From Madu Onuorah, Abuja

The Olusegun Obasanjo tenure ends on May 29, 2007, after which a new administration may present a new budget plan.

The bulk of the 2007 budget as approved by the federal executive will be spent on the education, health, power, works and water resources sectors.

The N1.9 trillion is one per cent higher than the figure of the 2006 budget. Of the sum, N92 billion is for statutory transfers, N290 billion for debt services and N1.3 trillion for the federal ministries and agencies.

The council also approved a memorandum from the Ministry of Finance for the payment of N75 billion to the over 300,000 pensioners nationwide. They are to be paid as government bonds through four yet unidentified banks. The banks will thereafter collect the bonds, pay the beneficiaries the cash value, and collect the full value on maturity.

Under the fiscal strategy paper for 2007, the Council approved N230 billion for debt services, with the London Club getting N80 billion and the domestic debts the remaining N150 billion.

The strategy paper also votes N100 billion for statutory transfers and N1.6 trillion for expenditures by federal ministries and agencies.

The projected increase in expenditure for federal agencies is a carry-over from the 2006 budget.

They include the bulk of the expenditure for the Independent National Electoral Commission (INEC), the National Population Commission (NPC), a total of N25 billion for payment to local contractors and N75 billion earmarked as petroleum subsidy for 2006.

The Minister of Finance, Mrs. Esther Nenadi Usman, disclosed after the Council meeting that INEC and NPC had the bulk of their expenditures being taken care of in the 2006 budget.

Usman, who addressed journalists alongside the Minister of Information, Mr. Frank Nweke Jnr. and Director-General, Budget Office, Dr. Bode Augusto, said that the expenditures which would not be repeated next year "are savings to be spent."

Meanwhile, Augusto declared that it was not for him to know what President Olusegun Obasanjo would do by next year when the N75 billion voted for petroleum subsidy elapses.

He said: "The price of crude has been going up. There may be a level of adjustment. But it is up to Mr. President (Obasanjo) on the adjustment to make."

The projected deficit for next year is put at one per cent of Nigeria's Gross Domestic Product.

According to Usman, "the aim and the objective of having this physical strategy paper in place is just to ensure that our planned spending is set at a very prudent and sustainable level and that this planned spending is consistent with our overall physical objective which we have tried to carry along from the last few years."

She added: "We do not foresee that there would be much of an increase in the budgeted figure. We still believe that we will keep it at about N1.9 trillion. Again, some people may wonder why is this so? It is basically so because there are some expenditures which we incurred this year which are of a one-off kind. So, next year we would not have such expenditure."

Augusto, stated that the N1.9 trillion is the expenditure profile of the Federal Government. He said: " It is actually a one per cent increase on yearly basis. But if you look at the breakdown by the major expenditure heads, you have about N100 billion in 33 transfers. We have a little bit over N200 billion in debt service that is largely domestic and N1.6 trillion for the ministries, departments and agencies to spend."

Explaining further on the savings from the 2006 budget, which would be spread as expenditure to federal ministries and agencies, he said: "There has been no material growth on a year and year basis because there are some major expenditure that we incurred in 2006 that is not going to repeat in 2007 and these are the Independent National Electoral Commission (INEC) because the bulk of the spending for the 2007 elections is already in this year. Second is the National Population Commission, because census has already been held this year. Thirdly, we have contractors that we are spending N27 billion to clear their arrears. And lastly, we have the petroleum subsidy of N75 billion this year and the level of subsidy is not likely to be as high as that next year."

All these "will lead to healthy increases in what the ministries, departments and agencies will spend." He added: "The major ministries that are receiving the bulk of the money will be education, health, power, works and water. We are also looking at a deficit of not less than one per cent of the GDP next year."

Usman added: "We have had informal discussions with the members of the Appropriations Committee of the National Assembly and we will formally transmit the document of the physical strategy paper before the end of this week. We will also begin to talk with the organised private sector and civil society about the budget. The ministries, departments and agencies have also been advised of their expenditures."