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Long wait for 2018 Budget

Long wait for 2018 Budget

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…As OPS laments dire implications for economy

Bimbola Oyesola

When President Muhammadu Buhari, on November 7, last year, presented the N8.612 trillion budget proposal for the 2018 fiscal year to the National Assembly, Nigerians, and indeed the Organised Private Sector (OPS), were excited that the early presentation will fasttrack its implimentation. They had expected that the budget would be passed by the end of December and become effective early in January. Indeed, it was an improvement over the date of presentation of the 2017 budgetary proposals, which was done in December 2016. The Buhari administration had indicated then its desire to  return to the budgetary circle of January to December as opposed to the current system where the budget is passed in the middle of the year.

Regretably, four months after it was presented to the National Assembly, the budget is still a subject of controversy between the Executive and the Legislature. Consequently, it can be argued that the 2018 budget has joined the list of budgets whose passage and implementation run into the following fiscal year due to the various hiccups experienced in the course of its passage.   

Recall that the Senate last week had accused the Ministers and the Ministries, Departments and Agencies (MDAs) of delaying the passage of the bill and  consequently, gave them an ultimatum of seven days to submit details of their 2018 budget proposal.

This is not the first time the Senate is giving such ultimatum, except that, it is threatening to proceed without the input of the remaining MDAs.

Speaking during plenary, Sonny Ogbuoji, who is the Vice Chairman of Senate Appropriation Committee, said the committee was having difficulty harmonising its report on the budget.

But the Vice President and the Minister of Budget, have at different functions exonerated the executive from the accusation.

Yemi Osinbajo, in Lagos, recently said the executive had fulfilled its part by presenting the budget proposals to the National Assembly in the first week of November 2017, and was now waiting for the legislature to pass the budget.

Osinbajo said: “We agreed that we will submit our proposal in good time, and we did that first week of November. The president did so. We fulfilled that part of the agreement. The budget is with the National Assembly. There is very little we can do to control that. That’s the system we have.”

For his part, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, also at an event in Lagos corroborated the Vice President that the executive has done its bit by submitting the appropriation bill in November last year.

He, however, said that his ministry was working closely with the National Assembly, noting that if there were issues, the Budget Ministry will address them. 

In the same vein, the Budget Office of the Federation debunked claims that the 2018 budget has not been passed because some details required for its passage were not submitted.

Ben Akabueze, Director General of the Budget Office of the Federation, in a statement penultimate Sunday, explained that President Buhari at the presentation to the National Assembly (NASS) had laid bare “all the usual details required by the National Assembly to process the budget.”

These details, the statement said, included that of the budgets of all federal MDAs based on the Government Integrated Financial Management Information System (GIFMIS) budget templates.

He, however, pointed out that the Federal Government Budget is distinct from the budget of Government Owned Enterprises (GOEs) and as such any delay in the GOEs providing additional details on their budgets should not affect the early passage of the ‘FGN Main Budget.’

Akabueze said the Budget Office had intervened directly with the affected GOEs to obtain the details in the format requested by the Senate, adding that most of them have since complied with the Senate’s requirement.

Historical perspective

The delay in the passage of the Nigerian budget has gradually become an annual one. 

The year 2000 budget was not signed until May 6, 2000, though it was presented in December 1999. Also, a cursory look at the budgets from 2008 to 2016 showed the same trend:

S/N Yr. of Budget Passed into law

1 2008 April 15, 2008

2 2009 March 10, 2009

3 2010 April 22, 2010

4 2011 May 27, 2011

5 2012 April 13, 2012

6 2013 Feb. 26, 2013

7 2014 May 24, 2014

8 2015 May 19, 2015

9 2016 May 6, 2016.

There is therefore no indication that this year’s budget will be anyway ready earlier than April taking precedence from last year’s experience.

President Buhari, last year, after the budget was passed by the National Assembly, had insisted on a clause by clause examination and comparison of the bill passed by the legislature before assenting his signature. This will surely add more weeks to the delay if followed this year. 

