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FG blames high recurrent expenditure on salary increase

By on January 22, 2014

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Monday blamed the high recurrent expenditure pattern in the 2014 budget on the increase in the salaries of workers.

The minister stated this in Abuja during the public presentation of the 2014 budget.

She said the salary increase, which was granted to various labour groups in 2009, had doubled the Federal Government’s wage bill from N857bn in that year to N1.72tn in 2013.

An analysis of the budget showed the share of recurrent expenditure as a percentage of the total budget was 74.43 per cent in 2011, but dropped to 71.47 per cent and 67.49 per cent in 2012 and 2013, respectively.

However, in the 2014 budget, the share of recurrent expenditure rose to 74 per cent.

Okonjo-Iweala said following the continued demand for increase in salary by various labour unions, the huge wage bill would not be easy to adjust downwards.

According to her, any attempt to do this will amount to the sacking of workers, noting that the government was not in any way interested in retrenching the workers.

The minister said the huge allocation for recurrent expenditure this year was a source of worry to the government as this had reduced the size of funds available for investments in capital projects.

She also said the report of the Stephen Oronsaye committee, which would have helped to trim down the cost of recurrent expenditure by scrapping agencies with duplicate functions, was difficult to implement owing to the fact that the laws setting up the agencies had not been repealed by the National Assembly.

She,  therefore, called on the National Assembly to assist in repealing some of the laws setting up the agencies so that more funds could be freed for the implementation of capital projects.

Okonjo-Iweala said, “We will need to make some tough choices in the future about the structure of our budgets. We need to strike a balance between a growing wage bill for the public sector and investing more of our resources in infrastructure projects.

“In 2013, we reviewed the recommendations of the Oronsaye report. However, we have had difficulty in streamlining redundant agencies because most are underpinned by law.

“We are, therefore, looking to the National Assembly to assist us in reviewing and repealing these laws to enable us to rationalise some of these duplicating agencies.”

Apart from the increased wage bill, she said that there were still additional pension arrears, which would need to be incorporated in recurrent budgets in the future.

This, she noted, might increase the size of government spending if urgent action was not taken to correct the imbalance.

She, however, said despite the challenge, the government would continue to reduce the cost of governance through other measures such as reduction in the size of delegates accompanying key government officials on foreign trips.

This policy, the minister noted, would save the country about N3bn.

Okonjo-Iweala said, “The   number of overseas trips by government officials will be curtailed, while the size of delegations accompanying key government officials on foreign trips will also be reduced.

“The Head of Service and the Director-General of the Budget Office will develop new guidelines for foreign travels by government officials, which will be circulated to all Ministries, Departments and Agencies. We anticipate saving about N3bn from the introduction of this new policy.”

On claims by the Nigerian National Petroleum Corporation that the $10.8bn was spent on fuel subsidy, strategic reserves and pipeline repairs, the minister said the explanation was premature since the reconciliation process was still ongoing.

She said, “The Federal Ministry of Finance had played its role in bringing all parties to the table to agree and discuss the outstanding funds that should be remitted to the government.

“The next stage of this discussion is to ensure that these funds are paid into the Federation Account. Unfortunately, newspaper headlines will not bring money into the government coffers.

“What will actually bring in the money is the hard work of completing the reconciliation exercise to find out what the NNPC has spent on its operations, with supporting invoices and documentation, and what has to be remitted to the treasury.”

“This is the work we are actually doing now. It has not been completed; so, claims by any of the parties in this exercise are premature.

“Let me be absolutely clear about this; the Ministry of Finance under my stewardship will always stand for accountability and for ensuring that money that belongs to the treasury is paid in, or at least, accounted for.”

Also speaking at the event, the Director-General, Budget Office of the Federation, Dr. Bright Okogu, said the overriding goal of the budget was to improve the standard of living of Nigerians in a sustainable manner.

To achieve this, he said the government would continue to create an enabling business environment that would promote innovative entrepreneurship and support domestic industries to thrive.

In his remarks, the Senior Resident Representative, International Monetary Fund, Mr. Gene Leon, said in formulating the budget, the consideration should be on how to find the appropriate balance between recurrent and capital expenditures.

He said while the Federal Government had made considerable progress in the area of prudent management of the nation’s resources, there was a need to ensure value for money in the funding of capital projects.

Also, the World Bank Country Director, Ms. Marie Francoise Marie-Nelly, said the bank would continue to assist the government in its reforms of public sector financial management.

According to her, some of the areas that the bank is assisting in the reform programmes are the Single Treasury Account, Integrated Payroll and Personnel Information System and procurement contracts.

Meanwhile, the National Assembly has given an assurance of a speedy passage of the 2014 budget.

The Chairman, House of Representatives Committee of Appropriation, Mr. John Enoh, who gave the assurance at the event, noted that the speedy passage of the budget would help to ensure its smooth implementation.

He said, “The 2014 budget has capital expenditure of more than N1tn and we want to see funds released for these projects so that we can see increased activities in the productive sector.

“We assure that as we resume tomorrow (Tuesday), the National Assembly will give the budget expedient action.”

 

 

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