The lower and upper houses (the House of Representatives and Senate) agreed total expenditure of 4.88 trillion naira ($31 billion), increased from original N4.6 trillion sent to the National Assembly by President Goodluck Jonathan in December 2011.
The Senate said the budget was increased to accommodate the SURE programme while the sum of N888 billion was appropriated for fuel subsidy.
The initial budget had no provision for fuel subsidy following the removal of the subsidy on January 1. But days of widespread protests and industrial action called by the labour union, made the federal government return a partial sum for the fuel subsidy.
The chairman Senate committee on Appropriation, Senator Ahmad Maccido, told journalists that the budget for the Nigerian National Petroleum Company (NNPC) was included in the budget while that of the Central Bank of Nigeria (CBN) was left out in the 2012 budget.
According to the Senate spokesman, Senator Enyinnaya Abaribe, “the CBN governor, in not submitting the budget of the apex bank to the National Assembly, is hiding under the CBN act, but, the Fiscal Responsibility Act stipulates that budgets from all government agencies should be scrutinized by the national assembly.”
He noted that the problem with the CBN budget is a legal matter which the National Assembly would take up.
Fears are that the National Assembly’s inflation of the budget above President Goodluck Jonathan’s provisions in the original Appropriation bill to the body could cause a delay in implementng the budget.
The 2011 budget faced same problem after lawmakers inflated spending proposed by government, and Jonathan sent back the budget and asked them to make more cuts, before a compromise was reached weeks later.
Government departments often lobby legislators to increase spending on their ministries. One of the reasons given for the increase in the Senate was to fund a programme to help the poor adjust to an eventual scrapping of fuel subsidies.
The spending plans for 2012 assume a $72 a barrel benchmark oil price, up from $70 in the proposal submitted by Okonjo-Iweala, boosting revenues available to the government.
Africa’s largest oil exporter saves money it earns over the benchmark price to cushion the economy against price shocks and economists and the Central Bank Governor Lamido Sanusi have urged lawmakers not to push it above $70 barrel.
The budget assumes oil production of 2.48 million barrels per day, an exchange rate of 155 naira to the dollar, 9.5 percent inflation and GDP growth of 7.2 percent. These are all unchanged from last month’s proposal.
Delays to the budget, widespread corruption and a patronage culture means many of the capital projects proposed in budgets never get completed, leaving infrastructure dilapidated. Okonjo-Iweala says improving implementation is a top priority.
Despite holding the world’s seventh-largest gas reserves Nigeria only produces enough electricity to power a medium-sized European city, putting a major break on economic development.
“In our view the first question is how much of the budgeted capital expenditure will actually be implemented,” said Alan Cameron, an economist at Nigerian stockbroker CSL, noting that 2011 saw just over three quarters implemented, an improvement on a historical average of around half.
President Goodluck Jonathan won an election last year pledging to create jobs, overhaul electricity production, unlock the huge gas reserves and cut poverty.
Reform plans have since stalled. A bill aimed at reforming the energy sector has been stuck in parliament for years, while a proposed sovereign wealth fund, the 2012 budget and power privatisation plans are months behind schedule.
Despite institutional bottlenecks, Nigeria’s economy grew at a faster rate in the fourth quarter last year, rising 7.68 percent, compared with 7.4 percent in the previous quarter, even as the oil production that provides most of the country’s export revenues declined.