The Federal Government has on Wednesday revised the 2012 budget to make provisions for N656.3bn for fuel subsidy for the year, thus reducing the budget of the ministries, department and agencies for travels and training by N100bn.
Consequently, the 2012 budget figure has reduced from N4.749trn to N4.649trn.
The Minister of Finance and Coordinator of the economy, Dr Okonjo-Iweala revealed this in Abuja while briefing the media on key developments around the revised 2012 budget.
Explaining the process through which the estimated amount of subsidy for 2012 was arrived at, the minister said: “After extensive consultations with NNPC and PPPRA, the amount required for 2012 was estimated using 2008 as baseline year.”
According to her, year 2008 was used as a baseline because subsidy payments and other associated factors were fairly stable in the year.
The statement reads in part, “The savings made and the cuts achieved underscore the seriousness with which the Federal Government views its mandate to make a difference in the lives of the people against all odds.
“At the directive of Mr. President and in line with his commitment to minimise the fiscal deficit and domestic borrowing, several steps were taken to bring the deficit to a more manageable level.
“Several steps were taken to squeeze further resources from revenue generating agencies.”
Explaining the decision to revise the budget she said: “In its determination to ensure a smaller and more effective budget, the Federal Government has achieved significant reductions in the 2012 revised budget which has been transmitted to the National Assembly. The revision became necessary as a result of the need to make provision for subsidy arising from the partial deregulation under which the price of PMS was reduced from N141 per litre to N97 per litre.
The revision was taken from a host of areas in the budget including administrative, training, transport and other costs.
According to Okonjo-Iweala, the campaign against waste and leakages has also recorded significant success as N74bn has been saved through biometric verification of workers and pensioners.
This, she noted, had led to a reduction in the pension budget while improving the processes for paying genuine pensioners.
The minister explained that the 2012 Fiscal Framework earlier submitted to NASS assumed 100 per cent subsidy removal and only N155bn was provided for the carryover of 2011 subsidy payments.
She added that the estimated total figure for subsidy in 2012 is now N888bn made up of N656.30bn for 2012 and N155bn as carry-over from 2011.