2011 Budget: Atiku faults Jonathan

a letter by presidential aspirant of pdp to current president pointing to the ills in the proposed 2011 budget. this leaves a big question mark on the ability of this man GOODLUCK jonathan, to steer us to the promised land of economic bliss. copied from www.pointblanknews.com

FORMER Vice President and presidential aspirant of the Peoples Democratic Party (PDP), Atiku Abubakar, has again warned that the nation is going broke and that the 2011 Budget as proposed by President Goodluck Jonathan can only destroy the economy.

In an 11-page letter he sent to President Jonathan, the former vice president argued that a budget “predicated on consumption without corresponding investments in critical infrastructure is a recipe for economic disaster.”
Abubakar wrote: “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.”
Also, lending its voice to the public outcry against the remuneration of federal legislators, the organised private sector at the weekend submitted that Nigeria runs “the most expensive, unproductive government in the world.”
Consequently, President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, (NACCIMA), Herbert Ajayi, in an exclusive interview with The Guardian, said the economy would continue to wallow in its current parlous state until there was drastic reduction in overhead cost, especially in the cost of governance.
Also, reviewing the economy in 2010 and projecting into 2011, the Lagos Chamber of Commerce and Industry (LCCI) said the nation experienced a mixed grill economic outlook.
In a statement by its President, Otunba Femi Deru, the chamber said, the Nigerian economy in 2010 remained largely a trading and primary products economy with marginal activities in production.
According to him, overall Goss Domestic Product (GDP) growth, which was estimated at 7.8 per cent turned out a mirage in the face of parlous infrastructure, which engendered high unemployment rate and sundry effects.
“Overall GDP growth rate was estimated at 7.8 per cent, which is by all standards a good score for the economy. The concern, however, is about the poor transmission of this apparent good performance to the real economy through improved productivity, job creation, increased production and better value addition.”
Ajayi stressed the need for the government to reduce the number of political office holders and cut down on their salaries as most political offices have little or no direct impact on governance.
He said efforts should be geared towards building infrastructure, adding that “it can no longer be business as usual as positive changes from the locust years of the recent past signpost a sustainable and dynamic growth of our economy.”
The NACCIMA president noted that the take home pay of public office holder was enough to pay 60 graduates at the N18,000 minimum wage rate.
While affirming that the recent report by World Economic Forum, which marked Nigeria low was authentic, Ajayi said rather than debunk it, government should strive to address the anomalies in the current budget.
The PDP presidential aspirant warned that excessive borrowings that had allegedly “marked the Jonathan administration as indicated in Budget 2011is in negation of the Fiscal Responsibility Act, has the potentials of returning Nigeria to a regime of debt overhang and making nonsense all the gains of the negotiated cancellation of the nation’s debts.
Abubakar added: “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 wrote: “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?”