VZCZCXRO8829
RR RUEHMA RUEHPA
DE RUEHUJA #0578/01 0931241
ZNR UUUUU ZZH
R 031241Z APR 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC 5674
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHGB/AMEMBASSY BAGHDAD 0160
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 ABUJA 000578 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PASS TO USTR-AGAMA 
DEPT PASS USAID/AFR FOR DATWOOD AND USAID/EGAT FOR MOTT 
BAGHDAD FOR DUNDAS MCCULLOUGH 
TREASURY FOR PETERS, IERONIMO, AND HALL 
DOE FOR GPERSON AND CHAYLOCK 
DOC FOR 3317/ITA/OA/KBURRESS AND 
3130/USFC/OIO/ANESA/MCREED 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ETRD EAID EINV ENRG NI
SUBJECT: NIGERIA: MINISTER OF FINANCE CONFIDENT ON BUDGET NEXT 
STEPS 
 
REF: A. ABUJA 263 
      ¶B. ABUJA 474 
 ¶C. 08 ABUJA 2365 
    ¶D. 08 ABUJA 2225 
     ¶E. 08 ABUJA 882 
 
¶1. (SBU) Summary: Reftel B reports on the signed 2009 budget 
allocations and ways to successfully execute the budget. Following 
the press announcement, Finance Minister Mansur Muhtar gave a speech 
on March 24 to audience of key ministers, head of government 
agencies, press and others at the International Conference Center in 
Abuja, about how he plans to manage the budget challenges.  He 
outlined an effort to increase non-oil revenues through taxation, 
and emphasized a government "to do" list for Nigeria to maintain 
macroeconomic stability.  The Minister asserted that the Nigerian 
government's (GON) 2009 budget focuses on diversifying the economy 
by developing critical infrastructure.  Furthermore, he expects the 
2009 budget deficit to increase to 3.02% of the GDP, or 836.6 
billion naira ($5.65 billion).  To cushion the impact of decreased 
revenues, the GON plans to use available funds from the Excess Crude 
Account (ECA).  The Minister underscored that policy reforms must be 
put in place and that the GON must focus on accountability, 
transparency and results in order to grow and survive the global 
economic crisis.  End Summary. 
 
Macroeconomic View of the 2009 Budget 
------------------------------------- 
 
¶2. (U) On March 24, Minister of Finance Mansur Muhtar briefed an 
audience of key ministers, directors, heads of government agencies, 
representatives of civil society, press and others at the 
International Conference Center in Abuja, on the recently signed 
2009 budget (reftel B).  Minister Muhtar explained that the global 
economic recession is impacting the Nigerian economy mostly by 
reducing demand for oil exports.  Other ways in which the global 
recession has affected Nigeria's economy was through reduced capital 
inflows; reduced income from exports; and decreased remittances from 
Nigerians in the diaspora. 
 
¶3. (U) Minister Muhtar contended that the 2009 budget is focused on 
diversifying the economy by giving priority to critical 
infrastructure improvements.  In addition, he estimated that non-oil 
revenue projections will increase from the 1.3 trillion naira ($8.78 
billion) in 2008 to 1.97 trillion naira ($13.33 billion) in 2009 
while the projected fiscal deficit of 836.6 billion naira ($5.65 
billion) will be financed by funds from the ECA and by borrowing 
from the domestic and international financial markets. 
 
¶4. (U) The 2009 budget emphasized increasing non-oil revenues 
through taxation.  The Minister outlined that this could be 
accomplished by: 
-- Expanding the non-oil tax base through tax policy and 
administration. 
-- Ensuring that the Ministries, Department and Agencies (MDAs) 
accurately disclose earnings, payments and remittances to the 
Federation Account. 
-- Reforming the Customs Services to improve efficiencies, enhance 
revenue and facilitate trade. 
-- Deepening reforms to tap into the domestic capital market 
(pension, insurance funds, etc). 
 
Next Steps 
---------- 
 
¶5. (U) The Minister announced that additional efforts will be made 
to ensure effective budget implementation.  A Cash Management 
Committee was established to manage and control cash availability; 
support budget implementation; promote efficient resource 
allocation; and integrate government cash and debt management. 
 
¶6. (U) In order to maintain macroeconomic stability, the Minister 
listed a series of GON "to do" items: 
-- Ensuring financial sector soundness. 
-- Improving public financial management. 
-- Sound budget preparation. 
-- Effective execution of the budget. 
-- Eliminating inefficiencies, corruption, leakages and rent-seeking 
activities in the petroleum sector. 
-- Diversifying sources of income by reforming trade polices. 
 
ABUJA 00000578  002 OF 002 
 
 
 
Comment 
------- 
 
¶7. (SBU) If oil prices do not stay above the 2009 budget benchmark 
of $45 in 2009, the budget deficit will likely be much more than 3% 
of the GDP.  The Minister and other government officials continue to 
maintain that this GON plan will be implemented.  From past 
experience, implementation is one of the many GON weaknesses.  If 
increasing revenues from non-oil exports and taxes is truly a 
priority then the GON must move forward on needed economic reforms 
and the attendant regulatory framework. 
 
¶8. (U) This message was coordinated with ConGen Lagos. 
 
SANDERS