$79 Benchmark: Why We Surrendered To NASS – Okonjo Iweala

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The Federal Government has said that it agreed to accept the $79 benchmark set for the 2013 budget by the National Assembly.

This was disclosed by the Coordinating Minister for the Economy and Minister for Finance Dr. Ngozi Okonjo-Iweala at the 2013 Budget briefing in Abuja yesterday.

Mrs. Okonjo-Iweala said: “We feel that for the purpose of moving both this budget and Nigerians forward, we have said. ‘Ok, we will live with this benchmark and then next year we would have another’, hopefully, in a more collaborative way of setting a benchmark that will work for all of Nigerians. So, we have accepted it, we will try to mitigate the risks, as we said, you know, by looking at how to strengthen our buffers both ourselves and the Central Bank should see the risks going down and then next year, we will look better.

“Prudence is what a country that is so dependent on one commodity economy must exercise at all times, you know we need to build a buffer, we have said it all but at the end of the day we have a collaborative process and in that process, we thought that well, the biggest challenges we face in the budget have now appeared and the National Assembly is willing to constructively work on that.”

She added that Nigeria might need to borrow the Chilean model, where a group independent of both the executive and the legislature sets the benchmark in a professional way.

“That is what Chile does for copper because the big product that they export there is copper. We are not the only commodity-dependent economy in the world. There are so many and people have evolved different ways of setting/dealing with this benchmark.”

She recalled how eight years ago, there was no benchmark and that caused the economy to be so volatile, as it could crash the first year, up the second year and crash the year after that.

“We showed that lapse many times and that was why our economy was growing at 2.4 per cent, because we couldn’t control the volatility in our economy.”

She said other countries whose economy are dependent on single products, such as Ghana and Chile have developed measures of fixing benchmarks for their budgets outside the control and manipulations of the political class.

Speaking on the Securities and Exchanges Commission (SEC), the minister said, “The SEC clause and the SEC Budget will not prevent us from moving forward on implementation of this budget. This is the budget of a country and we cannot allow one issue to derail it. So we have been having these discussions and we will continue to talk to look at that but we have all decided to move forward on the issue of the budget implementation.”

She also commented that on the contentious issues of the budget which delayed its signing by the President, saying, “We are asking for some amendments to restore salaries where they were moved around, most of these have already been done by the National Assembly. There are some amendment on the composition of projects and we are asking for some projects to be either restored if they were moved or amounts that were moved around be restored to such major projects. So within the composition of the projects themselves we are hoping to effect some amendments and these have been agreed.”

She disclosed that the National Assembly has already received an amendment to the 2013 budget, so that contentious issues such as the SURE-P programme would be incorporated.

The minister also commended the improvement in the start of the implementation of the budget, despite the fact that it started later than they had planned to.

“Taking account of the three month of this quarter, we are starting a bit late but not as late as last year. So each year hopefully we will improve. We are working on this things and it is also a learning experience for everybody on how to do better to get the budget ready earlier.

“We have to try and make up for the time as much as possible but there is no denying that a month or two has gone. We will soon be releasing capital for the first quarter next week as soon as they finish the Federal Account Allocation Committee meeting, we will release first quarter capital.”

She said the first quarter allocation would be released next week to meet debt payment and payment for the privatisation cost of the Power Holding Company of Nigeria (PHCN).

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