President Goodluck Jonathan on Tuesday presented a budget proposal of N 4.75 trillion before a joint session of the National Assembly.

While the budget has a capital expenditure of N 1.32 trillion, the recurrent expenditure is N 2.472 trillion. N 398 billion is meant for statutory transfer while debt servicing will gulp N 560 billion. The breakdown of what has been budgeted for the other sectors are below: Security: N921.91 Billion, Power: N161.42 Billion, Works: N180.8 Billion, Education: N400.15 Billion, Health: N282.77 Billion, Agriculture: N78.98 Billion, Water Resources: N39 Billion, Petroleum Resources: N59.66 Billion, Aviation: N49.23 Billion, Transportation: N54.8 Billion, Land and Housing: N24.9 Billion, Niger Delta: N59.7 Billion, Science and Tech: N30.84 Billion, FCT : N45.59 Billion, Communication and ICT: N18.31 Billion. Interestingly, the budget is without any clear cut allocation for fuel subsidy, an indication that the budget might have been worked out with the removal of the fuel subsidy in mind.

Below is the full text of the President’s speech at the National Assembly:

“I am delighted to present the 2012 Federal Budget Proposal before this esteemed Joint Session of the National Assembly. This Proposal comes at the end of a long consultative process with key stakeholders and it translates the development plans of government unveiled in the Transformation Agenda into concrete actions. This budget is a stepping-stone to the transformation of our economy and country in our walk to economic freedom. This esteemed Assembly would agree that this path would neither be easy nor uncontested; but with a sharp focus, hard work, determination and making careful choices we will overcome.

GLOBAL ECONOMIC DEVELOPMENTS

In the past year, the global economic recovery slowed down significantly and downside risks are on the increase as many countries, particularly in the Organization for Economic Cooperation and Development (OECD), have faced serious challenges leading to fiscal retrenchment and austerity measures in the face of high and rising levels of sovereign debt.

The Euro Zone crisis in particular has time and again thrown financial markets into turmoil as several countries in this economic and monetary union continue to face difficulty in servicing their debts. On the other hand, although many emerging and developing countries, like India and China are experiencing relatively robust growth, downside risks remain as well. In fact, global growth projection has continuously been revised downward and is now 4% for 2012-2013.

These developments have implications for our economy as, aside from the impact on the inflow of Foreign Direct Investments, they could also lead to lower demand for our primary export commodity. We are living witnesses to the extent of volatility that can afflict the international oil market with prices plummeting from US$147/barrel in July 2008 to about US$38/barrel four months later. Thus, although the oil price is currently over US$100/barrel, there is no guarantee what it would be in the future.

We cannot subject the well-being of Nigerians to such large fluctuations and must therefore protect ourselves by managing our finances prudently including by adopting a conservative benchmark oil price for our budgets.

There are also uncertainties in the area of international food prices which make it imperative that we take steps to safeguard our position through policies that would promote food security. So far, the Nigerian economy has weathered these storms well but efforts need to be reinforced to ensure macroeconomic stability and sustained economic growth.

DEVELOPMENTS IN THE DOMESTIC ENVIRONMENT

This year marked another milestone in our democratic experience, with the successful elections and peaceful transition. We now need to build on the mandate that Nigerians have entrusted to us to deliver the dividends of democracy through stronger economic reforms to deliver growth and create jobs. I have created an Economic Management Team (EMT) that I chair, and an Economic Management Implementation Team (EMIT) chaired by the Coordinating Minister for the Economy and Minister of Finance, to help us deliver on this economic agenda.

The robust growth recorded in the first half of 2011 underscores the resilience of the Nigerian economy and the prudence of our economic policies. Our growth in the 2010-2011 period has been broad-based.

The economy recorded impressive growth of 7.85 percent in 2010 and 7.72 percent as of the second quarter of 2011 compared to 5.2% forecast for sub-Sahara Africa. Medium-term prospects are also bright, with real GDP growth projected to remain strong over the period. Furthermore, we intend to pursue a programme of greater fiscal discipline complemented with appropriate monetary policy in order to help stabilize our declining foreign reserve.

The non-oil sector continues to be the main driver of growth with increased crop production, growth in wholesale and retail trade and increased financial sector activities backed by the banking sector reforms. Contributions by the oil sector continue to improve as average daily oil production rose to 2.45 million barrels per day in the second quarter of 2011 compared to 2.35 million barrels per day in the corresponding period in 2010.

At the same time, food inflation has been on a downward trend from 14.1% in October 2010 to 9.7% in October 2011, but it is still a matter of concern as our objective is to move to low or mid-single digit inflation.

REVIEW OF IMPLEMENTATION OF THE 2011 BUDGET SO FAR

We are approaching the end of a peculiar fiscal year for our nation. The 2011 Elections, the subsequent inauguration of a new Administration last May and the passage of the 2011 Amendment Budget in May 2011 all affected the implementation of the budget in 2011. Provisional data on the implementation of the 2011 Budget as at October 2011 indicate that revenue performance improved during the year over the situation in 2010.

Oil revenue receipts achieved the targeted levels as a result of relatively higher oil prices and production levels than benchmarked while non-oil receipts, though short of the projection for the period, are tending towards the set targets for 2011. As of mid-November, about 67% of the released funds had been utilized and we expect it to reach 70% by the end of December which is fairly good considering the circumstances. You will agree with me that 2010 and 2011 Budgets were relatively expansionary, and we must now inject a dose of caution.

