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I assent to the 2009 budget today, with a clear appreciation of the seriousness of the challenges we face as a nation. Our revenue base is dwindling with the drastic fall in the price of crude oil. As at today, the Naira has lost about 25 percent of its value against the United States Dollar. Our stock market, once a choice investment destination, has not escaped the adverse effects of the economic downturn. These developments have grave implications for macro-economic stability, economic growth and sustainable development in our country. While the economic climate of our nation, and indeed our world, may have changed dramatically in recent months, the underlining philosophy guiding this Administration has not. Right from the outset, we have predicated our actions on having a clear, structured plan and measurable targets. The aim is to ensure effective and targeted implementation of critical projects, while at the same time instituting efficiency and accountability in the management of scarce public resources. For us, therefore, the present global economic crisis offers an opportunity to re-examine the structure of our economy and implement strategies that will reposition our nation for the global economic order that will emerge from the current experience. With our collective aspiration to make Nigeria one of the world's 20 leading economies by 2020, we see this global crisis as an obstacle we must overcome, and not a reason to abandon what we consider a worthwhile journey. For that reason, we will not embrace the exigencies of the moment and sacrifice the burdens that the future imposes on us. We have to strike the requisite delicate balance. As a government, we are committed to doing everything possible to minimise the impact of the current global crisis on the people of this country. Whatever the sacrifices that have to be made, we will not allow the weakest among us to shoulder the burden. To this end, I have directed that representatives of Labour be co-opted into the Presidential Steering Committee on the global economic crisis under my chairmanship, which is tasked with considering the various dimensions of this crisis and evolving workable strategies. As you are aware, I have asked the Revenue Mobilization Allocation and Fiscal Commission to consider a reduction in the salaries and allowances of political office holders. This is not just a symbolic gesture. It is to ensure that we live within our means, especially in these critical times. More importantly, it is to ensure that the salaries and allowances of all public officials reflect the reality of the times. I do hope that the sub-national governments will take a cue from this. We have charged the Central Bank to take measures to stabilize the Naira within the scope of the reality of changing market forces. We have put in place an e-payment
President Umaru Musa Yar'Adua, GCFR Address at the 2009 Appropriation Bill Signing Ceremony 10th March 2009
regime in the transaction of all government business as a means of enhancing transparency and ensuring value for money. At the same time, we are moving in the direction of full deregulation of the downstream sector of the petroleum industry which is currently replete with unwholesome practices. These are all part of our holistic efforts at shoring up our national economy. The 2009 budget is devoted to sectors which we consider critical to the regeneration of the economy. There is a decided bias for power supply, transportation and other critical infrastructure. There is also increased funding for education, health, agriculture and other areas critical to the attainment of the Millennium Development Goals. The peace, security and sustained development of the Niger Delta are also a core priority in the 2009 budget. In December 2008, I presented a Budget Proposal with an aggregate expenditure of N2.87trillion with a deficit of N1.09trillion or 3.95% of GDP. Based on the revised fiscal framework subsequently agreed with the National Assembly, we had a deficit of N654billion or 2.36% of GDP. After due consideration of the Budget Proposal, the National Assembly passed a N3.1018trillion budget with a deficit of N836.6billion or 3.02% of GDP. As passed, the 2009 Budget projects higher oil revenues than in the original proposal. However, I must express some reservation regarding these higher forecasts given the current realities of declining international oil prices and production constraints. Due to militant activities in the Niger Delta, our production has sometimes declined to as low as 1.6mbpd from a projection of 2.209mbpd. Should this low production turn out to be our average for the year, and the average price falls to $40/barrel from the original budget projection of $45/barrel, our fiscal deficit would increase to N1.35trillion or 5.24% of GDP, which is well above the three percent allowable limit under the Fiscal Responsibility Act. Financing such a large fiscal deficit will have with its own challenges. We are reviewing the timing of the $500million Naira-denominated international bond issue. Similarly, care needs to be taken with regards to public borrowing from the domestic markets to avoid the effect of crowding out credit to the private sector and stifling economic growth. These are issues that the Legislature and the Executive will closely monitor, going forward. I must commend the leadership and entire members of the National Assembly for the continuous harmonious and productive working relationship with the Executive: a relationship that has been based on mutual respect and collective responsibility to the Nigerian people. As a nation, we have faced sundry challenges in the past. But at every point in history, a people united with a common cause and a common purpose, have always overcome the greatest of adversities. I remain unshaken in my abiding faith in the abounding capacity, the uncommon resilience and the creative enterprise of our people to convert the challenges we face today into great opportunities for the prosperity we seek for our nation. May God continue to bless Nigeria. Thank you.