•CBN uncovers $20bn idle funds, FG to reduce debt service by 25% in three years
•Senate c’ttee says N5,000 welfare scheme unrealistic
The federal government on Thursday disclosed that it had granted ministries, departments and agencies (MDAs) access to the treasury single account (TSA) as the transfers currently peak at N2.9 trillion.
This disclosure was made by the Minister of Finance, Mrs. Kemi Adeosun, during a collaborative meeting between the Joint National Assembly Committee on Appropriation and the federal government in the National Assembly on Thursday.
Also present at the meeting were the Minister of Budget and National Planning, Senator Udo Udoma, Accountant General of the Federation, Ahmed Idris and officials of the Central Bank of Nigeria (CBN).
Adeosun who was responding to a question on why the federal government had failed to factor in the transfers into the 2016 budget, said it was impossible to fund budgets with TSA, noting that the account is not stable as money goes in and out of it.
She disclosed that the federal government had recently opened up the TSA for agencies’ access, remarking that only the universities are yet to have access to their monies in the account. According to her, opening up the account to the agencies has become compelling in view of their dire need for money to fund their operations and as well invest.
“There was N2.9 trillion in the TSA. Money goes in and out of the account. Some of the monies belong to Nigerian National Petroleum Corporation (NNPC) and they need to plan with their money. So, you can’t mop up the monies and say ‘let’s use it to fund budget.’ We need to understand the breakdown of the balances. It is wrong to start sweeping the monies and leave the agencies unable to operate.
“We have opened a window for the agencies to access the TSA. Every agency now has a sub-account through which they access the TSA. Only the universities are yet to have access. TSA doesn’t pay interest. Some of them want to invest their monies. We looked at those things to find windows for them to invest monies. Now everybody has to move payment and it is working very well.
Agencies spent 99.9 per cent of their monies before. Now, we ask, ‘what do you want to use your Internal Generated Revenue (IGR) for? Must you use it? It is important to get revenues so that real agencies can come to account,” she said.
In its submission, the Central Bank of Nigeria (CBN) disclosed that the continuous depreciation in the value of naira as well as shortage of dollars in the system was caused by few individuals whom it said kept whopping $20 billion dollars in different domiciliary accounts in the country.
Making the disclosure, Deputy Governor of CBN on Financial System and Survelliance, Dr. Joseph Nnana, who did not name those involved in the act, said the culprits would be exposed as soon as the budget was passed because the CBN would embark on aggressive liquidity mop-up to enable the naira regain moisture.
“Naira problem is our own making; some individuals are speculating on the dollars to the detriment of the naira. Why should we have individuals that have $20 billion in different domiciliary account idle? Volatility in exchange will not continue after the passage of 2016 budget. Those who speculate on naira will have thier fingers burnt by that time because we are going to embark on aggresive liquidity mop-up to make the naira stronger,” he said.
In his submission, Udoma who said Nigeria’s fiscal deficit of N2.2 trillion to the gross domestic product (GDP) ratio of N2.16 per cent is still within the 3.0 per cent ceiling provided by the Fiscal Responsibility Act 20017.
According to him, the federal government does not service debt from the GDP but only does so from its revenues. He disclosed that by government’s three-year projection, the amount for debt service will be scaled down to the tune of 25 to 30 per cent, adding: “we can’t face fiscal deficit anymore.”
Udoma appealed to the committee not to increase the budget in view of the precarious economic crisis currently confronting the nation, saying increasing it will make its financing difficult.
Udoma added that Nigeria was currently transiting from an oil producing nation to a non-oil economy where he said more money was expected from the non-oil sector on the basis of zero-based budgeting (ZBB).
He said people were finding it difficult to understand ZBB and hence, would require a series of trainings for up to one year before government agencies could fully comprehend it.
He further said before the government arrived at $38 oil benchmark for the 2016 budget, it did an extensive research which he said made the benchmark appropriate as he promised that if in the middle of the year, the figure is not realistic, “we ‘ll be back to you mid-term for review.”
In addition, Adeosun said the projection for funding the budget would go beyond revenues from oil, customs duties and taxes. “We are focusing on non-oil aggressively to the extent of contributing to revive the economy.”
To get this done, she said the government had devised a framework technology to monitor agencies’ revenue collection adding that Nigeria will borrow to finance the budget in the course of the year from Chinese Exim Bank and World Bank with long moratorium and low interest rate adding that through the Integrated Personnel and Payroll Information System (IPPIS), ghost workers are being detected everyday and consequently reducing personnel cost.
She also stated that with 30 per cent capital allocation, the economy will be stabilised, private sector investment will be attracted, debt will reduce and revenues will go up. She also described the falling price of oil as a blessing because it provides Nigeria with the opportunity to explore other revenue sources. “It will be sad if we don’t come out stronger,” she said.
However, chairman of the joint committee, Senator Danjuma Goje, said the N500 billion budget for welfare and special intervention programme was not implementable this 2016 as he advised the government to defer it to 2017 so that it could have enough time to plan for it.
According to him, there is no clear-cut roadmap for its implementation which he said made the proposed policy unrealistic.
“There is no detailed, clear-cut structure being laid down for implementation of this project because what we have in this budget is N300 billion and N200 billion capital. We had to push hard yesterday to get some details which is not convincing. For instance, the explanation we got is that N5,000 will be given to one million Nigerians.
“Who would choose the one million people? What structures do you have in place to make sure that you choose the right people. You want to give N5,000 to about one million market women or there about and in my place, we do not have many market women, and how would you choose the market women to represent all interests?” he queried.
But Udoma in his response, described the scheme as a political commitment which he said must be done but promised that further consultations would be done on it and would report back to National Assembly.