Jonathan's 2012 Budget Speech Before The National Assembly

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Federal Republic of Nigeria
Budget Speech
201 2
Delivered by: Before:
His Excellency Dr. Goodluck Ebele Jonathan, GCFR President Federal Republic of Nigeria
A Joint Session of the National Assembly, Abuja
Tuesday, 13 December 2011
PROTOCOL         1. 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.     2. 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     3. 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.    
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  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.      
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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     8. 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.     9. 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.      
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10. 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.     11. 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.       12. 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  
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   13. 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.     14. 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.  
 
 
15. 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.     16. We   have   introduced   measures   to   actualize   this   programme  in  the  2012  fiscal  year  both  in  the  areas  of  
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     PRIORITIES  OF  THE  2012  BUDGET       17. 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.       18. 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.     19. In   this   respect,   being   the   first   budget   under   this   Agenda,   the   2012   Budget   has   been   designed   with   the  
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improved   revenue   collection,   recurrent   expenditure   reduction   and   increasing   the   share   of   capital   expenditure   in   aggregate   spending,   in   contrast   with   the  trend  of  recent  years.  
theme:   fiscal   consolidation,   inclusive   growth   and   job  creation.     20. 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  
 
21. 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.     22. 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.      
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23. 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.       24. 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  analyzing  the  financial  and  other  factors  including   the   economic   rates   of   return,   job   creation,   and   environmental  sustainability.     25. 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.      
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26. 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     27. 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.       28. 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   contented   for   clearance   of   goods   in   our   ports   to   take   3-­‐4   weeks   with   attendant   demurrage   and   costs   while   it  takes  48  hours  elsewhere.      
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29. 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.       30. 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     31. 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.      
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   32. 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.     Investing  in  priority  sectors:  Creating  Jobs     33. Against   the   background   of   the   above   reforms,   this   Administration   will   promote   job   creation   and   inclusive  growth  by  investing  in   critical  infrastructure,   human   capital   development   and   security   including   more   support   for   the   police,   defence   and   counter-­‐ terrorism   operations.   We   shall   also   give   priority   attention   to   Information   and   Communications   Technology,   Solid   Minerals   development,   Manufacturing,   Aviation   and   Creative   industries   in   order  to  further  develop  these  sectors  that  are  known   to  be  sources  of  growth  and  job  creation.      
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34. Let   me   now   comment   on   a   few   sectors.   The   Agricultural   sector   is   being   totally   transformed   to   enable   us   move   from   traditional   farming   to   modern   agriculture  as  a  business  both  for  our  small  and  large-­‐ scale  farmers.  Our  objective  is  to  ensure  food  security   whilst   also   promoting   exports   in   agriculture   value   chains   where   we   have   a   comparative   advantage.   We   intend  to  process  and  add  value  to  different  crops  such   as  rice,  cassava,  sorghum,  oil  palm,  cocoa,  cotton  etc.       35. This  approach  is  central  to  our  transformation  strategy.   Accordingly,   this   Administration   has   adopted   enabling   measures   to   support   the   development   of   private   sector-­‐driven   marketing   institutions,   and   push   for   policies   that   would   promote   our   agriculture   to   create   jobs.       36. To   unleash   the   potential   of   this   sector,   the   Federal   Ministry   of   Finance   has   put   in   place   a   mechanism   to   share   risks   with   the   banking   sector   by   guaranteeing   70%   of   the   principal   of   all   loans   made   for   supply   of   seeds   and   fertilizer   by   the   private   sector   this   season.   In   addition,   to   get   the   inputs   to   farmers   at   an   affordable   cost,   we   are   subsidizing   the   interest   rate   on   these   loans   to   bring   it   down   from   15%   to   7%   per   annum.   The   Minister   of   Agriculture   and   the   Central   Bank   are   collaborating   to   extend   these   services   for   credit  availability  for  the  medium  term.      
