FG extends capital budget execution till March 2015

FG extends capital budget execution till March 2015

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The Federal Government has extended the execution of the capital
components of the 2014 budget by three months from the initial end
date of December 31, 2014 to the last day of March 2015.

Our correspondent learnt from the Budget Office of the Federation in
Abuja on Monday that the extension became imperative owing to the
late passage of the fiscal document by the National Assembly.

The Senate had on April 9, 2014 passed the budget, raising the amount
in the fiscal document from the N4.642tn submitted by President
Goodluck Jonathan to the National Assembly on December 19, 2013 to
N4.695tn
Highlights of the 2014 budget as passed by the legislature and signed
by Jonathan are statutory transfers, N408.68bn; debt servicing,
N712bn; recurrent expenditure, N2.454tn; capital expenditure,
N1.119tn; and aggregate expenditure, N4.695tn.

The lawmakers had tinkered with the original budget proposal, raising
the recurrent expenditure from the original N2.43tn submitted by the
executive to N2.454tn.

The National Assembly also raised the capital expenditure to N1.119tn
from the original N1.10tn earlier proposed. The budget was signed by
Jonathan on May 21 this year.

It was learnt that since the budget was passed almost in the middle of
the year, it would be difficult for the capital components to be fully
implemented within a six-month period.

A top official in the budget office, who spoke with our correspondent
on the condition of anonymity as he was not officially permitted to
speak on the matter, said since the process of awarding contracts
was cumbersome, it would only be reasonable to grant the extension
of the budget implementation cycle in the light of the late passage of
the budget.

The official also said that the difficulties being encountered in the
government’s quest to raise revenue owing to the massive drop in oil
prices since June might have affected the release of funds.

The official said, “You know that the budget was passed almost in the
middle of the year and before that time, nothing tangible was
happening as regards capital spending. For instance, we had the first
capital vote released almost in March; this is rather late considering
the fact that such allocation should have come at the beginning of the
year.

“Even as we speak, the fourth quarter capital allocation has not been
released to the Ministries, Departments and Agencies of government.

What we have so far released is just for three quarters and we can’t
be closing the books when the fourth quarter allocation is still pending.

“So, all these are factors that affect budget execution and it is
because of these that we have, as was done in the past, agreed to
move the deadline for capital vote implementation to March ending.”

Findings further revealed that out of the N1.1tn budgeted for capital
expenditure in 2014, only N610bn had been released to the MDAs two
days to the end of the year.

The Director-General, Budget Office of the Federation, Dr. Bright
Okogu, confirmed the figure in his review of the performance of the
2014 budget.

He said, “For the 2014 budget implementation, recurrent releases are
on track. For capital, N610bn has been released, most of which has
been fully cash-backed and being utilised.

“This level of implementation is coming amidst various challenges to
the 2014 budget.”

Okogu listed some of the challenges facing the economy in terms of
revenue generation to include quantity shocks (average oil production
of 2.2 million barrels per day as against 2.38mbpd budgeted); price
shocks (oil price falling from about $114 per barrel in June to about
$60 presently).

The director-general also said that under remittance of Internally
Generated Revenue by some MDAs was affecting the raising of the
revenue needed to execute the budget.

According to figures obtained from the Ministry of Finance, a total
amount of N4.03tn was collected as gross federally collected revenue
in the first six months of this year.

The amount was generated from two major revenue sources. They are
mineral revenue made up of crude oil sales, oil and gas royalties, rent,
gas flared penalty, petroleum profit tax and gas tax; and non-mineral
revenue such as Value Added Tax, corporate taxes, Customs import,
excise and fees.