• Already In Default Of The Fiscal Responsibility Act Provisions
• Officials Maintain Sealed Lips
WHEN in September, The Guardian engaged Nigeria’s Vice
President, Prof. Yemi Osinbajo, in a roundtable on Nigeria’s
economy, focusing largely on the President Muhammadu
Buhari’s Economic Blueprint and the 2016 Federal Government
Budget, he reeled out plans by the administration to rein in the
much hyped recession threat raised by the Central Bank of
Nigeria (CBN) Governor, Mr. Godwin Emefile.
Osinbajo equally spoke on how the 2016 Budget preparation,
which he said, had been flagged off by the National Planning
Commission, in conjunction with the Budget Office of the
Federation and the Federal Ministry of Finance. He was
unequivocal in his statement that the budget would check
wastage in public finance management through the novel zero
budgeting strategy so that scarce resources can be deployed to
providing services to lift millions of Nigerians from the poverty
trap.
The Vice President revealed that the Medium Term Expenditure
Framework (MTEF), which is the precursor to the Budget itself,
as well as the Fiscal Strategy Paper (FSP), which details the
implementation plan of how the projections for the spending
plan would be actualised, were soon to be ready for
presentation to the National Assembly for approval, from
where the Budget proper would be anchored.
The Vice President said: “What we are doing at the moment is
on the MTEF in particular and we expect that it would be
submitted to the House of Representatives in the National
Assembly very shortly. We also have a lot of ministries already
working and we would be sending guidelines to them for the
zero budget process.”
However, two months after those declaration and nearly one
month after the inauguration of the Federal Executive Council,
the country is yet to have an MTEF nor the FSP in line with the
provisions of the Fiscal Responsibility Act (FRA 2007), which
prescribed that the two instruments must be produced four
months to the beginning of a new fiscal year (that is August)
and secure approval of the National Assembly before the
Federal Ministry of Finance or as it is currently constituted, the
Federal Ministry of National Planning and Budget can proceed
to produce a budget based on the approved MTEF.
But as at Friday last week, neither the Budget Office of the
Federation nor the Ministers of National Planning Commission
and Budget have been able to come up with any report on
MTEF. Several visits to the two offices, including the Federal
Ministry of Finance, met brick walls, as none of the officials
were willing to comment.
While the Minister of Finance, Mrs. Kemi Adeosun, and the
new Permanent Secretary in the ministry were said to be out of
Abuja, the Director General of the Budget Office of the
Federation, Mallam Aliyu Yahaya Gusau, declined comment on
the matter.
One of his aides told The Guardian that his boss would not talk
on it, “because they are still meeting on the issue. He advises
that you should exercise patience until they have concluded on
the matter.”
At the National Planning Commission headquarters on
Thursday evening, the two ministers were not available.
Attempts to get the Permanent Secretary to comment were
thwarted, as an aide referred our reporter to the Ministry’s
Director of Finance and Accounts, who it was said to be in the
know of the progress. But unfortunately, the Officer too had
already left the Office.
From all indication, given the pattern and space with which the
Buhari Economic Team member are going, they may not
eventually adhere to the provisions of the 2007 FRA, which
specifies the procedures to be adopted in the preparation of a
Budget, which included wide consultation with stakeholders
such as the civil society organisations for inputs into the
document to enrich it and make it representative.
The Act provides that such consultations shall be open to the
public, the press and any citizens or authorised representatives
of any organisation, group of citizen, who may attend and be
heard on any subject matter properly in view.
For the avoidance of doubt, Part 2 and 3 of the Act , which
deals on the conditions for the production of the MTEF and the
Budget states inter alia :
Medium Term Expenditure
• The Federal Government after consultation with the states
shall –
Not later than six months from the commencement of this Act,
cause to be prepared and laid before the National Assembly,
for their consideration a Medium-Term Expenditure
Framework for the next three financial years; and
• thereafter, not later than four months before commencement
of the next financial year, cause to be prepared a medium –
term expenditure Framework for the next three financial years.
The framework so laid shall be considered for approval with
such modifications, if any, as the National Assembly finds
appropriate by a resolution of each House of the National
Assembly.
The medium-term expenditure framework shall contain:
• A Macro-Economic Framework setting out the macro-
economic projections, for the next three financial years, the
underlying assumptions for those projections and an evaluation
and analysis of the macroeconomic projections for the
preceding three financial years;
A Fiscal Strategy Paper setting out:
• The Federal Government’s medium term financial objectives,
• The policies of the Federal Government for the medium- term
relating to taxation, recurrent (non-debt) expenditure debt
expenditure, capital expenditure, borrowings and other
liabilities, lending and investment,
• The strategic economic, social and developmental priorities of
the Federal Government for the next three financial years,
• An explanation of how the financial objectives, strategic,
economic, social and developmental priorities and fiscal
measures set out pursuant to sub-paragraph (i), (ii) and (iii) of
the paragraph relating to the economic objectives set out in
section 16 of the constitution.
