OBASANJO RAISES NATIONAL ASSEMBLY ALLOCATION,

UNCLAS ABUJA 000721

SIPDIS

E.O. 12958: N/A
TAGS: ECON PGOV EFIN NI
SUBJECT: OBASANJO RAISES NATIONAL ASSEMBLY ALLOCATION,
SIGNS BUDGET

REF: A. ABUJA 537


B. ABUJA 678

CLASSIFIED BY COUNSELOR JAMES MAXSTADT FOR REASONS 1.5 B AND

D.


1. (C) Summary: On April 21, President Obasanjo ended a
two-month battle over the 2004 budget bill by signing it into
law after the National Assembly (NA) dropped its requirement
from the bill that oil revenues in excess of the budget's USD
25 per barrel target price be held in an account at the
Central Bank of Nigeria (CBN). Instead, the flow of excess
oil revenues will only be monitored by the Finance Ministry.
Both the Executive and many National Assembly members
indicated in press accounts and to Econoffs that this was the
best and most transparent budget since Obasanjo took office
in 1999. In addition, political consensus was achieved
through concessions and horse-trading, giving each side some
of what it wanted. President Obasanjo graciously announced
that he would try to implement 80 percent of the budget (up
from his admission to the NA in December that he had only
implemented around 50 percent of last year's budget),but
more to the point he raised the budget's allocation to the NA
End Summary.


2. (U) President Obasanjo signed Nigeria's 2004 appropriation
bill into law on April 21. Post has not yet seen a final
copy, but National Assembly (NA) sources tell us the NA
deleted its amendment requiring that revenue from crude oil
sales above the budget target price (which the NA had raised
to USD 25/barrel) be put in a special account at the CBN.
Instead the NA agreed that the Finance Ministry would monitor
and record oil receipts above the USD 25 benchmark, and
report them monthly to the NA.


3. (C) COMMENT: On one hand, this is a tremendous NA vote of
confidence in Finance Minister Okonjo-Iweala. On the other
hand, the Ministry of Finance has no way to monitor excess
oil revenues at this time (what revenue monitoring system
there is resides with the Accountant General),and those who
stole the excess revenues in the past will likely still be
able to steal them at least for the immediate future. And
making monitoring dependent on this Finance Minister's
integrity and skill, talented though she is, means it is
dependent on her keeping her job -- not a given, and less
likely the more she tries to cut off the thieves. END
COMMENT.

MANY LEGISLATORS OPTIMISTIC
--------------


4. (C) Farouk Lawan, NA House of Representatives Finance
Chairman and a frequent critic of President Obasanjo though
of the same PDP, told Econoff April 22 that the Legislature
and Executive could both be proud of the budget. He said
that it showed the President's willingness to compromise and
that most of his colleagues in the Assembly were optimistic
that the President and NA "had turned a new page in
cooperation." Lawan compared this to last year's troubles
over the budget, including requiring a supplemental budget
that also in the end was not fully implemented. Lawan had
been part of the movement in the Assembly to impeach Obasanjo
in 2002 over non-implementation of the budget, but said this
time that Nigeria had now shown democracy is taking hold.
Lawan noted that Obasanjo said he will try to implement 80
percent of the budget, called this is a "definite
improvement" over the 50 percent implementation Obasanjo
admitted to the NA in December on last year's budget.

THE BEST ASSEMBLY MONEY CAN BUY?
--------------


5. (C) Despite today's optimism from comparatively straight
shooters like Lawan, and other legislators or their staffs,
other NA staff claim many NA members were bought off to
prevent the NA from restricting the administration's direct
access to excess oil revenues. During the last two weeks,
the President also lobbied NA members through increased
pork-barrel spending, agreeing to fund "constituency
projects" well above those in his original budget submission
to the NA. But what turned the trick may have been a raise
in the allocation in the budget for the National Assembly
itself. According to press reports, in the original budget
submission NA personnel costs were to be allocated 3.5
billion Naira (about USD 27 million),and the President
raised that in the final signed budget to 27.9 billion Naira
(about USD 215 million) to cinch the deal.
ROBERTS