Acting President Yemi Osinbajo signing the 2017 Budget into Law while (from left to right), National Assembly Liasion Officer to the President, Senator Ita Enang; Minister of Budget and National Planning, Senator Udoma Udo Udoma; Chief of Staff to the President, Abba Kyari; and Minister of Finance, Kemi Adesoun, look on at the State House, Abuja... recently

Kunle Aderinokun

As a fallout of signing of the 2017 budget into law by Acting President Yemi Osinbajo, the Executive and the National Assembly have agreed to return the Federal Government to a January–December budget calendar, starting from the 2018 budget.

To this end, the executive has made a commitment to submit 2018 budget to the National Assembly so that it can be passed into law before the end of 2017. This may not be unconnected with the effort to ensure timely and effective implementation of the budget.

While this is not the first time a timeline would be set for the appropriation bill to be signed into law before the end of December and implemented from January, executive-legislature disagreement or wrangling usually defeat the objective. The January-December calendar has been scheduled a number of times before and during the current administration.

For instance, during the administration of former President Goodluck Jonathan, the government had stipulated submission of the appropriation bill by September for deliberation and early passage into law.

Besides, last year, the senate committee on reforming the budget process in Nigeria proposed a budget calendar that would ensure that the President assents to the appropriations law by the third week of December while the MTEF is submitted in the second week of July as the first step in the budget process.

The decision to return to the January- December calendar has therefore attracted the attention of economic analysts who see it as a way to faithfully comply with the budget and ensure adherence to the fiscal policy.

According to the CEO, Nigeria Competitiveness Council of Nigeria (NCCN), Matthias Chika Mordi, it is a positive development that brings some certainty to fiscal policy.

Pointing out that it is instructive that we have crossed the halfway line in 2017 while waiting for the budget, Mordi stated that, “it begged the question on budget fidelity: Does the FGN comply with the budget?

“The budget is a statement of intent and requisite fiscal discipline in terms of compliance is equally important. On the budget itself, based on the available summarised headlines (we await the detailed budget) there is an encouraging but insufficient nominal increase in CAPEX, burdensome debt ratio (in the context of increased borrowings and deficit financing), and a reflationary theme that reflects recession reversal.

“If the absolute figures are weighted for inflation or converted to US Dollar terms, the CAPEX increases are marginal or an actual contraction. Another source of concern is the oil price benchmark. We consider $50 to be a ceiling for oil prices over the next two years. Prices are likely to oscillate in the forties in cadence with US supply increases. It will be prudent to pick a lower benchmark price,” posited, ….who is also the CEO of Accender Strategies.

Also reacting, Executive Director, Corporate Finance, BGL Capital Ltd, Femi Ademola, noted that, “The normal fiscal year in Nigeria is from January to December; hence the ideal is for the budget to also cover the same period.”

This, Ademola said, had been an issue in Nigeria especially since the return to democracy in 1999 when the separation of executive and legislative responsibilities was restored. “This also necessitated the inclusion in the economic blueprint of the President Jonathan’s administration that annual budget will be presented to the National Assembly by September/October of every year. This was to ensure the passage of the budget on/before the commencement of the fiscal year in January. So a return to January-December budget cycle is very apt.”

“In addition to meeting the government budget Plan, the cycle helps businesses that depend significantly on government plans and budget to make seamless plan of their activities early enough in the year.

A stable budget cycle will also aid economic progress through certainty of expected actions and ease of raising needed funding for projects,” he said,

To the analysts at Eczellon Capital Ltd, the decision to return the Federal Government to a January-December budget calendar was laudable and appropriate. In the same vein, many countries of the world operate a January 1-December 31 budget calendar.

They stated that, “The current budget calendar had been characterised with late/incomplete execution of capital projects triggered by delayed commencement of the budget process. Thus, most capital items in the budget which might have been impactful on the economy usually get the least percentage of implementation, whilst recurrent items with minimal impact get complete execution.”

The analysts further said, “We believe that the January 1-December 31 budget calendar would foster swift and complete implementation of capital and recurrent items in the budget.”

“The new budget calendar would imply a shift in revenue and expenditure reporting. Hence, there will be slight changes in the reporting of revenues from taxes and other sources of income to January 1- December 31. Definitely, the accounting books will have to be changed to reflect the new budget calendar proposed by the Federal Government.

Also, the new budget calendar will imply that government may merge revenues with core business in the country as more corporate organisations run a January1-December 31 budget calendar.”