An Unpleasant Story of 2018 Budget

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There are strong indications that it may be impossible to pass the 2018 N8.612 trillion Appropriation Bill before the end of the year, writes Damilola Oyedele

The executive arm of government has made it clear that it wants to restore the nation’s fiscal year and budget calendar to January-December as against the current practice where budgets are sometimes signed in June, as was the case with the 2017 N7.3 trillion budget. But the hopes that the 2018 N8.621 trillion Appropriation Act would be passed before the end of this year, which is less than 30 days away are dashed by the day. Several factors lend credence to this.

For starters, the budget was presented to the National Assembly on November 7, 2017. Normally, the budget process at the legislature takes a minimum of three months. Perhaps because of the need for expediency in this instance, it may be compressed to two months. It would therefore have been close to the end of January 2018 before it would have been passed (lawmakers would embark on Christmas/New Year recess).

There was however a hitch even before the budget estimate was laid by President Muhammadu Buhari. The 2018-2020 Medium Term Expenditure Framework /Fiscal Strategy Paper (MTEF/FSP) was presented just few weeks before the budget estimate was laid. Procedurally and practically, MTEF ought to have been passed, and then its assumptions used to prepare the budget.

Delay in Passage of MTEF

As at Thursday, the National Assembly was yet to approve the assumptions of MTEF. The assumptions which formed the basis of the 2018 N8.612 trillion Appropriation bill is based on benchmark oil price of US$45 per barrel, oil production estimate of 2.3 million barrels per day, including condensates, exchange rate of N305/US$ for 2018, real GDP growth of 3.5 per cent and inflation rate of 12.4 per cent.

Many lawmakers during the budget debate, which held in both chambers last week, said the assumptions were unrealistic, with calls for the increase in the benchmark from $45 to about $50.

Saraki particularly questioned the oil output projection of 2.3m barrels per day, where the country had 1.9mbpd in 2017. He explained that in the last two months, the Federation Accounts Allocation Committee (FAAC) has not been able to put any money in the Excess Crude Account, even though oil prices have been as high as $60 per barrel.

“The only reason must be that oil production is much less than what we are budgeting for. I think this is an area we need to look at seriously. It must be that the level of theft and vandalism that are still going on is very high and it is not being properly reported. I think we at the National Assembly have a role to play,” Saraki said.

Both chambers on Thursday agreed to reschedule the consideration and passage of the document to Tuesday, following fears that the Organisation for Petroleum Exporting Countries (OPEC) would cut Nigeria’s output to 1.8 mbpd.

It therefore translates that the 2018 appropriation act cannot pass through second reading and be committed to committees until after MTEF has been considered and passed.

Partial Blame on the Executive

Aside not presenting the MTEF and budget estimate in ample time to meet the anticipated December deadline, there is more blame on the part of the executive arm of government.

Speaker of the House of Representatives, Hon. Yakubu Dogara, in his speech when the budget was laid on November 7, 2017 indicated that the preparations for the budget estimates might have been shoddy.

“Once again, let me place it on record that the 2018 Budget preparations suffer from inadequate consultations between the MDAS and various over-sighting committees of the National Assembly. Consequently, one can only hope and pray that it does not lead to delay in the consideration and passage of the budget,” he said.

More recently, the Senate cautioned that the new trend by heads of Ministries, Departments and Agencies to deliberately shun invitations from its constituted committees could slow down the 2018 budgetary process.

In a statement by its spokesman, Senator Sabi Adullahi, the Senate said Chief Executives of critical agencies such as the Nigeria Customs Service (Col. Hameed Ali (rtd), Nigeria National Petroleum Corporation (Dr. Maikanti Baru), Central Bank of Nigeria (Mr. Godwin Emefiele), the National Bureau of Statistics (Dr. Yemi Kale) and others, did not honour the invitation of the Senate Committee on Finance and Appropriation to defend the 2018-2020 Medium Term Expenditure Frame work.

Such attitude, the Senate said, would not help their principal’s, (President Muhammadu Buhari) bid for the passage of the 2018 budget before the end of the year, adding that committees are hampered when the heads of these critical agencies do not show up, or when they send representatives, who cannot adequately respond to questions put before them.

The Senate spokesman said the upper chamber of the National Assembly decided to make the attitude public now, so it would not later be accused as an institution of slowing down the passage of the budget.

“For the budget, what we are trying to say is that it is serious enough for all of these chief executives to honour the National Assembly by their presence so that we can look at these issues critically. In doing so, they will be honouring the request by their principal and our overall President and Commander-in-Chief, President Muhammadu Buhari,” the spokesman added.

The Neglect of Procedure

For Hon. Kingsley Chinda (Rivers PDP), preparing and submitting the budget estimates, without an approved MTEF is procedurally wrong, adding that it is not possible for the budget to be passed before the end of 2017.

In an extensive interview with THISDAY, Chinda, who is Chairman, House Public Accounts Committee (PAC), said the budget process would suffer setback if there was a disagreement between both arms of government on MTEF.

Chinda, therefore, argued that the National Assembly accepted to discuss both MTEF and the budget proposal at the same time, due to the yearning of Nigerians who want the budget passed.

“The MTEF ought to have been passed, which would give the executive arm the benchmark and thresholds to use for the proposal which they want to lay before the National Assembly. But they went ahead and prepared the budget without MTEF. I have never seen any year where there is complete agreement between the two arms, unless there were prior discussions and meeting before the MTEF is prepared, which I do not think was the case in this instance.

“So, when the MTEF is passed, and it is not in tandem with what the executive used, it would affect the entire budget. That is one of the reasons you have cases of two budgets appearing, because if you prepared your first budget, without MTEF being passed, the implication is that you have to tinker with your budget in line with the passed MTEF, then you have two documents. So, it would not be possible to critically look at and pass the 2018 budget before the end of the year, unless we want to pass it the way some state assemblies pass budgets,” he added.

Potential conflicts in the two documents could have been avoided if the executive had waited just a few weeks to allow for the passage of MTEF, before presenting the budget, he said, explaining further that any conflicts would have to be sorted by harmonisation between both arms, which would cause further delays.

The lawmaker said the N8.612 trillion budget estimate, is an unrealistic one, as the country has a record of low implementation of budgets. He advised that a budget figure of N4 trillion or N5 trillion is much more realistic, and more achievable.

Chinda, also questioned the projection that the non-oil sector, which is not fully diversified, could bring in over N4trillion, while Nigeria’s main source of revenue, oil, would bring in about N2 trillion.

“How can you present a budget in Nigeria today, where you would tell us that the non-oil sector revenue would double that of the oil sector? That is insincerity. It is not realistic. It could happen in the future, but not today,” he said.

Conclusion

From all indications, it is crystal clear that the appropriation act would not pass this year. Both arms of government would do better to target probably February or early March, as unnecessary rush could result in a contentious budget. The budget is a piece of law, and must be subjected to the nitty-gritty of the lawmaking processes.