The Minister of Finance, Dr Ngozi Okonjo-Iweala has expressed concern about states expending their resources on salaries and operational costs rather than on capital projects.
Okonjo-Iweala said this on Tuesday in Minna at the National Council for Economic Development (NACOFED) conference.
She said that there was the need for states to make strategic choices about how to spend their allocation from the federation account.
“The structure of our public expenditure is lopsided, at the federal level and in most states, our budgets consist mostly of recurrent expenditures such as payroll and overhead expenses.
“Yet, we continue to have more demands for more recurrent spending.
“At present, ASUU wants government to pay N92 billion in extra allowances when the resources are not there and when we are working to integrate past increases in pensions,?? she said.
According to her: ?We need to make choices in this country as we are getting to the stage where recurrent expenditures take the bulk of our resources and people get paid but can do no work.?
Okonjo- Iweala, who is also the Coordinating Minister for the Economy, said that at the federal level, there had been recent progress in improving public financial management in the country.
The minister said that government was paying close attention to the management of the country’s foreign and domestic debt.
She said that the ministry was collaborating with the Debt Management Office to get a clearer picture of outstanding debts incurred by state governments.
The coordinating minister also urged state governments to keep “an eagle eye on domestic borrowings??.
According to her, the Federal Government is working hard to diversify the economy as part of its strategy, thereby reducing over dependence on the oil sector.
Okonjo-Iweala said that efforts were also on to grow the non oil sector such as agriculture and infrastructure.
“We are working to improve our non-oil tax revenue collection. Recently, we hired international consultants to conduct a diagnostic exercise on the bottlenecks in our tax collection process.
“They compared our official registry of companies at CAC to the official taxpayers? database at FIRS.
“The result was that 75 per cent of registered firms were actually not in the tax system, in addition about 65 per cent of registered tax payers had not filled their tax returns in the past two years.
“Overall, it was estimated that an additional N80 billion could be obtained if we improved our tax systems, given the recent decline in our oil revenues. This is additional money which is urgently needed.??
Okonjo-Iweala also stressed the need for all states to adopt the Fiscal Responsibility Commission 2007 Act.
“We need to cooperate more on our fiscal policies since all tiers of government operate in the same economy.
“We will need to coordinate more on how we spend our money, what we spend on and also when we spend it on.
“This will help us manage liquidity in the economy and keep our macro-economic indicators stable,” she said.
In his remarks, Vice President Namadi Sambo, said that there was the need to reduce recurrent expenditure to sustainable levels, while increasing capital projects.
Sambo was represented by the Minister of National Planning Commission, Dr Shamsudeen Usman.
The Vice President said that following the Orunsaye Committee?s report, the Federal Government had taken steps to reduce waste as well as duplication of government agencies.
“Consequently, recurrent expenditures will be trimmed further from 71.5 per cent in 2012, to about 68.7 per cent of the 2013 budget, while the capital vote is expected to increase to 31.3 per cent from 28.5 per cent in 2012,?? he said.
Sambo said that the government was working to restructure expenditure through its transformation agenda by improving capital expenditure in infrastructure to create employment and a business friendly environment.
“The annual budget of our administration is predicated on four main pillars, namely macro-economic stability, structural reforms, governance and investments in priority sectors.
“It is our belief that the effort of the Federal Government in this regard would be complemented by those of the states and local governments.
“So that together we can lay solid foundation for sustainable economic growth,?? he said.
Sambo urged participants to deliberate and come up with workable solutions that would help to improve public finance in the country.
Dr Yerima Ngama, the Minister of State for Finance in his closing remarks, thanked the Niger State Government for hosting the conference.
“We need to work more closely in tackling various public services which fall on the concurrent list such as delivering health and education.??
Ngama said that he was optimistic that the nation?s economy would be on sound footing in the near future, following the implementation of government?s various economic development strategies.
The conference was attended by states commissioners for finance, accountants-general as well as permanent secretaries of ministries of finance from the 36 states.