In the 2012-2015 Medium Term Fiscal Framework he sent to the National Assembly on Tuesday, President Jonathan admitted the illegality of the Excess Crude Account.
He said extra budgetary revenues would now go to the Sovereign Wealth Fund (SWF), which the 36 state governors want the Federal Government to run side by side the Excess Crude Account.
Jonathan said in the letter to the two chambers of the National Assembly, that: “The NSWF (National
Sovereign Wealth Fund) will manage Nigeria ‘s excess earnings from crude oil. The current administration stated the current Excess Crude Account has no real legal backing, since it was formed under a political arrangement from the previous administration.
“In continuation of the adoption of an oil-based fiscal rule, oil benchmark prices significantly below the current market prices, will be adopted for the 2012-2015 period. Revenue in excess of the benchmark price, will continue to be set aside in the Sovereign Wealth Fund (SWF).
“The SWF, which formalizes the ECA, was designed to guarantee savings for future generations, to promote the development of critical infrastructure, thus promoting growth and diversifying the economy and to protect the budget against negative oil price shocks.”
Jonathan however explained that in the mid-term framework, government would adopt a gradual slash in recurrent expenditure and concentrate on completing on-going capital projects.
In the letter and for year 2012, N2.581 trillion is budgeted as recurrent expenditure while N1.319 trillion will be spent on capital projects.
The president also explained to the lawmakers, that recurrent expenditure was pushed up by the new minimum wage including increment in wages of medical personnel across the country, and that of the Academic Staff Union of Universities (ASUU).