THE Federal Executive Council (FEC) met in an extraordinary session on a Friday recently with President Goodluck Jonathan presiding. It was the first time since the advent of the Jonathan Presidency that the federal cabinet would be meeting twice in one week, having met the previous Wednesday for its regular session. The Friday’s meeting was remarkable for its deviation from the tradition of considering mostly memoranda for contract awards or contract augmentation as the session was chiefly on the 2012/2015 medium term fiscal framework that would guide Nigeria’s fiscal expenditures between now and 2015. The meeting also worked on measures to get recalcitrant corporate debtors to meet up with their obligation on back log of taxes which, at the time of the FEC, stood at about N170billion.

In view of the impact of the movement of oil, Nigeria’s key export and revenue earner, the meeting analysed the situation in the global environment before arriving at the parameters for the 2012 Budget. This is important because, as the Coordinating Minister for the Economy and Minster of Finance, Dr Ngozi Okojo-Iweala, noted, there are many uncertainties in the global environment, especially as growth in both the United States, Nigeria’s largest market for oil, and Europe has slowed down.

Nigeria’s oil export may be enjoying some boom at the moment because of the situation in Libya, and as the minister also noted, if Libya settles down and is able to resume its normal oil supply to the world market, there could be some significant effect on Nigeria’s supply. So, government must look at this trend when it begins to work on the budget.  FEC discussed this and what the impact could be for Nigeria before settling on the parameters.

The council looked at other issues based on its calculations, projections and the global uncertainties and decided to anchor the 2012 budget on $75 per barrel as well as work with 2.48 million barrels of oil per day production by the Nigerian National Petroleum Corporation (NNPC). Government is also looking at what it says is a realistic Gross Domestic Product (GDP) growth of between seven and eight per cent over the duration of the Jonathan administration.

The extraordinary FEC similarly resolved to extend, from three to four years, the nation’s medium term expenditure programme to coincide with the turn of the administration. Government’s intention is to align the nation’s budget to anticipated resources and correct some of the fiscal lapses that have developed in recent years to facilitate the success of its transformation agenda. Government is also concerned about fiscal discipline in its planning and execution of projects.

“The overall objective is to ensure that the promised transformation the president had given to the nation is anchored on a sound fiscal framework that will enable all his dreams or at least a solid foundation to be made for the realisation of the dreams he has offered to the nation,” says Labaran Maku, the Minister of Information, who also spoke on the reason for the extra ordinary session of FEC.

Another issue FEC also considered was deficit and the need government to keep it at three per cent, as it is in the Fiscal Responsibility Act, over the next four years.

There was similarly the issue of recurrent expenditure which government hopes to peg from its present 74 per cent to 70 per cent by 2015 without necessarily retrenching workers. In the same vein, the council decided that there was the need to increase capital spending by 1.5 per cent per year and possibly faster, given the resources available, and moving from about 26 to 27 per cent to about 32 per cent by 2015 while also working on initiatives to drive borrowing down so that fiscal deficit will come down to three per cent of the GDP.

The session was, indeed, quite extraordinary, refreshing from its break from announcements of huge money contract awards that FEC has come to symbolise. It would appear that the presence of Okonkjo-Iweala has injected a sense of urgency, the needed impetus and a definite focus in the deliberations of FEC. It is what has been lacking. With what happened last Friday, Nigerians can convince themselves that the Jonathan administration has taken off and the move towards his promised transformation is up and running.

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