The Lagos Chamber of Commerce and Industry (LCCI) has said that the delay in passing the 2018 budget may drag the economy into a state of inertia and economic decline.
This, according to the LCCI was also a threat to achieving the countryâ€™s Economic Recovery and Growth Plan (ERGP) targets and Nigeriaâ€™s goal of becoming one of the top 20 economies by 2020.
This was revealed in a report signed by the Chamberâ€™s Director General, Muda Yusuf and obtained by THISDAY.
According to the LCCI, if funds for critical projects are not disbursed on time, the tempo of economic activities might be reduced.
It added that capital expenditure such as infrastructural development, construction work and payment of contractors would also be affected. â€œThis is especially of concern when these funds are meant to be channeled towards sectors that improve the ease of doing business, such as transportation and electricity.
â€œPerformance of these sectors is correlated with the success of Nigerian businesses, which are key players in the effort to combat the countryâ€™s high unemployment rate.
â€œIt also affects private sector operators that depend on the budget to plan their activities for each fiscal year. Delay in passing the budget therefore slows down their activities with negative economic consequences,â€ the Chamber stated.
LCCI also argued that slow provision of critical infrastructure needed to boost industrial activity negatively affects the countryâ€™s ability to export locally made products, and therefore reduces revenue and foreign exchange earnings from non-oil exports.
â€œThere is also the issue of inadequate absorptive capacity as the country may not be able to spend so much money in such little time. This may result in dislocations in the macro economy,â€ it added.
The Chamber however, suggested the way to end the countryâ€™s perennial budget delay.
â€œGoing forward, the executive order of May 2017 by the Vice-President Professor Yemi Osinbajo, which placed emphasis on the timely submission of the annual budget estimates of MDAâ€™s, needs to be strictly adhered to.
â€œThe executive order directs all federal government MDAs to submit their schedule of revenue and expenditure estimates for the next three years to the Minister of Finance and that of Budget and National Planning on or before the end of May of every year. It also directs the MDAs to forward their annual budget estimates to the two Ministers on or before the end of July every year.â€
On the 16th of May 2018, the National Assembly passed a budget of N9.12 trillion for the 2018 fiscal year. This represented a six per cent increase over the N8.61 trillion budget proposal that was presented by President Muhammadu Buhari on the 7th of November 2017 before a joint session of the National Assembly.
It also represents a 22.6 percent increase over the N7.44 trillion appropriated in 2017. The fiscal operations of the 2018 appropriation are to result in a N1.95 trillion deficit, amounting to 1.73 per cent of GDP which represents a N60 billion reduction compared to the 2018 proposal by the Executive arm of government (with a deficit of 1.77 pe rcent of GDP) and N450 billion reduction compared to the 2017 budget where the deficit was 2.61 per cent of GDP. This reduction in deficit is in line with the ERGPâ€™s objectives.