Cablegate: Nigeria's Budget Battle: National Assembly's

This record is a partial extract of the original cable. The full text of the original cable is not available.

191543Z Apr 04



E.O. 12958: N/A


1. Summary: On April 15, Nigeria's National Assembly (NA)
made a key concession to President Obasanjo in the 2004
budget battle. Obasanjo had requested in late March that the
National Assembly amend several clauses they had inserted
into the 2004 appropriation bill as a condition for his
signing the budget into law. On Thursday, the NA dropped
requiring the Finance Ministry to seek a waiver from the NA
if it could not fund salaries and projects appropriated in
the budget. The NA retained, however, a requirement that oil
revenues in excess of the budget target price be deposited in
an account at the Central Bank of Nigeria (CBN) that the NA
could monitor. President Obasanjo had described these
various clauses in the budget as unconstitutional, saying
they encroached on his executive powers. Neither side seems
likely to give in soon on excess oil revenues, and Nigeria
may continue under last year's budget for rather longer than
expected earlier. End Summary.

2. The NA dropped the clause it had attached to Nigeria's
2004 budget bill which required the Minister of Finance to
gain an NA waiver when projects and salaries appropriated in
the budget could not be funded by the GON. The NA kept,
however, a clause requiring Nigeria's Accountant General to
establish a special fund at the Central Bank of Nigeria for
crude oil revenues in excess of the NA-proposed benchmark of
USD 25 per barrel (up two USD from Obasanjo's proposed
budget). In 2003, according to National Assembly members,
less than 40 percent of the appropriated budget was actually
implemented and millions of USD were used instead to pay for
the All Africa Games and the Commonwealth Heads of Government
Meeting, both held in Abuja.

3. Dr. Bright Okogu, a special adviser on oil and gas to the
Minister of Finance, told Econoffs April 13 that the GON's
present accounting system for monitoring crude oil revenues
is poor and easily manipulated by GON officials. He admitted
that the Ministry of Finance has no system in place to
account accurately for oil revenues received by the
Accountant General or the Nigerian National Petroleum
Corporation (NNPC). Dr. Okogu, on a two-year leave from the
IMF in Washington, added that there is certainly stiff
political opposition to the Ministry's attempts to monitor
crude oil revenues, and claimed there are vested interests --
such as the oil extractors themselves -- who benefit from the
lack of transparency in the GON's accounting system.


4. President Obasanjo has refused to sign the 2004
appropriation bill into law because the NA had added three
clauses to the bill in mid-March. The first required that
the Ministry of Finance only release money appropriated in
the budget; i.e. funds could not be used for off-budget
items. The second clause required that the Ministry of
Finance receive a waiver from the NA to divert funds from
appropriated items to non-appropriated projects. The third
clause mandated that Nigeria's Accountant General pay any
excess oil revenues (over the USD 25 per barrel benchmark
price mandated by the Assembly) into a special account at the
Central Bank of Nigeria.

5. President Obasanjo's two-page letter to the NA of March 30
bristled at the Assembly's amendments. Obasanjo said certain
clauses amounted to unconstitutional usurpation of his
executive powers, as they would grant powers to the NA to
halt payment from the Central Bank of Nigeria to GON
ministries that the Executive had the right to authorize, and
vest the Assembly with executive or quasi-executive functions
not envisaged by the Nigerian Constitution and the NA's own
Appropriation Act.

6. Comment: The Nigerian Constitution provides that the
previous signed budget continues in effect until a new one is
signed, effectively letting the GON operate under a
continuing resolution without needing such a resolution to be
passed by the legislature. While many Nigerian observers had
thought Obasanjo would sign the budget sooner rather than
later (reftel), as he had been cooperating more with the NA
on the budget process this year, much of that amity seems to
have disappeared. Both sides now are remembering each
other's failings, and the budget battle may go on for some

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