Dr Ngozi Okonjo-Iweala, the Coordinating Minister for the Economy, on Tuesday in Abuja cautioned that the rising public sector wage bill could erode the gains recorded in economic stability.
Okonjo-Iweala, who is also the Minister of Finance, gave the advice at a consultative meeting with members of the organised private sector and civil society organisations on the 2013 budget.
She said that the 2013 budget, with the theme ``Fiscal Consolidation and Growth’’ would consider how to ``streamline the bureaucracy of government’’ based on the Oronsanye committee report.
The committee had recommended massive reduction of the government Ministries, Departments and Agencies (MDAs) to curtail leakages and save resources needed for critical areas of the economy.
``We are spending a lot of money on personnel who are not necessarily producing much to the economy, some parastatals are not really producing but they have staff there and we continue to pay.
``What do we do with those are the things we are worried about and we need your input on this.’’
Earlier, the finance minister had explained that the 2013 budget would ensure the country ``husbands its resources and try to manage them as tightly and efficiently as possible.''
``But you can also do that with growth, meaning that those resources that you do have should be directed to the most productive activities within the economy to yield growth.’’
She said efforts would also be geared towards extensive savings, highlighting currents move by the government to increase the Excess Crude Account (ECA) from 5.3 billion dollars to 10 billion dollars.
According to the minister, the budget would also aim to reduce recurrent expenditure and improve capital from what it was in the previous year.
``At the same time, we want to look at the debt, particularly our domestic debt, although the numbers are not alarming with regards to debt service to export and so on.
``But we are worried about domestic debt, we have been working and we are also looking forward to solutions; we need to make sure that the two angles to debt, the debt stock and flow are both being brought down.’’
She said government would set up a sinking fund in the 2013 budget to enable it to settle part of its domestic debt.
The minister said that N852 billion was borrowed to support the 2011 budget compared to N744 billion in 2012.
On revenue generation, she expressed concern that many MDAs were not generating up to expectation.
She reiterated government’s commitment to continue to support the Federal Inland Revenue Service to expand the tax base and the Nigeria Custom Services to ensure improved revenue generation.
In his presentation, the Director-General, Budget Office, Dr Bright Okogu, said that the wage bill had increased from N443 billion to N1.659 trillion from 2009 to 2012.
Okogu said that the share of personnel cost as a percentage of aggregate expenditure increased from 27 per cent of the total federal spending to 34 per cent in 2012.
He blamed the rise on several wage increases granted to public workers, including ASUU, medical personnel, civil servants and the Minimum Wage Act of 2011.
Okogu noted that although the 2013 budget would ensure that recurrent expenditure was reduced, agitations for wage increase remained a challenge.
He said that the 74.4 per cent of recurrent expenditure of the 2011 budget was driven by wage increments and personnel cost, adding that between 2009 and 2012, it had risen to 93 per cent.
``This is not yet over, people are still agitating; (if) we need to increase wage, we need to look at its impact on the economy.’’