With the support of the National Assembly, the Government is determined to pursue a programme of far-reaching fiscal consolidation so as to reduce our deficit and domestic borrowing to more manageable levels.

We have introduced measures toactualize this programme in the 2012 fiscal year both in the areas of improved revenue collection, recurrent expenditure reduction and increasing the share of capital expenditure in aggregate spending, in contrast with the trend of recent years.

PRIORITIES OF THE 2012 BUDGET

At a time when rating agencies are downgrading countries globally, the Outlook on Nigeria was recently upgraded from negative to stable by Fitch Ratings; this was largely a reflection of two things: a) the new economic programme, including the Medium-Term Fiscal Framework that government has put in place with important reforms and a clear programme of fiscal consolidation; b) the successful political transition following the 2011 elections.

In furtherance of its efforts, the government has significantly scaled up the flow of resources to key areas of priority including Security, Infrastructure renewal and development (including power and roads), human capital development and food security to give a more inclusive growth and attention to job creation. Yet, there is much that still needs to be done. The Transformation Agenda spells out the strategic direction of my Administration.

In this respect, being the first budget under this Agenda, the 2012 Budget has been designed with the theme: fiscal consolidation, inclusive growth and job creation.

To achieve the above objectives, we have established four main pillars, namely, (a) Macroeconomic stability; (b) Structural reforms; (c) Governance and institutions; and (d) Investing in priority sectors.

Macroeconomic Stability

Government is determined to pursue policies that will ensure a stable macroeconomic environment through a strong and prudent fiscal policy, manageable deficits, sustainable debt-GDP ratio of no more than 30%, and single digit inflation, thereby promoting real growth. We believe that these measures would engender a stable and competitive exchange rate and help to reverse the declining trend of our international reserves.

Our domestic debt profile has risen sharply in recent years, currently standing at about 16.4% of GDP. This cannot be allowed to continue and become a new burden on our children. So in addition to looking at the expenditure side of our national balance sheet, we are also paying strong attention to the revenue side.

In this regard, we have initiated steps to increase revenues by blocking leakages from various sources, improve corporate tax collection, and boost internally generated revenue. We also believe that we should be able to earn a lot more revenue from the maritime sector. As part of the on-going port reforms, government will work vigorously to increase our revenue from maritime and related activities.

Starting in 2012 for the medium term, we shall focus on cutting recurrent expenditure to sustainable levels through reducing waste, inefficiency, corruption and duplication in government. Recent reviews of public expenditures provide a basis for taking such measures. In order to make capital spending more effective, government is introducing a new template for analyzingthe financial and other factors including the economic rates of return, job creation, and environmental sustainability.

Similarly, Government will continue to prioritize its expenditures while focus will be on the completion of viable on-going capital projects. It is our intention to fund and bring the large portfolio of on-going projects to completion in the next few years while also taking on flagship projects already identified in the Transformation Agenda.

From 2012, there will also be a robust programme to strengthen our oil reserves base, and increase oil exploration activities in identified inland sedimentary basins, outside the Niger Delta, with the requisite potential for the production of oil and gas, particularly the Chad Basin.

Structural Reforms

My Administration is pressing forward with key structural reforms. We are implementing the privatization of the power sector based on the Power Roadmap which I unveiled last year. We believe that the power sector can benefit from liberalization and privatization by attracting investors in the same manner as the telecommunications sector has done. In the same vein, government will come up with policies to encourage investment in the downstream sector through liberalization so as to create jobs for our people.

We have also embarked on reforming our ports and customs and we intend to continue vigorously on this path so as to reduce the cost of doing business for our private sector actors. No longer are we going to be content for clearance of goods in our ports to take 3-4 weeks with attendant demurrage and costs while it takes 48 hours elsewhere. In this regard, I have set up a Committee chaired by the Coordinating Minister for the Economy and Minister of Finance with a mandate to remove the bottlenecks at our ports and another Committee made up of private sector users of the ports to monitor implementation. We also intend to work hard to improve the infrastructure at the ports. Other impediments such as those arising from bureaucratic and costly paperwork will also be removed.

With regard to the petroleum sector, the Federal Government is conscious of the need to bring the Petroleum Industry Bill debate to conclusion so as to give investors the comfort and policy certainty that they require. My Administration is determined to bring this matter to closure by engaging with all stakeholders and I therefore call on the National Assembly to work with us in this regard.

Governance and Building Institutions

Our reforms can only endure if they are founded on strong systems and institutions that promote transparency and we are taking steps to strengthen ours. As you are aware, we have already resumed the publication of revenues allocated to the three tiers of Government as this will promote transparency and accountability in the management of public funds. Similarly, the recent passage of the Freedom of Information Act has further strengthened the hands of citizens in monitoring the activities of government and I acknowledge the role of the National Assembly and civil society, in making this a reality. The fight against corruption is a collective responsibility and my Administration will strengthen our anti-corruption agencies such as the EFCC and ICPC to enable them discharge their mandate. Finally, we recognize that we can only succeed in our effort to transform the economy if we have a vibrant civil service and we fully intend to embark on reforming the public service for optimal service delivery.