THE Federal Government may have commenced talks with the National Assembly in a move to reduce fiscal deficit of over N700 million of the N4.6 trillion budget this year.The moves to reduce the imbalance in the budget came amidst predictions yesterday by the International Monetary Fund (IMF) that countries in sub-Saharan Africa would have a narrowed fiscal deficit this year,The prediction was contained in the Regional Economic Outlook for the sub-region by the IMF in Lagos yesterday.It said some low-income countries with high tax revenues projections would become buoyant to allow fiscal deficits to be brought down gradually while still accommodating the recent first rate of expansion in real government expenditure.The fund said in its economic outlook for Sub-Saharan Africa that there should be planned reduction in fiscal deficit, as the crack in most economies has diminished.It also urged oil-exporting countries in the region to save windfall revenue, with spending constrained by absorptive capacity within a medium- term fiscal framework.Head of Nigerias budget office, Mr. Bright Okogu, said yesterday that government was already in talks with the legislators over the countrys 2011 budget proposal, with a view to reducing the countrys fiscal policy in the next few weeks.President Goodluck Jonathan initially proposed a N4.226 trillion ($27.32 billion) budget in December, but the National Assembly inflated the spending projection by passing a N4.972 trillion three months after.He vowed in March to take the issue up with the National Assembly.We are very, very deep in the negotiations, we have gone very far, Director-General of the Budget Office, told reporters while the International Monetary Fund (IMF) was launching its outlook for sub-Saharan Africa, in Lagos, yesterday.We have both recognised in all our preliminary discussions that there is a need to come back to a more realistic budget deficit level, he said.The original budget plan presented by Jonathan implied a deficit of around 3.6 per cent, but Okogu said the final version would push the deficit back in that direction.Presidential, National Assembly and state governorship elections last month disrupted the pace of negotiations, but Okogu said he was optimistic that agreement would be reached before the end of the current administration on May 29.Both sides recognise that this has to be sorted out before the new parliament comes into being, so we have a very tight target that we are both working towards, he said.Okogu said the tightening would come from both recurrent and capital expenditure, although care would be taken not to impact any highly-needed infrastructure or other capital projects.Some of it will be overheads for example that were increased a little, and some of it will be capital, he said.We are going to be very careful. All projects that do not have proper designs and not properly costed, we would want to work with the National Assembly to see if they can be given attention at a future date, he said.More than half of the planned spending in the version passed by National Assembly was earmarked for recurrent expenditure, meaning Africas most populous nation would be spending more on keeping government running than on highly needed new infrastructure.Analysts had expressed concern about the state of Nigerias public finances in the run-up to Aprils elections after foreign currency reserves dwindled and oil savings were eroded.The central bank raised its benchmark interest rate by a surprise full percentage point to 7.5 per cent in March, partly in a bid to ward off the effect of rising government spending ahead of the elections.
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