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37. We   are   introducing   further   fiscal   policy   measures   to   support  the  development  of  the  agricultural  sector.  In   this   respect,   the   duty   on   machinery   and   certain   specified   equipment   for   the   sector   will,   effective   January   31st   2012,   attract   zero   duty.   We   will   further   look  at  supportive  fiscal  policies  for  the  rice  and  wheat   sectors  to  stimulate  domestic  production.    
 
38. Government   is   also   introducing   policies   to   encourage   the  substitution  of  high  quality  cassava  flour  for  wheat   flour   in   bread-­‐baking.   Bakeries   will   have   18   months   in   which   to   make   the   transition,   and   will   enjoy   a   corporate   tax   incentive   of   12%   rebate   if   they   attain   40%   blending.   With   effect   from   March   31st   2012,   importation  of  cassava  flour  will  be  prohibited  so  as  to   further  support  this  programme.    
 
39. All   equipment   for   processing   of   high   quality   cassava   flour   and   composite   flour   blending   will   enjoy   a   duty   free  regime  as  incentive  to  bakers  for  composite  flour   utilization.   Consultations   with   the   sector   to   ensure   a   smooth  transition  are  on-­‐going.    
 
40. It   is   common   wisdom   that   the   best   way   we   can   grow   our  economy  and  create  jobs  for  our  people  is  for  us  to   patronize   Nigerian-­‐made   goods.   This   is   why   we   are   introducing   enabling   policies   to   drive   this   process.   In   this  regard,  we  are  introducing  fiscal  policy  measures   that   will   encourage   the   purchase   and   utilization   of   locally  produced  commodities.    
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   41. From   July   1st   2012,   wheat   flour   will   attract   a   levy   of   65%  to  bring  the  effective  duty  to  100%,  while  wheat   grain   will   attract   a   15%   levy   which   will   bring   the   effective  duty  to  20%.       42. Similarly,  there  will  be  a  levy  of  25%  on  brown  rice  to   bring   it   to   30%.   In   addition,   to   encourage   domestic   rice   production,   a   levy   of   40%   will   be   placed   on   imported   polished   rice   leading   to   an   effective   duty   rate   of   50%.   Effective   December   31st   2012,   all   rice   millers  should  move  towards  domestic  production  and   milling  of  rice,  as  the  levy  of  50%  will  be  further  raised   to   100%.   Let   me   add   here   that   no   waivers   or   concessions   will   be   entertained   for   rice   and   wheat   importation.     43. We   have   also   commenced   implementation   of   the   Power   Roadmap   which   aims   to   create   a   robust   power   sector  through  the  privatization  of  the  generation  and   distribution   of   power   as   well   as   create   an   enabling   environment   for   investment.   Institutional   arrangements   have   been   made   for   a   Bulk   Trader   company   to   intermediate   between   power   producers   and   distributors   in   a   market   setting,   thereby   giving   Independent   Power   Producers   (IPPs)   the   confidence   to  invest  in  generation  capacity.      
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44. Government,   in   collaboration   with   our   development   partners   has   created   a   credit   risk   management   initiative   to   provide   Partial   Risk   Guarantees   (PRG)   to   give   comfort   to   gas   producers   in   respect   of   payment.   Similarly,   effective   January   31st   2012,   equipment   and   machinery  in  the  power  sector  will  attract  zero  duty.       45. The  Government  recognizes  the  provision  of  affordable   housing   as   a   social   need   and,   also,   a   veritable   source   of   socio-­‐economic   development   and   job   creation.   Owning  one’s  own  home  is  a  basic  aspiration  of  every   human  being,  and  our  people  are  no  different.    
 
46. To   this   end,   based   on   a   new   housing   policy,   Government   is   working   with   our   development   partners   to   create   an   effective   mortgage   finance   system   in   the   country   and   to   develop   value   chains   in   the   building   materials   segment.   This   will   give   the   necessary   stimulant   to   the   sector   to   accelerate   its   development   and   also   help   to   reduce   the   cost   of   construction,   thereby   energizing   the   construction   industry.     47. It   is   a   well-­‐known   fact   that   government   alone   cannot   solve   the   infrastructure   problem,   which   is   why   we   have   invited   the   private   sector   and   international   investors  to  partner  with  us  through  the  Public  Private   Partnership  (PPP)  arrangements.      
