2014 budget: FG slashes capital vote by N609bn

President Goodluck Jonathan

As President Goodluck Jonathan prepares to submit the 2014 budget to the National Assembly next week, facts have emerged that the capital component of the fiscal document may have witnessed a significant decline of about N609bn.

This, according to investigations, might dash the hopes of many Nigerians who have craved for improved budgetary allocations for the implementation of various capital projects.

Findings show that about 8,000 projects are currently in a state of abandonment owing to paucity of funds.

The implication of the cut in budgetary provisions for capital project in the 2014 budget is that Nigerians may witness an increase in the recurrent expenditure owing to a persistent rise in wage bill of government workers.

Our correspondent gathered on Friday in Abuja that the persistent decline in government revenue as well as the continued increase in personnel cost were major reasons for the reduction in capital vote.

The development was confirmed by the 2014-2016 Medium Term Expenditure Framework and Fiscal Strategy paper of the Federal Government.

The MTEF and FSP provide the basis for annual budget planning and consist of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including government financial obligations in the medium term.

The documents also set out the underlying assumptions for these projections, provide an evaluation and analysis of the previous budget and present an overview of consolidated debt and potential fiscal risks.

They also produce a number of important outcomes, including the macroeconomic outlook; fiscal balance; and other key indicators.

The MTEF and FSP both fulfil a requirement of Section 11 of the Fiscal Responsibility Act 2007 which stipulates that the Minister of Finance shall prepare the MTEF and FSP and get them approved by the Federal Executive Council and National Assembly.

The document, a copy of which was obtained by our correspondent on Friday, revealed a drop of N608bn in capital (expenditures including transfer components) from N1.786tn in 2013 to N1.178tn in 2014.

According to the document, the share of capital vote as a percentage of total expenditure dropped from 35.82 per cent in 2013 to 26.22 per cent for 2014.

On the other hand, the recurrent expenditure (non debt) was raised by N14bn from N2.386tn in 2013 to N2.372tn thus increasing the share of recurrent as percentage of total expenditure to 73.78 per cent in 2014 compared to the 63.18 per cent in 2013.

Explaining the reason for the decline in capital vote, the document said, “Because of the new challenges occasioned by the projected significant reduction in revenue in 2014, there will be a temporary dip in the share of capital spending to about 26.22 per cent (inclusive of the capital component of statutory transfer entities).

The document, however, says the government is intensifying efforts at stopping the illegalities in the oil sector; implementing a more ambitious non-oil revenue programme; and, tightening fiscal policy as government prioritises spending and continues to focus on completion of ongoing capital projects.

The fiscal deficit, according to the document, is projected to rise slightly to about 1.9 per cent of Gross Domestic Product in the 2014 Budget, up from 1.85 per cent projected for 2013.

This, it added, is a direct consequence of the declining revenue but helped by the expenditure restraint.

To this end, the document stated that there would be a N726bn drop in the funds to be distributed from the federation account from N6.655bn in 2013 to N5.929tn in 2014.