrowing Plan. Lagos State has justified the borrowing and has acceptable debt sustainability level, and therefore is eligible to borrow.
“The loan would be used to finance light rail project, education, roads and bridges, water and health sector development among others.”
Saraki commends colleagues
In his remarks, Senator Saraki, while commending his colleagues on their efforts in the report emphasized the importance of such development loans, said: “It is our responsibility that we do our work in our respective committees so we can do the proper oversight that is required.
“Loans must be considered on case by case basis. Loans for infrastructural development should be commended and approved provided the loans are used effectively for infrastructure.”
Senator Danjuma Goje, APC, Gombe, who seconded the motion to approve the loan, stressed the need for proper monitoring and evaluation, especially on how the loan would be spent, adding that all the governors will not mind loans like this if given the opportunity.
Senator George Sekibo, PDP, Rivers East senatorial district, who noted that it was important for the loan to be followed up, said: “It is one thing to borrow, it is another to ensure that they are well utilised.”