FG to borrow N633bn to fund 2013 deficit

Despite assurances by the Federal Government to
reduce domestic borrowing, there are indications
that it will raise N633.85bn from the bond market in
2013.
The Medium Term Expenditure Framework 2012 –
2014 obtained by one of our correspondents in Abuja
on Monday showed that out of a proposed
expenditure of N4.83tn in 2013, the Federal
Government would resort to the domestic debt
market to borrow N633.85bn.
Coordinating Minister of the Economy and Minister of
Finance, Dr. Ngozi Okonjo-Iweala, had at a forum
raised the alarm over the nation's domestic debt,
which stood at $38.37bn (or N5.97tn) as at March 31.
She also disclosed that the Federal Government
would establish a sinking fund aimed at reducing the
volume of the domestic debt.
In an apparent contradiction of this intention,
government, in the MTEF prepared by the Budget
Office of the Federation, said it would run a deficit of
N833.85bn in 2013 and 76.01 per cent of this would
be funded through borrowing from the domestic debt
market.
Other funds for the deficit are N50bn to be obtained
from signature bonus and N150bn from the
Stabilisation Fund/Excess Crude Account.
The Punch
had exclusively reported that the Federal
Government's domestic debt burden rose by N1.21tn
between March 2011 and March 2012, a 12-month
period.
Given the size of the domestic debt, the government
had in the 2012 budget provided a total of
N511.98bn for servicing domestic debt.
The amount proposed for servicing domestic debt
would increase to N543.38bn, reflecting the
increment expected in the volume of domestic debt
in 2013.
The MTEF document also showed that the Federal
Government would spend N1.69tn on personnel as
against the N1.65tn it proposed on the same item in
2012.
There has been a steady increase in the nation's
wage bill since 2005. As at 2005, the Federal
Government spent N443bn on salaries.
The proposed expenditure in 2013 would reflect an
increase of 275 per cent from the 2005 wage bill.
Trend analysis on wage bill showed that the share of
personnel cost as percentage of aggregate
expenditure increased from 27 per cent of
expenditure in 2005 to 34 per cent of expenditure by
2012.
The MTEF showed that the administration of
President Goodluck Jonathan was targeting gross
federally collected revenue of N10.09tn for 2013.
The amount represents an increase of N40bn or five
per cent over the 2012 figure of N9.69tn.
It proposed an oil production of 2.55 million barrels
per day. The 2.55 million bpd would be anchored on
an oil benchmark price of $70 per barrel for the 2013
fiscal year.
The 2013 oil production figure represents an increase
of 70,000 barrels per day or three per cent over the
2.48 million bpd approved by the National Assembly
in 2012.
The National Assembly had anchored the 2.48 million
bpd on an oil benchmark price of $72 per barrel.
The MTEF is the basis for which the annual budget of
the Federal Government is prepared.
Specifically, Section 18 (1) of the Fiscal
Responsibility Act states that the MTEF shall be the
basis for the preparation of the estimates of the
revenue and expenditure required to be prepared
and laid before the National Assembly after being
endorsed by the Federal Executive Council.