To reduce fiscal deficit and minimise domestic borrowing, the Federal Government has slashed N100 billion from the 2012 budget, which will be transmitted to the National Assembly soon.
The Co-ordinating minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, disclosed this to reporters in Abuja yesterday.
She said the revision became necessary as a result of the need to make provision for subsidy arising from the partial deregulation under which the price of Petroleum Motor Spirit (PMS) otherwise known as petrol, was reduced from N141 per litre to N97 per litre.
The reductions, which amounted about N100 billion, were taken from the recurrent expenditure. Areas affected include administrative, training capital votes, transport and other costs.
Also, she said the campaign against waste and leakages has also notched up significant success as N74 billion has been saved through biometric verification of workers and pensioners. This has simultaneously led to a reduction in the pension budget and improved the processes for paying genuine pensioners.
The minister explained that the 2012 Fiscal Framework earlier submitted to NASS assumed 100 per cent subsidy removal and only N155billion was provided for carryover of 2011 subsidy payments. The estimated figure for 2012 is now N888 billion inclusive of some carry-over from last year.
Following the controversy over the deregulation and government’s decision to implement partial subsidy removal with PMS pump price of N97/litre and kerosene still fully subsidised, the government had faced the challenge of achieving the objectives of the budget within the context of reduced revenues.
“The savings made and the cuts achieved underscore the seriousness with which the Federal Government views its mandate to make a difference in the lives of the people against all odds,” says the minister.
The minister listed the steps taken to minimise the fiscal deficit and domestic borrowing, to include the squeezing of further resources from revenue generating agencies, which has led to the Internally Generated Revenue (IGR) to increase by N53.3 billion from N393.46 billion to N446.78bilion and the recovery of about N151 billion by the Pension Task Force of which N74 billion has already been reflected in the 2012 budget.
Others include cuts in aggregate expenditure with transfers reduced by N25.34 billion; Service Wide votes cut by N24.39 billion from N337.08 billion to N312.69 billion while overhead vote was slashed by N17.75 billion.
Besides, she said Capital vote was reduced by N35.53billion from N1.319 trillion to N1.284 trillion, as a result of the removal of administrative capital items.
”These efforts resulted in savings of about N100 billion, with aggregate expenditure coming down from N4.749 trillion to N4.649 trillion,” she explained.
She said fiscal deficit increased slightly from 2.77 per cent of Gross Domestic Product (GDP) as in the original budget proposal to 2.97per cent of GDP under the revised budget.
This deficit, she explained, will be financed through the traditional sources such as privatisation proceeds and signature bonus. In line with the focus on prudence, domestic borrowing requirement is kept constant at N794.4 billion. Also, the additional amount required to finance the deficit will come from the Excess Crude Account, she added.
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