Stakeholders believe as in other advanced countries of the world that the process of the passage of the budget should be seamless and this is supported by the Central Bank of Nigeria (CBN) which stated in one of its publications: “In Nigeria the fiscal year begins on January 1 and ends December 31. There is, however, no time limit for the National Assembly to consider and approve the budget set before it, although there is a time limit for the President. This process starts in June with the issuance of a Call Circular from the FMOF to MDAs to submit their expenditure proposals, which are set within the spending limits. A draft bill is prepared in October by the FMOF and sent to the NASS through the Presidency. Technically, before the legislature’s December recess, the bill could be passed with any agreed amendments. The President could then be able to authorise the bill to become law in January. A clause also allows the President to spend from the previous year’s budget, which has to be within the time limit of six months, although there has to be an awaiting appropriation act for the current fiscal year.”

Implications for the economy

The OPS has stated that the delay is bound to have grave consequences for the economy. The effects, OPS stated, would affect the economic growth, with the attendant job losses.

The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, for instance, said the delays being experienced in the budgetary process would further entrench the vicious cycle of poor budget implementation. 

According to him, the continued delay would affect implementation of the budget, especially the capital component of the budget. 

“The risk is that recurrent spending will be fully implemented while capital projects suffer the usual implementation deficiency.  The delay has implications for planning in both the public and private sectors of the economy. Strategic planning for many organisations takes a cue from the budget structure and the policies that come with it. To the extent that the budget is not in place, uncertainty and associated business risks in the economy are heightened.”

The LCCI boss said the delay would also have negative impact on the nation’s investment base, stating, “this is surely not good for investors’ confidence, either from a foreign investor’s perspective or from domestic investor’s standpoint.”

Going forward, Yusuf called for a better communication between the National Assembly and the executive arm of government. He said, “they need to be on the same page with regard to the fundamental principles of the budget. The ruling party has a role to play in this matter, especially when it has the majority in the legislature.

“It is also necessary to clearly define the boundaries of responsibilities between the executive and legislature in budgetary appropriation to avoid the recurring problem of delays. A judicial pronouncement is necessary to lay the matter to rest.”

The LCCI Director General, however, said the face-off between the two arms could have been responsible for the delay in the passage of the budget as well as the constitution of the boards of MDAs, which, he said, is critical to the smooth and efficient political and economic governance.  

He stated that, “some of the boards are yet to be constituted because of the face-off between the executive and the legislature.  The implications for the country and the economy are far reaching.”

Also commenting on the development, the Nigeria Employers Consultative Association (NECA) lamented that the frequent delay of the budget passage is plunging the economy into a state of inertia particularly in the first quarter of the year.

President of NECA, Mr. Larry Ettah, expressing the views of the association’s governing council on the budget, said, “it appears to have become a tradition in this democratic dispensation for the budget to be unduly delayed.” 

He added: “In December 2016, the President presented the 2017 Appropriation Bill to the National Assembly. However, the National Assembly did not pass the bill until May 11, 2017, almost six months after it was presented. We recollect that President Buhari presented the 2018 budget to our legislators in November 2017.

As at today, there exists an uncomfortable silence from the Executive and National Assembly on the passage of the budget. This recuring delay in the passage of national budgets calls for serious attention as it is capable of slowing down the development of our nation. Moreso, the 2018 budget was supposed to address the significant issues of infrastructure investment and employment generation.

He argued that both the legislative and executive arms of government must mutually agree on a time frame that would ensure that the budget for the following year is passed into law before the end of every current fiscal year, stressing that the 2018 budget should be speedily passed into law.

The Manufacturers Association of Nigeria (MAN), however, warned that failure to pass the budget immediately would make nonsense of Nigeria’s development planning.

The President of MAN, Frank Jacobs, noted that the main anchor of the budget that excited the OPS is the fact that it would focus on infrastructure, but he reasoned that this could not be executed when the rainy season sets in.

“For us in the OPS, we were excited on the infrastructural development aspect of the budget, but construction of roads is only good during dry season but now the rain is almost here and the budget has not even been passed. Climatic condition is what really bother us.”

The MAN President also stated that the delay would have a negative impact on the nation’s Foreign Direct Investment (FDI) as no investor would want to invest where there is no political stability.

“We are looking forward to amicable settlement between the legislative and the executive arms to move our nation forward,” he said.

The post Long wait for 2018 Budget appeared first on The Sun News.

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