2019 budget proposal as proverbial ‘wait and see’
One of the major issues fuelling Nigeria’s development challenges has been identified as its budget, manifested in the processes, quality and the will to implement capital budget items. Experts say these have given way to corruption, bred by alleged fictitious, duplicated and ambiguous items, extra-budgetary expenditures, revenue leakages and failed implementation of capital votes.
In the 2019 budget proposal, like the past years, there is still high suspicion that the menace lurks around, despite a raised optimism on a positive outcome from the economic document.
An economist, Martins Elenwo, told The Guardian that the problem of the country is not much about documents’ contents, but the will and patriotism to translate the contents in totality to reality.
“Otherwise, tell me why a N3.5 trillion recurrent non-debt expenditure for 2018, will be fully implemented, but a N2.3 trillion capital expenditure will be difficult to implement. Even when there are claims of implementation, government will find it difficult to list projects and the amounts spent on them publicly,” he said.
A Nigerian knowledge institution, Centre for Social Justice (CSJ), said the presentation of the 2019 Federal Budget towards the end of December by President Muhammadu Buhari, is a welcome, despite being a worse record in recent years.
Positives
“It is welcoming that there is emphasis on the completion of existing capital projects instead of starting new ones and abandoning the existing ones. These would lead to faster completion of capital projects,” the Lead Director of CSJ, Eze Onyekpere, said.
There is also the inclusion of the expenditure plans of larger Government Owned Enterprises (GOEs), worth N275.88 billion, as well as bilateral and multilateral-tied loans at N556.02 billion into the 2019-2021 Medium Term Fiscal Framework. This is expected to improve comprehensiveness and transparency of the overall expenditure plan.
The President also spoke of plans to continue the expenditure on Social Intervention Projects (SIP), Presidential Amnesty Programme in the Niger Delta and the North East Intervention Fund, which would be crisis containment strategy.
The recapitalisation of the Bank for Agriculture and the Bank of Industry with the sum of N15 billion and N10billion for subsidising interest rates for Small and Medium Scale Enterprises, in a bid to pave way for single digit interest rates at the bank of Industry are welcome developments. However, the sums for the foregoing could have been increased for greater economic impact.
It is also positive for the earmarking of one per cent of the Consolidated Revenue Fund, amounting to N51.22 billion for the Basic Health Care Provision Fund. However, going by previous experience, a commitment to full disbursement of the Fund is needed.
“Seeing these to a conclusive point is rather important than mere proclamation and documentations. This is where successive governments of this country have failed and for me, like many millions of other Nigerians, we will be waiting to see,” Elenwo added.
Downsides
For Omale Omachi Samuel of the Centre for Social Justice, it is doubtful whether 2019 budget will make a difference, considering the late presentation and being an election year, when the whole energy and resources will be deployed to politics.
“It is obvious that the executive has prepared the grounds for the continued failures. The inability of the Federal Government to stick to the legal fiscal calendar will continue to rob Nigerians of the benefits of workable and efficient budget,” he added.
Buhari has refused to sign amendments that propose a new sub-section that gives timeline to National Assembly and State Houses of Assembly to pass budget for the incoming year before the end of the financial year in which the budget estimates is presented.
It is not inspiring that after four years of consistent campaign and claims on diversification, the non-oil revenue, comprising Company Income Tax, Value Added Tax, Customs and Excise and Federation Account Levies, is projected much-lower than oil revenue. At 53.36 per cent of projected revenue, oil revenue is dominant.
The percentage may increase as most of the non-oil components, going by previous experience, may likely underperform. For instance in 2017, independent revenue was projected at N807.57billion but only the sum of N295.29billion came in at the end of the year. As at half year of 2018, independent revenue had underperformed by 48.2 per cent.
With regard to fiscal transparency and accountability, Onyekpere noted: “It is not clear whether the N203.38 billion recovered loot is already in the bag or being expected, which should be clarified by the fiscal authorities. If it is an expected sum, then it should not be made a revenue source, as there is no certainty that it will be realised. It should only be appropriated when it has already been realised through a supplementary appropriation.
“The Federal Government has been silent on the trillions of Naira accruing to it as stamp duties over the years. Nigerians suffer deductions from their bank accounts and the money seems to have been lost in a black hole as no one accounts for it. At a time of poor revenues, the country can ill afford this humungous waste.”
The $1billion (N305 billion at official exchange rate) subsidy on Premium Motor Spirit (PMS), now known as “under-recovery” by the Nigerian National Petroleum Corporation for 2019 is seriously unsettling. Though the renaming of subsidy with “under-recovery” is still controversial, if the publicly reported figure of over N2billion daily subsidy is true, then there is a “loading” disaster.
The claims of daily consumptions of fuel by NNPC have become confusing and fuelling fears over the $1billion provision. During the years of six per cent economic growth, NNPC said Nigeria was consuming about 30m litres daily. During the recession and post recession, when many companies closed down, jobs lost and the economy greatly slowed down, NNPC claims that Nigeria is consuming between 60-65million litres per day. Government must resolve this seeming discrepancy.
A preliminary review of the 2019 appropriation bill by CSJ, faulted capital expenditure plan at 23 per cent of the total budget, especially as previous experience indicates that the capital vote is very poorly implemented.
For instance, out of the 2018 capital vote of about N2.87trillion, only N820.57 billion had been released as at December 14, 2018, but the President was, however, silent on how much was cash backed as at that date.
It is therefore not sufficient to make proposals, which may not be followed through at the end of the day. It is also imperative for the administration to ensure that the bulk of the capital expenditure is developmental, rather than administrative. This is the only way it can have a direct impact on the majority of citizens.
National Assembly is expected to do a thorough vetting of the proposals before their approval and forwarding for presidential assent and ensure that revenue projections are based on empirical evidence, trim budget expenditure to be in harmony with realistic and realisable revenue projections. It should be in harmony with available resources.
Source:https://samueljackson12.blogspot.com/2019/01/2019-budget-proposal-as-proverbial-wait.html
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