US embassy cable - 04ABUJA721

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