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48. As  estimated  in  the  First  National  Implementation  Plan   of  the  Nigeria  Vision  20:2020,  we  need  N32  trillion  for   the   execution   of   capital   projects   over   a   four   year-­‐ period,   of   which   the   private   sector   is   to   contribute   N13   trillion.   In   this   respect,   we   are   creating   the   enabling   environment   to   attract   private   investments   by  having  a  clear  regulatory  framework.       49. Government   will,   in   addition   to   ongoing   critical   infrastructure   projects,   execute   new   flagship   projects   with   positive   multiplier   effects   across   the   country   through  PPP  arrangements  in  the  next  three  years.       50. In   our   continuing   effort   to   improve   on   our   human   development   index,   we   are   conscious   of   the   need   to   avoid   the   trap   of   focusing   on   economic   growth   as   an   end   in   itself,   but   rather,   a   means   to   improved   human   development   through   ensuring   better   health   care,   education  and  wealth  creation.       51. To  this  end,  my  Administration  will  continue  to  invest   in  these  sectors  to  improve  on  the  quality  of  education   for   our   children   especially   young   graduates   from   our   educational   institutions,   support   Public-­‐Private   Partnership   arrangements   for   skills   development   and   improve  the  quality  of  our  health  service  delivery.       52. Fellow   Compatriots,   we   recognize   that   we   can   only   achieve   the   developmental   goals   in   a   secure   and  
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     THE  2012  BUDGET       53. The   2012   budget   is   based   on   a   set   of   assumptions   reflecting   Government’s   determination   to   maintain   prudence  in  the  face  of  continued  uncertainties  in  the   external   environment.   Accordingly,   the   budget   is   based  on  the  following:     • Oil   production   of   2.48   million   barrels   per   day   (mbpd)  up  from  2.3mbpd  for  2011;   • Benchmark   oil   price   of   US$70/barrel,   a   cautious   revision   from   the   US$75/barrel   approved   in   the   2011  Amended  Budget;   • Exchange  rate  of  NGN155/US$;   • Projected  GDP  growth  rate  of  7.2%;  and   • Projected  inflation  rate  of  9.5%.     2012  Revenue  and  Expenditure  Profile    
peaceful   environment.   Accordingly,   safeguarding   the   sovereignty,   independence   and   territorial   integrity   of   the   country   is   at   the   heart   of   ongoing   reforms   in   the   security   sector.   As   you   are   aware,   we   have   since   commenced   strategic   programmes   to   upgrade   the   skills   of   officers   in   the   security   agencies   while   modernizing   security   infrastructure   across   the   country.    
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54. Based   on   the   above   assumptions,   the   Gross   federally   collectible   revenue   is   projected   at   N9.406trillion,   of   which   the   total   revenue   available   for   the   Federal   Government’s   Budget   is   forecast   at   N3.644   trillion,   representing   an   increase   of   9%   over   the   estimate   for   2011.   Non-­‐oil   revenue   is   projected   to   grow   significantly   in   2012   as   recent   efforts   to   reform   revenue  collecting  agencies  and  the  implementation  of   initiatives   to   further   develop   non-­‐oil   sectors   are   expected  to  yield  results.  
 
55. The   aggregate   expenditure   proposed   for   the   2012   fiscal   year   is   N4.749   trillion,   which   is   a   modest   increase   of   6%   over   the   N4.484   trillion   appropriated   for   2011.   I   am   pleased   to   note,   however,   that   the   declining   share   of   capital   is   being   reversed   so   it   will   account   for   about   28%   of   total   expenditure   in   2012   compared   to   26%   in   2011.   We   intend   to   continue   on   this   path   so   that   by   2015,   it   will   have   risen   to   almost   33%.    
