2011 deficit financing to take N865.24b
Panel lists 11,886 projects, decries graft
A SUM of N1.104 trillion was last year raised by the Debt Management Office (DMO) to finance the funding gap of the N5.160 trillion 2010 Amended and Supplementary Budgets.
The Director-General of DMO, Dr. Abraham Nwankwo who disclosed this, said the sum was raised from the monthly sovereign bond market issue locally by the DMO.
Again, Nwankwo disclosed that this year, the agency has been tasked to raise the sum of N865.24 billion to finance the funding gap of the N4.5 trillion 2011 Budget.
He made the disclosure last Tuesday at a lecture he delivered at his alma mater, University of Nigeria (UNN), Nssuka where he also had a stint as lecturer after graduation. He was speaking on the topic: "Stages of Nigeria's public debt management," and latter dote-tale to the deployment of the proceeds of the N4.5 trillion raised from the domestic market during the period under review.
The DMO chief said: "The link between the transformation of the sovereign bond market and the economic development could be inferred from the portion of the deficit in the annual budget, which is funded from proceeds of FGN bonds. The contribution has grown from N27 billion in 2005 to N524 billion in 2009 and went up to N1.104 trillion in 2010. In addition , to general budget support, proceeds of domestic bond issuance were also used to fund special government stimulus spending initiatives between 2008 and 2010,'' Nwankwo further declared.
He presented a public debt table of 19 countries consisting of developed and developing countries which listed Nigeria as one of the least indebted countries by debt to GDP ratio.
Meanwhile, the Presidential Projects Assessment Committee (PPAC) yesterday submitted its report to President Goodluck Jonathan, decrying the prevalence of corruption in the handling of government projects by "many self-seeking officers and contractors."
The Committee noted that the corruptive influence in the Execution of the projects has caused "massive inflation of costs" while at the same time undermining the legitimacy of monitoring and supervisory responsibilities."
It stated that the Federal Government is executing a total of 11,886 ongoing projects while the total sum "reckoned in today's prices and allowing for unreported ongoing projects, the total cost needed to complete all projects may well be as high as N8 trillion."
The Presidential Committee, which was constituted during the period President Goodluck Jonathan was the Acting President, also said that out of the figure of N7.78 trillion, N2.696 trillion has already been paid to contractors.
According to the Committee, "corruption in the handling of projects by many self-seeking officers and contractors has led to massive inflation of costs and undermined the legitimacy of their monitoring and supervision responsibilities. Following the committee's in-depth assessment of many of the projects, we take no joy in confirming that there is indeed evidence of large scale, widespread institutional mediocrity, deficiency of vision and a lack of direction in project management, which result in poor conceptualization, poor design and faulty execution.
"Needless to add that, this has resulted in avoidable losses of billions of Naira to the Federal Government. As a matter of routine, contracts are awarded without securing the required funds in the annual budget to ensure their timely execution. Now, with eight trillion Naira commitment, and on the basis of the prevailing allocation of about one trillion Naira for capital projects annually, it will take the next eight years or so for the Federal Government to complete existing ongoing projects, provided there will be no inflation within the period."
The Committee said that the total contract "the figures represent the total responses received from the Ministries, Departments and Agencies (MDAs), some of whom for reasons best known to them, failed to respond to the committee's request for data on ongoing projects." .
The committee listed the factors responsible for the high cost in project financing to include "consistent delays in payment to contractors, leading to massive claims for overhead costs, interests and additional costs, poor coordination between government officials at all levels in the planning and execution of projects, poor planning and conceptualisation of projects resulting in costly variations and inefficiency in the implementation and management of projects.
Also listed is lack of adequate and efficient municipal services such as the provision of electricity, transport, security and water supply, all of which contractors have to arrange privately."
The report added that the project cycle was subverted as most of the ongoing projects have not been subjected to, and taken through the normal project cycle of conceptualisation, planning, the undertaking of full economic, social and environmental impact analyses, design and procurement, contract execution and maintenance. .
The report also said the Bureau for Public Procurement Act was undermined and subverted at the MDAs.
It further said that on occasions, the 'No Objection Certificates' issued by the BPP were revoked without any justification as well as cases of disqualification of duly pre-qualified contractors in questionable circumstances.
The committee pointed out that there are many uncompleted projects where trillions of Naira has already been spent, including the Ajaokuta Steel Company Project, on which $4.5 billion had been spent.
Source: Debt Office raises N1.104tr to fund 2010 budget deficit (http://ngrguardiannews.com/index.php?option=com_content&view=article&id=50119:debt-office-raises-n1104tr-to-fund-2010-budget-deficit-&catid=1:national&Itemid=559)