Atiku On Jonathan

Atiku On Jonathan’s 2011 Budget: Politics Aside

Ifeanyi Izeze

No Nigerian government has ever contradicted itself like the present administration and this is becoming very embarrassing as it depicts a disjointed team. No matter what some groups may think or say, this is not good for the image of governance in this country.

When the former Vice President, Atiku Abubakar wrote to President Goodluck Jonathan what sounded like Abraham Lincoln’s letter to his son’s school teacher on the 2011 budget, the Presidency responded by saying that “It is regrettable that a letter purported to have been written by a former Vice-President should contain such misrepresentations and Atiku’s stand depicted the failure of the writer to understand the global economic and financial dynamics of the period 2008-2010.”

And in a direct contradiction of what the Jonathan government would want Nigerians to feel about Atiku, the same Presidency wholeheartedly acknowledged that “some of the issues Atiku talked about (concerning the budget and economy) are those which have been identified by the government and which are currently being addressed by the President Jonathan’s administration.”

Now let’s face the facts: Since the advent of the current dispensation, the present administration has presided over the highest budgetary expenditure of over N4 trillion in one year; recorded the highest rate of borrowing in any one year; lost the highest level of reserves in normal times both external and excess crude account; and had the worst economic growth in the last seven years as disclosed by several international credit rating agencies.

It is very insulting on the sensibilities of informed Nigerians for the Finance Minister Olusegun Aganga to say that the Nigerian economy is doing very well and that “Atiku misrepresented facts on the state of the economy to score cheap political points.” This same minister days ago could not even agree with his subordinate- the CBN Governor, over the authenticity of the figures used in budgetary calculations. Truth be told, the Nigerian economy is doing well only in the imagination of the recently repatriated finance minister who is fast turning into government’s chief propagandist using voodoo statistics to confuse not only his boss but the entire nation.

Could you imagine the Finance Minister saying “The reduction in the reserves level is attributable to the increased demand for foreign exchange in line with increased economic activity by the public and private sectors, including the outlays on the power sector by the three tiers of government and the seed money for the Sovereign Wealth Fund.” This one no be grammar? Increased economic activity by private and public sectors- where?

The Government should tell us why the 2011budget deliberately played down or more aptly blanked out any form of investment/funding of infrastructure development. Rather, it sets to spend the entire earnings from both oil and non-oil sectors on consumption or more aptly, perishables, and even borrow more money to consume.

Do we need to be economic experts to understand from the proposal that the entire capital budget was hoped to be funded on borrowed funds?

Politics apart, Atiku was very right to point out that “At a time of unprecedented oil boom, you (Jonathan) have presented Nigeria with a budget of consumption for consumption; a budget of debt accumulation to imperil the future; a budget that is rich in rhetoric and pedestrian initiatives but lacking in any bold step to lay the foundation for Nigeria’s next 50 years or even 20 years.”

Is it not funny that the President in his first budget which he said is the first budget for the National Implementation Plan (NIP) for Vision 20:20:20 proposed a total expenditure of N4.22 trillion to be financed by a revenue estimate of N2.83 trillion, leaving a total deficit (to be added to the already heavy debt overhang) of N1.4 trillion. In real terms, the fact that this is Jonathan’s first budget in the implementation of Vision 20:20:20, it shows that the entire Vision is blurred or rather just an empty slogan.

The President plans to borrow 33% of the entire budget, or 3.62 percent of GDP which is higher than the 3 percent stipulated in the Fiscal Responsibility Act. We don’t need to be Jonathan’s political opponents to agree that excessive borrowings that has marked his administration as also indicated in Budget 2011 has the potentials of returning Nigeria to a regime of debt overhang and making nonsense of all the gains of the negotiated cancellation of the nation’s debts.

Debt servicing alone was pegged at N542 billion (which is higher than the entire capital spending on power, roads, health and education put together).

The implication of the recurrent expenditure (including debt service) of N3.023 trillion, is that with a revenue of N2.83 trillion, the federal government plans to borrow money to finance recurrent expenditure even if capital budget is zero. The recurrent budget is 107% of total revenue.

Put differently, the proposed capital budget is N1 trillion whereas the deficit or planned borrowing is N1.4 trillion, meaning that even with a zero capital budget Jonathan plans to borrow about N400 billion to add to revenue to finance “consumption,” or more aptly perishables. As was rightly said, “no one needs to be an economist to appreciate that this is a disaster.”

You don’t need to be a political opponent of the President to agree that it is a bad omen for the government to opt to borrow the entire capital budget at a time of increasing revenue from oil sales. Abi I de wrong?

The implication is that if we continue to borrow at the average interest rate of 14% by the 2012 budget, government’s borrowing in 2011 will add another N196 billion to debt service payment (and hence by 2012 debt service might be in excess of N738 billion). At that rate, by 2015, debt service payment will be in excess of N1 trillion. This is the truth, the whole truth and nothing but the truth.

IFEANYI IZEZE IS AN ABUJA-BASED CONSULTANT ON STRATEGY AND COMMUNICATION (iizeze@yahoo.com)