Budgets all over the world are basic estimates that guide either the individual, corporate organization or nations on their spending pattern. Budget estimates the revenue that are being expected and the expenditure that will be following the projected stream of incomes that are likely to be realized from revenue sources. It is about the judicious allocation of scarce resources. A very good budget on paper can be frustrated by inadequate financing or lack of capacity to implement the policies that will ensure the full realization of the budget. To the average economist, this is the way to think.
At the October 2013 World Bank/IMF meetings of global financial leaders, one thing that came out clearly was the fact that the global environment is still quite uncertain, even though growth is recovering in the euro zone, there is still uncertainties. The growth projections have actually been revised down.
More importantly, countries such as Nigeria were advised to build buffer strongly which means that Nigeria should build step up savings in the excess crude account because it is not yet clear what else is going to happen in the near future. It is also expedient that Nigeria manages its expenditures better to protect it in case the world economy should slip back into a recession or other adverse consequences could occur because of global market uncertainties. These were thoughts meant to guide nations in their expenditure outlay for 2014.
But every year in the federal government preparation and presentation of budget, the executive and the legislature engages in a feud that leads no where. At the moment the President and the House of Representative are in disagreement over what should be the budget bench mark for crude oil in the 2014 budget. While the President had proposed that the Medium Term Expenditure Framework/Fiscal Strategy Paper MTEF/FSP, be based on $74 per barrel, the Senate and House joint Committee raised the bench mark to $76.5 per barrel. While the Senate kept to its own end of the agreement when it passed the MTEF/FSP two weeks ago, the House reneged on the agreement and hiked the bench mark to $79 per barrel.
Previous experience has shown that the perennial executive legislative feud over the benchmark price of crude oil produces no tangible results because the central challenge lies more in ensuring that projected mbpd is realised. Moreover, the sums saved in the Excess Crude Account are available for use either during the year or at a later date.
The legal basis for this argument is “The Fiscal Responsibility Act” which was made as an Act to provide for the prudent management of the nation’s resources, ensure long-term macro-economic stability of the national economy, secure greater accountability and transparency in fiscal operations within a medium term fiscal policy framework, and the establishment of the Fiscal Responsibility Commission to ensure the promotion and enforcement of the nation’s economic objectives and for related matters. The fiscal policy framework envisaged by the Act is the Medium Term Expenditure Framework (MTEF). The MTEF is to be prepared by the Minister of Finance and presented to the Executive Council of the Federation (EXCoF) for its consideration and endorsement after which it will be laid before the National Assembly (NASS) for approval by a resolution of each House of the National Assembly.
The MTEF in accordance with S. 18 of the Act shall; be the basis for the preparation of the estimates of revenue and expenditure required to be prepared and laid before the National Assembly under section 81 (1) of the Constitution; The sectoral and compositional distribution of the estimates of expenditure referred to in subsection (1) of this section shall be consistent with the medium-term developmental priorities set out in the Medium-Term Expenditure Framework.
By the provision of this act, it will be wrong for the President to present the 2014 budget before the National Assembly if one arm of the National Assembly is not agreeable to the basis on which the budget is premised. Instead of dissipating energies and wasting time, what will please Nigerians is not a fight over the budget bench mark but a clear fight over waste of resources and massive stealing of the nation’s financial resources. If these members were holding the President to the fact that oil theft is making the nation lose so much revenue, every Nigeria will sing the praises of the house members. Oil thieves are on rampage yet nothing is being done as government continued to plead helplessness. When the House uncovered the subsidy scam last year, every Nigerian supported them.
The House is well aware that budgets in Nigeria are a one way stream. Envelop budgeting system. It is a repetition of the same sub heads marked up each year. Provisions are made under several sub heads for the same item. It happens in all the ministries. These house members have not the mental agility/capacity to detect these anomalies in the annual budgeting of the federal government. They are passed so long as provisions have been made for these men in power.
The annual fight over the budget bench mark is all about how much is available to corner into private pockets. It is worrisome that the recurrent budget is always 100+1 per cent implemented but the capital budget is never implemented above 40 per cent. What will have been new is if the House members are insisting that since capital budget provision has not always been fully implemented, the total budget should be scaled down to a level where it will be fully implemented.
If the House members were altruistic in their action they should have said that the amount provided for entertainment for members should be scrapped, they should have insisted that since civil servants are paid, there should be no provision for office entertainment. They also should have removed from the budget all the non essential provisions of the budget. This can only happen if they have the capacity and will power which they lack.
More troubling is the provision of N150 billion for National Assembly. Since 2010, NASS has been allocating N150 billion to itself. This is now a matter of right which cannot be changed by macroeconomic fundamentals or the expressed wishes of Nigerians. At the moment both executive and the legislative arm of government lack the political will to lead by example by reducing their perks of office.
The Executive arm has a lot of padding up in the budget that should not escape the eagle eyes of experienced and capable legislators. What is the President doing with several aircrafts in the Presidential fleet? These aircrafts are maintained with public funds. What is a minister doing with fleets of cars in a convoy? Not to talk of bullet proofs cars. What should an aide to a minister, Governor or any public office holder be doing with fleets of cars maintained with tax payer’s money? Disaggregating capital expenditure between administrative and developmental capital, the picture that emerges over the years is that up to 30 per cent of capital expenditure has been dedicated to administrative capital such as cars, office buildings for MDAs, furniture and equipment. This has narrowed the band of capital expenditure that directly impacts on the citizens. It is this abuse of office that Nigerians want stopped.
