Jul 4, 2002

Nigeria cannot sustain a trillion-naira budget without major long-term macro-economic distortions, the World Bank’s Chief Economist, Mr. Nick Stern, said yesterday.

Nigeria cannot sustain a trillion-naira budget without major long-term macro-economic distortions, the World Bank’s Chief Economist, Mr. Nick Stern, said yesterday in Abuja, even as the National Economic Intelligence Committee has advised the Federal Government to strengthen the budgetary process to allow for adequate checks and balances in the implementation process.

“A trillion-naira budget is not consistent with macro-economic stability and national economic growth,” Stern said while fielding questions from newsmen.

He said the budget was one of the issues raised at his meeting with President Olusegun Obasanjo, Finance Minister, Adamu Ciroma and members of the National Assembly.

The chief economist said the bank had similarly expressed concern to members of the National Assembly and urged them to look at the issue critically in the overall interest of the country.

Stern said his discussions with the country’s political leaders also focused on the challenges of rural development and the fight against poverty in Nigeria.

Other issues discussed included conditions for private sector investment in the rural areas and the provision of infrastructure of local communities to stimulate growth and development, he said.

On the bank’s support for New Economic Partnership for African Development (NEPAD), Stern said that the African Development Bank must come in forcefully in support of the programme, being an African initiative.

He noted that as an economic development institution, the World Bank was in support of NEPAD, saying: “There is an alignment of the spirit and objectives of NEPAD with the spirit and objectives of the World Bank.

Industrialised countries, he said, could not be talking of the removal of subsidies in trade and agriculture in developing countries “when they are subsidising trade and agriculture to the tune of $300 billion annually.”

“This amount is rightly the total GDP of the entire sub-Saharan Africa,” he stressed.

“Mr. Stern also said that Nigeria did not qualify for debt forgiveness.

Stern, who is the bank’s senior vice-president further stated that Nigeria was not qualified to benefit from debt forgiveness under the Heavily Indebted Poor Countries (HIPC) programme of the bank.

He explained that the country was unqualified because it had the ability to service its indebtedness to London and Paris clubs of creditors.

“Nigeria’s export/debt service ratio makes it unqualified for debt forgiveness under HIPC,” he said.

The World Bank chief economist explained that based on the country’s earnings from oil exports, its portfolio on debt servicing could be better.

He said that sustained improvement in the economic management of the country as well as structural and social policy reforms were some of the criteria to be satisfied for qualification for HIPC programme.

Stern pointed out that governments’ programmes and policies to improve basic health care and education were also crucial for the nation to qualify for the HIPC programme.

Meanwhile, the National Economic Intelligence Committee (NEIC) has advised the Federal Government to strengthen the budgeting process to allow for more checks and balances in the implementation process.

It noted that the measure became necessary in view of the recent decision by government to replace the IMF Staff-Monitored Programme with a home-grown economic programme, describing it as a serious challenge to the nation’s policy makers.

NEIC Chairman, Doctor Ibrahim Ayagi, who led members of the committee to State House, Abuja told President Obasanjo that the recent Supreme Court ruling on external debt management, joint venture cash calls, NNPC priority projects and the Federal Capital Territory (FCT) may have implications on the budgeting process.

He said the judgement has serious implications for the finances of the federal, state and local governments, and urged government to evolve measures towards addressing the issue in order to avert negative consequences on the economy.

Doctor Ayagi also reported the committee’s findings as regard the execution of Federal Government projects and programmes, saying the implementation of the National Primary Health Care Delivery programme and the Universal Basic Education (UBE) programme are progressing as required.

Suleiman Mohammed, Daily Trust (Abuja), July 4, 2002