Federal government suspends 2006 supplementary budget

By Omoh Gabriel, Business Editor
Indications emerged yesterday that the federal government has suspended the supplementary appropriation bill it submitted to the National Assembly for passage to law to enable the government spend more in the 2006 fiscal year.
The Minister of Finance Mrs Nenadi Usman who disclosed this in Singapore in an interactive session with Nigerian journalist said the government considered the short period between the proposed supplementary and the commencement of the 2007 budget which draft is almost ready and decided to merged the major items in the supplementary budget with the 2007 budget proposal. She said that the supplementary budget if pursued would have been counter productive given the short time in which it would have been implemented as ministries would have rushed to beat the budget year thus resulting in improper implementation of the supplementary budget. She said that the national Assembly is presently bogged down with a number of pending bills and saddling them with a supplementary budget would divert their attention. More so the passage of the supplementary budget may take two to three months to be paased into law by the national Assembly.
Giving an insight into the 2007 budget she said that it will be essentially the same as the 2006 but that the oil price bench mark might change slightly. She said that the ministry of Finance is working in harmony with the CBN to fine tune both fiscal and monetary policy.
The federal government had last month presented a supplementary budget to Senate for N150 billion to fund some power sector projects in the country and the additional two days by which the recently conducted National Population Census was extended.
President Olusegun Obasanjo had sent a request dated August 16, 2006 to the Senate through the Senate President, Chief Ken Nnamani seeking approval for the supplementary budget.
The Senate had taken the first reading of the Bill for an Act to authorise the issue from the Consolidated Revenue Fund of the Federation the total sum of $1,062,591,071.85 for the power sector projects and the additional two days for the National Census.
The Bill, which may be cited as the Supplementary Appropriation Act, 2006, provides in part B under Capital Expenditure a breakdown of the allocations to wit: $1,045,259,903.23 for the power sector projects and $17,331,168.62 for funding additional two days of the National Population Census 2006.
The Rules and Business Committee is expected to list the bill for second reading during which the house will extensively and exhaustively debate the bill’s general principles.
The CBN Governor Professor Charles Soludo collaborating what the minister said disclosed that nothing will change in terms of policy trust in the 2007 budget. He said that money supply is targetted to grow by about 15 per cent and that 2007 being an electioneering year will involve a contractionary monetary policy as fiscal policy is likely to be expansionary. He allayed fears that there will be more spending that may lead to higher inflation, increase in interest rates and depreciation of the naira exchange rate. He said that the only thing that might happen is that composition of money supply may change from bank deposit to cash but that money supply will be largely unaffected.