 
56. This   underscores   the   need   to   intensify   our   efforts   to   curtail   recurrent   expenditure,   which   we   have   already   embarked   upon   under   the   policy   of   fiscal   consolidation  as  evident  from  the  Medium-­‐Term  Fiscal   Framework.   The   share   of   recurrent   expenditure   in   the   2012   Budget   proposal   is   72%,   down   from   74.4%   in   2011,   and   we   intend   to   continue   on   this   downward   trend  up  to  2015.    
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57. The   aggregate   expenditure   comprises   N398   billion   for   Statutory   Transfers,   N560   billion   for   Debt   Service   underscoring   the   real   need   to   address   the   rising   domestic   debt   profile,   and   N2.472   trillion   for   Recurrent   (Non-­‐Debt)   Expenditure.   We   are   conscious   of   the   need   to   control   the   cost   of   governance.   Government  will  streamline  agencies  with  overlapping   mandates  as  a  way  to  realign  public  expenditure.       58. In  this  respect,  I  have  received  the  preliminary  Report   of  the  task  force  which  I  set  up  for  this  purpose  and  we   shall   implement   relevant   recommendations.   We   are   also   pursuing   the   biometric   verification   of   workers   and  pensioners  as  part  of  our  effort  to  control  cost.     59. Capital   expenditure   has   an   allocation   of   N1.32   trillion   representing   a   15%   increase   over   the   amount   approved  in  the  2011  Budget.  The  emphasis  is  on  the   completion  of  critical  infrastructure  projects.       60. Based   on   the   above,   the   fiscal   deficit   is   projected   at   about  2.77%  of  GDP  in  the  2012  Budget  compared  to   2.96%  in  2011.  This  is  within  the  threshold  stipulated   in   the   Fiscal   Responsibility   Act,   2007   and   clearly   highlights  our  commitment  to  fiscal  prudence  as  a  way   to  create  more  space  for  the  private  sector.        
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61. This   will   also   have   a   salutary   effect   on   our   domestic   debt   profile,   which   has   risen   significantly   in   recent   years.   We   are   determined   to   rein   in   domestic   borrowing,  and  through  this,  ensure  that  our  debt  is  at   a  sustainable  level.     62. As   I   mentioned   earlier,   government   has   made   significant   progress   in   putting   the   finances   of   the   nation   on   a   sound   footing   and   laying   the   foundation   for  rapid  and  sustainable  economic  growth.     63. Allocations  to  some  critical  sectors  of  the  economy  are   as   follows:   Security   -­‐   N921.91   billion;   Power   [including   Bulk   Trader,   Nelmco,   and   Multi-­‐Year   Tariff   Order   (MYTO)]   -­‐N161.42   billion;   Works   -­‐   N180.8   billion;   Education   [excluding   Universal   Basic   Education   Commission,   Petroleum   Technology   Development   Trust   Fund   (PTDF)     &   Education   Trust   Fund]  -­‐  N400.15  billion;  Health  -­‐  N282.77  billion;  and   Agriculture   &   Rural   Development   -­‐   N78.98   billion.   Others  are:  Water  Resources  -­‐  N39  billion;  Petroleum   Resources   –   N59.66   billion;   Aviation   -­‐   N49.23   billion;   Transport  -­‐  N54.83  billion;  Lands  &  Housing  -­‐  N26.49   billion;   Science   &   Technology   -­‐   N30.84   billion;   Niger   Delta   -­‐   N59.72   billion;   Federal   Capital   Territory   Administration   (FCTA)   -­‐   N45.57   billion   and   Communications  Technology    -­‐  N18.31  billion.      