• An expenditure and revenue framework setting out:
• Estimates of aggregate revenues for the Federation for each
financial year, based on the predetermined Commodity
Reference Price adopted and tax revenue projection,
• Aggregate expenditure projection for the Federation for each
financial year in the next three financial years,
• Aggregate tax expenditure floor for the Federation for each
financial year in the next three financial years:
Provided that, the estimates and expenditures provided under
paragraph (D) of this subsection shall be:
• Based on reliable and consistent data certified in accordance
with section 13 (2) (b) of this Act;
• Targeted at achieving the macro-economic projection set out
in subsection (2) (a) of this section;
Consistent with and derive from the underlying assumptions
contained in the Macro-economic framework, the objectives,
policies, strategic priorities and explanations in the Fiscal
Strategy paper;
• A consolidated Debt Statement setting out and describing the
fiscal significance of the debt liability of the Federal
Government and measures to reduce any such liability; and
• A statement describing the nature and fiscal significance of
contingent liabilities and quasi 0fial activities and measures to
offset the crystallization of such liabilities.
Aggregate expenditure ceiling
The estimates of:
• Aggregate expenditure and the aggregate amount
appropriated by the National Assembly for each financial year
shall not be more than the estimated aggregate revenue plus a
deficit, not exceeding three per cent of the estimated Gross
Domestic Product or any sustainable percentage as may be
determined by the National Assembly for each financial year.
• Aggregateexpenditureforthefinancialtearmayexceedtheceilingi
mposed by the provisions of subsection (1) of this section, if in
the opinion of the president there is a clear and present threat
to national security or sovereignty of the Federal Republic of
Nigeria.
In his own intervention, a development economist, Mr. Odilim
Ewegbara, said from 2015 budget’s N4trillion to 2016 budget’s
N8trillion is a welcome development, which left to him, should
be as high as N10tn.
This way, he explained would move from mere consumption
budgeting where over 80 per cent is spent on recurrent to
investment budgeting, where at least 60 per cent is spent
capital projects. Which is mostly in infrastructure will
drastically cut down the current high cost of doing business in
Nigeria associated with high infrastructure deficit and the high
cost of infrastructure to our real sector firms.
Ewegbara spoke more on how government could raise funding
for the expansionary plan: “ First, with Treasury Single Account
fully enforced, government money has now warehoused in the
CBN all its money. This reason alone, makes government
borrowing its own money kept in the country’s commercial
banks at supposedly zero interest, at such cutthroat interest
rates as high as between 13 per cent and 15 per cent as time
past. So, the money wasted in borrowing its own money is now
saved and could be used in bringing down fiscal deficit next
year.”
He added, “one of the ways to both raise tax revenue and give
Nigerians world-class road infrastructure is for government to
reintroduce toll fees on our highways by concessioning most of
the country’s highways along with insisting on e-collection
where 10 per cent of all the toll fees is remitted to government
in in the form of tax. Another source of tax revenue should be
the introduction of carbon tax, where all auto number plates
are renewed annually with a fee based on engineer capacity
and types of automobiles. That too can earn government as
high as $1.2tn annually.”
He noted that removing budgeting from finance ministry is
good for the country, because it now makes those who are
saddled with the responsibility of planning to be the ones to be
saddled with coming up with the country’s budget estimations,
which normally is part of planning. Because they are
responsible for coming up with our short-term, medium-term,
and long-term planning, annual budgeting should be part of
their short-term planning assignments.
In fact, by moving budgeting to planning ministry, government
should expect a thorough process, including possible early
budgeting beginning with setting specific deadlines for budget
presentation, approval, and implementation. This is good
because early among budget benefits include providing an
ample opportunity for lawmakers to exhaustively deliberate on
it and harmonise differences emanating from the two
chambers. Another is the fact that there is enough time for
procurement, implementation, monitoring, and evaluation
planning. High level of transparency accompanies public
participation in budgeting with the needs and priorities of the
citizens fully accommodated, to the extent that by promoting
strategic priorities it also delivers maximum value for money,
along with promoting growth and development.
Besides budget planning, he said the new ministry should be
the one to be saddled with the full responsibility of making
sure that each year’s budget is maximally implemented, which
was lacking in previous governments, because the finance
ministry was overwhelmed with both budgeting and
implementation, along with fiscal policy-making and
implementation, supervision. With budget now domiciled in
the planning ministry, budget should come with clear templates
on monthly cash flows, milestones, and deadlines, which means
the presence of Annual Cash Plans and Disbursement Schedule
as mandated by sections 25 and 26 of Fiscal Responsibility Act
will bring the badly needed fiscal sunshine into budget
implementation in a way that makes abysmal budget
implementation a thing of the past.
In other words, with cash flow template accompanying next
year’s budget, there is no doubt that the weekly Federal
Executive Council (FEC), rather, than being reduced to mere
weekly lobbying ground for discriminatory budget
implementation, becomes truly where national economic
policies and strategies are sharpened and fine-tuned along with
implementation appraisals.
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