Former vice president and presidential aspirant of the Peoples Democratic Party (PDP), Atiku Abubakar has accused President Goodluck Jonathan of being too ashamed to defend his 2011 budget proposal. Atiku who spoke through his Campaign Organisation in Abuja yesterday said the budget of a nation is too serious a matter to be defended through anonymous persons.
Atiku was reacting to media reports that an “anonymous” presidency source had questioned the rationale behind his widely-published critique of the budget 2011 proposal.
“It is inconceivable that a government that presented a budget that will determine the lives of 150 million cannot rise in defence of such budget.
“It is reprehensible that despite the army of officials in government, there is no single volunteer who can take the risk of being identified with the wishy-washy collection they call the Budget 2011 proposal. “A budget is a very serious instrument that guides the conduct of government business. Its formulation is supposed to be guided by the philosophy and the vision of the government. It is the appropriation of this vision with the expectations and needs of the people that a budget is said to be well-thought out. If the Budget 2011 proposal is well-thought out, everybody in government will not be too ashamed to put a face to its defence.
“The conduct of government by anonymity is becoming the defining character of this administration. When the presidency is accused of working on the 2011 elections with a rigging manual, the initial response of government is through this now notorious “anonymous presidency sources.”
“How can an “anonymous source” be the one defending government against serious allegations of incompetence and malfeasance,” the statement queried.
Atiku restated his earlier position that the Budget 2011 proposal, which guiding policy is predicated on consumption was a recipe for economic disaster.
He noted that the emphasis on consumption was becoming understandable with daily revelations of the staggering daily allocations for food consumption in the presidency.
The former vice president restated his alert that the nation’s economy was on a free fall and that President Jonathan’s Budget 2011 can only worsen the parlous state of the economy. He warned that the budget which is predicated on consumption without corresponding investments in critical infrastructure is a recipe for economic disaster.
“At a time of unprecedented oil boom, you 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,” Atiku had said in a letter to President Jonathan.
He noted that the excessive borrowings as reflected in Budget 2011 was in breach of the Fiscal Responsibility Act, and a throwback to the era of debt overhang.
“I almost wept for Nigeria after reading your 2011 budget, which is your first budget as President of Nigeria. In simple terms, it signals your vision for Nigeria and how you intend to govern. For effect, you proudly announced that this is the first budget of the National Implementation Plan (NIP) for Vision 20:20:20. The rest of the world must be laughing at us. For a summary, you proposed a total expenditure of N4.22 trillion to be financed by a revenue estimate of N2.83 trillion, leaving a total deficit (new borrowing) of N1.4 trillion.
“Mr. President, you plan to borrow 33% of the entire budget, or 3.62% of GDP which is higher than the 3% stipulated in the Fiscal Responsibility Act. Your total debt service is N542 billion (which is higher than your total capital spending on power, roads, health and education put together). Your total recurrent expenditure (including debt service) is N3.023 trillion, meaning that with a revenue of N2.83 trillion, your government plans to borrow money to finance recurrent expenditure even if capital budget is zero. “Your recurrent budget is 107% of total revenue. Put differently, your capital budget is N1 trillion whereas your deficit or planned borrowing is N1.4 trillion, meaning that even with a zero capital budget you plan to borrow about N400 billion to add to revenue to finance consumption.
Mr. President, no one needs to be an economist to appreciate that this is a disaster,” Atiku had said. He said it was unacceptable for government to have recourse to borrowing the entire capital budget at a time of increasing revenue from oil.
“Mr. President, let me draw your attention to the simple meaning of your budget: not one kobo of our oil revenue (at a time of oil boom) is being spent on power and infrastructure. Rather, you plan to spend the entire oil revenue on consumption, and even borrow to consume. Every kobo of capital budget is to be borrowed. If you continue to borrow at the average interest rate of 14% by the 2012 budget, your 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),” he said.
“At the rate you are going, by 2015, debt service payment will be in excess of N1 trillion. If oil price drops below $50, it is evident that Government will not be able to service its debt without austerity measures. Is this what you plan for this country?” Atiku queried. Atiku said his own envisaged plan to restore the nation’s public finance to a path of sustainability is to spend at least 40% of the budget on capital budget as opposed to Jonathan’s zero on capital. “I have put out a plan to restore our public finance to a path of sustainability. Our target is to spend at least 40% of current revenue on capital budget (compared to your government that spends zero on capital). Over the medium term of four years, our agenda is to constrain recurrent expenditure to be fully funded by non–oil revenue while devoting every kobo of oil revenue to capital spending on infrastructure, power, health and education.
In other words, oil is a depleting, exhaustible resource, and we must use it to build capacity for the future. We should avoid borrowing but if we must borrow at all, it has to be under stringent conditions. We should borrow only for bankable capital projects whereby the projects must generate the revenues to pay back the loan,” he said.
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