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   Fiscal  Policy     64. Fellow   compatriots,   you   will   agree   that   the   budget   is   not   an   end   in   itself   but   rather,   an   instrument   for   the   promotion   of   economic   growth,   wealth   creation,   poverty   reduction   and   service   delivery   to   the   citizenry.  Government  desires  that  we  should  begin  to   experience   a   commensurate   increase   in   gainful   employment   and   social   well-­‐being   of   Nigerians   with   the  rate  of  economic  growth.       65. This  Budget  seeks  to  act,  not  only  to  create  jobs,  but  to   also   lay   a   solid   foundation   for   sustainable   economic   growth   which   would   deliver   the   dividends   of   democracy   to   our   people.   In   this   respect   as   you   may   recall,  I  hosted  a  retreat  in  October  this  year  with  the   organized   private   Sector   (OPS)   at   which   a   number   of   issues   including   fiscal   policy   were   extensively   discussed.       66. I   wish   to   reiterate   here   that   the   principal   objective   of   my   Administration’s   fiscal   policy   in   the   area   of   tariffs   and   trade   is   to   promote   industrialization   and   the   growth   of   the   manufacturing   and   agricultural   sectors   of   the   economy   and   above   all   to   generate   employment   for  Nigerians.      
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67. As   part   of   the   process   to   realize   this   objective,   we   have   commenced  the  review  of  the  2008-­‐2012  Customs  and   Excise   Tariffs   to   correct   identified   anomalies   and   introduce   policies   that   will   help   in   the   promotion   of   industrialization   in   the   country   when   the   review   is   concluded.   In   addition,   to   ensure   a   level-­‐playing   field   for   businesses,   this   Administration,   beginning   from   the   2012   fiscal   year,   will   where   necessary,   only   grant   concessions   or   waivers   on   a   sectoral   basis.   The   focus   of   any   concessions   will   be   on   expanding   domestic   production   for   local   consumption   and   boosting   exports,   development   of   value   chains,   and   boosting   employment.     68. The   Export   Expansion   Grant   (EEG)   scheme   has,   over   the   years,   contributed   significantly   in   the   diversification  of  the  economy  through  the  promotion   of   non-­‐oil   exports.   Efforts   have   therefore   reached   an   advanced   stage   to   review   and   streamline   the   Scheme   to   make   it   more   effective   as   an   instrument   for   the   promotion   of   non-­‐oil   exports.   We   shall   also   aggressively   pursue   economic   diplomacy   within   the   framework   of   ECOWAS   to   ensure   that   the   ECOWAS   Trade   Liberalization   Scheme   (ETLS)   achieves   its   objective   of   promoting   intra-­‐   ECOWAS   trade   and   that   it   is   not   used   as   a   vehicle   for   dumping   goods   in   the   region.  In  particular,  we  shall  review  the  application  of   the   ECOWAS   Trade   Liberalization   Scheme   (ETLS)   to   the  oil  palm  and  other  sectors.  
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   69. For   some   time   now,   especially   with   the   advent   of   the   consolidated   salary   structure,   there   has   been   agitation   over   the   lopsided   nature   of   the   Personal   Income   Tax   Act   and   the   fact   that   the   tax   free   allowances   were   inadequate.   I   am   pleased   to   announce   that   I   have   signed   the   Personal   Income   Tax   Amendment   Act   2011   into   law   which   amongst   others   has   the   benefit   of   reducing,   on   the   average,   taxes   paid   by   low   income   earners   and   providing   a   more   equitable   tax   structure   for  individuals.  This  law  also  provides  for  Tax  Appeal   Tribunals   to   listen   to,   and   address   concerns   of   individual  taxpayers  as  a  cost-­‐effective  administrative   intervention  prior  to  recourse  to  the  courts.         70. Other  fiscal  changes  to  be  gazetted  shortly,  include  tax   waivers   on   all   bonds   and   related   instruments   issued   by   corporate   and   other   tiers   of   Government,   tax   rebates   as   incentive   to   companies   that   create   jobs,   regulations   to   support   taxpayers'   self-­‐   assessment,   and  regulations  to  support  the  growing  quest  of  those   involved  in  social  and  community  development  to  get   tax  incentives  for  those  donating  to  their  causes.     71. As   you   may   recall,   Government   initiated   a   new   multifaceted   National   Job   Creation   Scheme   with   the   provision   of   seed   funding   of   N50   billion   in   the   2011   Budget.   Implementation   of   this   programme   has   commenced  in  earnest.    
