N1trn fraud in 2012 budget – Senate

ABUJA— Senate,
yesterday, alleged that
out of the N4.7 trillion
budget estimate
submitted last year to the
National Assembly by
President Goodluck
Jonathan for
consideration and
subsequent passage,
some government
Ministries, Departments
and Agencies, MDAS
secretly smuggled in
over N1trillion projects
into it. This came just as
the President has
requested for Senate
approval to borrow
$7.9billion from the World
Bank and four other
multilateral development
institutions.According to the Senate,
over 40 per cent of
projects to be executed
were not captured in the
2012 budget estimate
indicating that the budget
may have been doctored.
Budget padding and
corruption has led to
rising poverty in the
country with over 112
million Nigerians said to
be under the poverty
line.
Early in January, the
federal government
increased pump price of
fuel from N65 to N140 a
litre in a bid to finance its
subsidy reinvestment
and empowerment
programme. The price
was later adjusted
downward to N97 per
litre after a long drawn
battle between labour,
civil society groups and
government which
paralysed the economy
for about two weeks.
Also yesterday,
President Goodluck
Jonathan asked the
Senate to give approval
for Nigeria to borrow
($7.905 billion) N1.264
trillion from World Bank
and four other foreign
banks to enable him fund
the transformation
programme of the Federal
Government in the next
three years. The amount
when borrowed will
increase the nation’s
external debt from the
present figure of
$5.67billion or just 2.5
per cent of estimated GDP
to $13.575 billion by
2015.
Nigeria’s external debt,
which stood at $32 billion
in 2005 before the exit
from the Paris club of
creditors in 2006,
dropped to $5.67 billion
in 2011. The current
figure of $5.67 billion
includes the external
borrowings of state
governments, which are
necessarily guaranteed
by the federal
government and
representes $2.17billion
of the total. Ratings
agencies prefer to adjust
their definition of public
external indebtedness
for official reserves.
Nigeria at the moment
enjoys a net creditor
status at end-December
by virtue of its reserves
of $32.9billion. More than
80 per cent of the
current outstanding
external debt was
contracted from the
World Bank and other
multilateral agencies on
concessional terms. The
largest single commercial
loan is the US$500m
Eurobond (6.75% Jan
2021), on which the yield
has narrowed to around
6.00 per cent. The view
of the DMO, whose role is
to implement the policy of
the FGN, is that the issue
was a one-off to
establish a benchmark
for parastatals and
commercial entities.
However, President
Jonathan in his letter to
the Senate read by David
Mark yesterday
explained that the money
will be used as part of
government’s medium
term plan to create
employment and
engender economic
development within the
country, even as the
Senate assured that the
Federal Government is
not bankrupt.
The President in the
letter stated that the
Federal Government will
draw the money from
African Development
Bank, Islamic
Development Bank, Exim
Bank of China and Indian
lines credit, besides the
World Bank. He
explained further that
the borrowing plans
cover a period of three
years starting from 2012
to 2014 money with an
expected plan to borrow
$2.64 billion or N422.4
billion annually.
The letter reads, “I wish
to inform you that a
number of special
initiatives were designed
to put the economy back
on track through growth
and employment activities
geared towards the
implementation of the
transformation agenda. In
that regard, a number of
projects have been
designed to create
employment opportunities
with a view to growing
the economy.
“The pipeline projects
are at various stages of
finalization. Therefore, I
present herewith a total
external pipeline
borrowing in the amount
of $7, 905, 690, 000 or
$2.64 billion a year being
a cumulative facilities
offered by the World
Bank, African
Development Bank,
Islamic Development
Bank, Export-Import
Bank of China and Indian
lines of credit.
He explained the benefits
of the borrowing plans to
Senators saying, “The
objectives of the
projects conform to the
Transformation agenda
of our administration and
cut across various
sectors of the economy.
The initiatives are meant
to put the economy on
track through growth and
employment.”
Chairman, Senate
Committee on Media and
Publicity, Enyinnaya
Abaribe, while responding
to questions from
journalists after plenary
dismissed claims that the
borrowing was
necessitated by lack of
money to fund critical
sectors of the economy.
He said, “I do not think
that has anything to do
with Nigeria being broke.
I think they are
requesting to borrow $7
billion for a specific
projects and you will get
the details of it when the
debate on it gets to the
floor of the Senate
because definitely a
request from the
President coming to the
chamber will be debated
whether it will be
accepted or not pending
on the merit of the
request.”
Senate Committee
tackles MDAs
Speaking yesterday,
Chairman, Senate
Committee on
Appropriation, Senator
Ahmed Maccido, PDP,
Sokoto Central, described
what the Committee saw
as substantial changes in
the budget, adding that
the 2012 budget which
was currently before the
National Assembly may
have been doctored.
Maccido who noted that
some government
Ministries, Department
and Agencies, MDAS
secretly smuggled in
over N1trillion projects
into the N4.7trillion fiscal
estimate, also alleged
that the smuggled items
may have pushed the
2012 fiscal estimate to
about N5.7trillion, adding
that the committee would
subject the budget to
what he termed a more
thorough scrutiny to
expunge all the
unauthorized projects.
The Committee Chairman
who noted that the
projects were smuggled
into the budget by the
MDAS, vowed that the
Committee would expunge
all the unauthorized
projects, adding, ‘’we at
committee level would
jettison them because
they are not in the
original budget.”
According to him, ‘’the
problem is that we are
seeing projects that are
not in the originally
version of the budget
presented to us by
president Goodluck
Jonathan and substantial
part of these projects
are being smuggled into
the budget by the MDGS
and ministers . Over 40
percent of the projects in
the budget are not in the
original budget. And we
are saying no to this.
‘’The items so smuggled
into the budget is over
N1trillion. So we are right
now comparing the
budget as originally
presented by the
president and the
version presented by the
MDGS. Unless these
projects are there in the
originally budget, we are
going to scrap them. It is
no longer going to be
business as usual.
‘’These people are just
smuggling in projects that
are not in the budgets.
And we are going to
remove them.”