2017 budget implementation: Time is of the essence
On May 11, after what seemed an age, the National Assembly finally passed the 2017 Appropriation Bill effecting an upward adjustment in the proposed spending plan submitted by the President. Considering that the Legislators tinkered with the aggregate expenditure ceiling raising it from N7.298 trillion proposed by President Buhari on December 14 2016 to N7.441 trillion, will the Acting President give or withhold assent? If by June 18, a few days away, the 2017 Appropriation Bill transmitted to the President on May 19 is not assented to by the Acting President, then the unprecedented will happen: according to Section 59 (4) of the 1999 Constitution, ‘’where the President, within thirty days after the presentation of the Bill to him, fails to signify his assent or where he withholds assent, then the Bill shall again be presented to the National Assembly sitting at a joint meeting, and if passed by two-thirds majority of members of both houses at such joint meeting, the Bill shall become law and the assent of the President shall not be required.”
The mere thought of this scenario playing out is scary not least because any face off between the Executive and the Legislature will spell doom for the implementation of the 2017 budget. By the provisions of the 2016 Appropriation Act, the 2016 budget expired on May 5 2017 having been assented to by the President on May 6, 2016. So, it is evident that the 2017 budget of ‘’recovery and growth’’ is already running behind schedule like virtually all the ones before it since the return to civil rule in 1999.
The negative impact of budget delays cannot be overstressed especially on an economy struggling to exit a recession. In the absence of any approved budget, Section 82 of the Constitution only allows the President to ‘’authorise the withdrawal of moneys in the Consolidated Revenue Fund of the Federation for the purpose of meeting expenditure necessary to carry on the services of the Government of the Federation for a period not exceeding six months or until the coming into operation of the Appropriation Act, whichever is earlier’’. The implication of this is that without an approved budget, no capital expenditure is undertaken and so not much happens to trigger economic activities and help grow the economy. This creates fiscal uncertainties and so investors choose to sit on the fence.
The delay in the approval and implementation of the 2017 budget is negatively affecting both local and foreign investments in the country. Recent data from the National Bureau of Statistics indicate that the total value of capital imported into Nigeria in the first quarter of 2017 was estimated to be US$908.27 million. It was the second lowest value recorded since 2007 and lower than the value of capital imported in the previous quarter by as much as 41.36 percent. There was also a significant change in the composition of Portfolio Investment as Portfolio Equity, usually the largest component, declined from US$176.44 million in the previous quarter to US$101.99 million, a fall of 42.19 percent. This should not come as a surprise as the delay in the implementation of the capital component of the 2016 budget and the late passage of the 2017 budget proposals all combined to dampen investors’ confidence.
Indeed, since the commencement of the fourth republic in 1999, the country has not implemented any capital budget fully within any fiscal year- no thanks to budget delays. The government should be concerned about how to put an end to this seemingly intractable challenge. Without a doubt, the recent Executive order issued by the Acting President to the effect that ‘’all agencies, whether or not listed in the Fiscal Responsibility Act, shall, on or before the end of July every year, cause to be prepared and submitted to the Minister of Finance and the Minister of Budget and National Planning their annual budget estimates’’ is one step in the right direction. However, this directive only applies to the Executive arm. Budget proposals could still get stuck in the National Assembly even after the Ministries, Departments and Agencies have complied with the Executive order ensuring timely submission to the Legislative arm of government.
The conspicuous loophole created in Section 11 (2) of the Fiscal Responsibility Act 2007 is a potential source of friction between the Executive and the Legislature resulting in avoidable budget delay. This section requires that the medium-term expenditure Framework for the next three financial years, which should be submitted by the federal government not later than four months before commencement of the next financial year, ‘’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’’.
Now, has this section given the lawmakers the power to increase the aggregate expenditure proposal by the President as is the case with the 2017 Appropriation Bill, or simply make ‘’modifications’’ within that ceiling? Without a clear interpretation of this section of the FRA, the end of budget delays may not be in sight. What is required therefore, beyond an Executive order is a Budget law similar to the US Congressional Budget Act 1974, that clears this fog as well as provides clarity to Section 81 of the constitution which provides that ‘’ the President shall cause to be prepared and laid before each House of the National Assembly at any time in each financial year estimates of the revenues and expenditure of the Federation for the next financial year.”
In his May 29 Democracy Day message to Nigerians, the Acting President, Yemi Osinbajo admitted that of the three challenges of insecurity, corruption and economy which the Buhari administration promised to tackle, ‘’the economy has proven to be the biggest challenge of all’’. This is a fact considering that the National Bureau of Statistics reported that the economy contracted for the fifth consecutive quarter by 0.52 percent in the first quarter of 2017.
Notwithstanding the improved outlook for the economy on the back of enhanced government revenue, the bullish trend in the equities segment of the capital market in recent time, the gradual retreat in headline inflation, the relative stability in the naira exchange rate across all segments of the foreign exchange market on account of accretion to foreign reserves and improvements in foreign exchange supplies, any further delay in assenting to the 2017 Appropriation Bill and its implementation could reverse the modest gains recorded thus far and is capable of stalling the implementation of the Economic Recovery Growth Plan.
Therefore, in order to sustain the momentum of recovery and restore confidence in the Nigerian economy, the government must hit the ground running with regard to the implementation of the 2017 budget since time is of the essence.
Uwaleke is head of Banking & Finance Department at Nasarawa State University, Keffi
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