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   72. This   Administration   believes   that   it   is   time   to   give   Nigerian  youths  an  opportunity  to  enjoy  the  dignity  of   a  job,  the  support  for  innovation,  the  confidence  to  be   an   entrepreneur   and,   the   sheer   optimism   to   be   an   employer   of   labour   along   with   the   security   of   an   income   that   can   contribute   to   our   economic   development.   We   are   conscious   of   the   fact   that   we   have  the  task  of  transforming  the  huge  potential  of  our   youths   into   real,   tangible   outcomes   which   all   of   our   people  can  experience  and  call  their  own.       73. In   this   respect,   Government   is   focused   on   stimulating   entrepreneurial   activity   and   setting   a   framework   for   young   people   with   creative   tendencies   to   showcase   their  business  acumen,  build  capacity  and  create  jobs.   In   this   spirit,   and   to   move   beyond   the   conventional   paradigm  of  job  creation,  the  Government,  partnering   with   the   organized   private   sector   and   our   development   partners,   took   bold   steps   to   initiate   the   Youth   Enterprise   With   Innovation   in   Nigeria   (YouWin)   programme  which  I  launched  in  Abuja  in  October  and   has   since   been   launched   also   across   the   six   geopolitical  zones.       74. This   programme   is   targeted   to,   not   only   create   a   new   generation   of   innovative   real   sector   entrepreneurs   in   Nigeria,   but,   in   the   medium   term,   also   generate   jobs   for  youths  across  the  country.    
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   75. I   believe   that   this   move   will   drive   the   future   technological  and  socio-­‐economic  development  of  our   country.   YouWin   will   lead   to   the   creation   of   about   100,000   jobs   through   support   to   our   young   entrepreneurs.     CONCLUSION     76. Mr.   Senate   President,   Mr.   Speaker,   Distinguished   Senators,   Honourable   Members   of   this   esteemed   Assembly,  the  Proposal  I  lay  before  you  this  day  seeks   to   sustain   sound   macroeconomic   growth   that   will   translate  to  achieving  socio-­‐economic  transformation,   and   gainful   employment   for   our   people.   But,   we   can   only  progress  in  this  course  and  turn  our  possibilities   into   reality   when   we   diligently   adhere   to   the   implementation   of   well   thought-­‐out   and   articulated   developmental  policies.     77. The  2012  Budget,  as  our  collaborative  effort,  has  taken   the   welfare   of   Nigerians   as   top   priority.   In   an   environment   of   global   uncertainties   and   domestic   challenges,   the   strong   support   of   the   National   Assembly   is   invaluable   for   us   to   achieve   our   set   developmental  goals.      
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78. As   we   collectively   resolve   to   create   a   brighter   and   enduring  future  for  all  Nigerians  -­‐  a  future  of  hope  and   prosperity  not  lack,  fear  or  hatred,  we  must  prepare  to   overcome   any   adversity   that   may   arise.   Accordingly,   we   must   all   be   determined   and   committed   to   follow   through  with  the  difficult  but  balanced  choices  that  we   make  in  piloting  the  affairs  of  this  great  nation.     79. Finally,   I   wish   to   appreciate   the   enduring   partnership   between   the   Executive   and   the   Legislature   in   discharging   our   shared   responsibility   for   nation-­‐ building   and   I   note,   with   thanks,   the   patriotism,   commitment   and   support   that   Distinguished   and   Honourable  Members  of  this  esteemed  Assembly   have   consistently  demonstrated.       80. Once   again,   I   encourage   us   to   dialogue   openly,   frankly   and  in  good  faith  over  the  challenges  that  face  us  as  a   nation.   It   is   my   hope   that   the   National   Assembly   will   consider   and   pass   the   2012   Budget   Proposal   expeditiously;   and   I   foresee   even   more   productive   collaboration  to  the  benefit  of  all  our  people.       81. I  am  indeed  grateful  for  your  kind  attention.     82. May  God  bless  you  all,  and  bless  the  Federal  Republic  of   Nigeria.  
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