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