• Delay poses reputational challenge to govt, says Uba
• States await FG’s revenue parameters
• ‘We don’t need directive from finance ministry to prepare budget’

The failure of the executive arm of government to submit the 2025 to 2027 Medium-Term Expenditure Framework (MTEF) to the National Assembly may significantly affect the country’s fiscal plan for 2025.

The delay may force the Federal Government to push forward the budget cycle beyond the January take-off time.  Sources at the Budget Office told The Guardian at the weekend that the adjustment is dependent on President Bola Tinubu who is yet to communicate clearly when he hopes to present the document to the National Assembly to kickstart the rigorous legislative process.

Section 11(1)(b) of the Fiscal Responsibility Act 2007 mandates the Federal Government, not later than four months before the commencement of the next financial year, lay before the National Assembly, an MTEF for the next three financial years. – 2025, 2026 and 2027 in this case.

The January-December budget cycle is likely going to be breached too as there is little time between now and the end of the year for budget presentation, scrutiny (budget defence), passage, and the presidential accent.

However, sources at the Budget Office have downplayed the consequences, insisting that the uncertainty will not hurt the economy or disrupt the fiscal process adversely.

A source familiar with budget preparation told The Guardian that the Office does not wait for directives from the Ministry of Finance budget and does not wait for ministerial directives to execute its duty.

“Preparation of the yearly budget is an ongoing process. The end of one budget cycle is the beginning of the next. That the Minister of Budget and National Planning has not made any pronouncement on the 2025 budget does not mean the Budget Office is idle and waiting for a directive from the ministry before doing its job. The needs of various government agencies, parastatals and departments are submitted to the Budget Office by officers who are detailed to do so.

“The only thing that the Budget Office is unsure about is when the budget will be presented to the National Assembly. As of today, we are not sure when that will happen. It is also very clear that the exercise is late this year,” the source explained.

READ ALSO:2025 Budget: Reps ask Tinubu to urgently submit MTEF

On whether the Federal Government will be able to implement the January take-off date for the 2025 budget circle, the source expressed pessimism about the possibility, saying: “I am not sure that can happen. Considering that the National Assembly will have to invite various ministries for budget defence and all the drama that normally follows such an exercise, I don’t think that the lawmakers will be able to pass the budget before the end of the current year”.

There are fears that the Federal Government may continue implementing the 2024 budget into 2025, a reason it is not in a hurry to present the 2025 budget estimates.

The delay has grave implications for businesses as well as state governments who are waiting on budget parameters to make informed economic decisions and funding estimates.

A development economist and certified public accountant, Prof. Chiwuike Uba, thinks that the fate of the 2025 budget may be hanging in the balance until the MTEF is presented.

His words: “The 2025 budget cannot be presented to the National Assembly without the lawmakers approving the 2025 to 2027 MTEF. I recall that around October this year, the National Assembly called on the executive arm of government to present that document to them. As of today, I have not read where the National Assembly has debated and approved that document. Except this is done, the budget presentation cannot happen because MTEF forms the basis for the 2025 budget.”

The economist observed that the FG is already in breach of the law, especially the Fiscal Responsibility Act (FRA) 2007.

“Currently, the executive has breached the relevant section of the FRA and the annual budget calendar circle that requires the executive to present the budget four months before the next fiscal year. If the executive presents the budget now, there will not be enough time for the legislature to do a thorough job. They need at least two months to do a proper scrutiny of the budget,” he noted.

“For a country that is touring the world in search of foreign direct investments (FDIs), it is not a good option to engage in inappropriate budgets. Toeing this line is self-inflicting injury”, Uba submitted.

He said: “As we speak, the Federal Government is still implementing some aspects of the 2023 budget in 2024. What I envisage is that having gone through the process this year with nobody raising an eyebrow, the executive could be emboldened to do the same this year.

“I see a situation where in 2025, the Federal Government will go back to the National Assembly and continue to implement the 2024 budget as though we are still in 2024. It is not a good thing that we are implementing the 2024 budget in 2025. What the law provides is that the executive can spend out of the preceding year’s budget for a reasonable number of months, but we have been implementing the 2023 budget up to now. This practice not only poses a reputational risk to the government but also budget credibility issues.

“There is no doubt that variation, though an acceptable practice, also harbours corruption which encourages public officers to push the budget circle beyond recommended timelines. This also poses a reputational risk to Nigeria as a country.”

On how budget estimates affect the economy, Uba explained: “The Federal Government, through the budget, is expected to fix some ceilings and projections such as inflation, oil production, targets, revenue, exchange rate, and projections, etc. As things stand now, it is difficult for the government to make those projections. Those ceilings are hibernating because there is no budget.”   Because most businesses rely on government patronage, delays in budget presentation could lead to economic contraction.

“Indeed, most state governments are yet to present their MTEF to their various state legislative houses. The reason for this might not be divorced from the fact that the Federal Government has yet to present the MTEF. States need to present their MTEF for approval as well because the Federal Government determines most of the fundamentals, such as exchange rate, revenue, and inflation rate target for the year among others”, he said.

A retired staff of the Central Bank of Nigeria (CBN), Yunana Bature, said as a summary plan for income or revenue and expenditure for a given period, budgets require early preparation, presentation, review and approval.

“In our case, the constitutional requirement is for the President to formally present the budget to a joint session of the National Assembly and thereafter the various chambers will scrutinise the document separately, pass it and jointly reconcile the bill before sending it for the president’s assent to an act,” he said.

Bature argued that given the various important treatments that will be given to the document, the need for its early presentation is crucial to the success rate. He also agreed that all the major players in the Nigerian economy are keenly waiting for the national budget to fine-tune their plans.

On his part, an investment banker, Tolulope Alayande, submitted that the late presentation of a national budget indeed has significant impacts on the economy, affecting government operations, business planning, investment and overall economic stability.

“There are government projects and programmes that rely on timely budget approval for funding, especially capital projects such as roads and hospitals. When budgets are presented late, funds are not allocated on time, causing delays in infrastructure, health, education, and other public projects. There is no doubt that this can slow down economic growth, as public investments often stimulate economic activity, create jobs, and improve infrastructure,” he said.

For a country whose currency is at an all-time low, Nigeria cannot afford to engage in processes that are deemed counterproductive to growth as investors’ confidence can easily be eroded, he said.

He held that investors, both local and foreign, view the budget as a key policy document outlining government priorities, spending plans and fiscal stability. Hence, it must be taken seriously.

Alluding to Uba’s position, Alayande agreed that businesses often depend on government budget details to plan their investments, expenditures and pricing and that a delayed budget makes it difficult for the private sector to align with government priorities or anticipate changes in taxes, tariffs, and spending.

Mohammed Ande, who is a retired banker, also maintained that a delayed budget presentation is injurious to the government itself. His argument: “Delays in budget presentation can also affect the government’s revenue collection plans. For instance, if new tax policies or increases are proposed in the budget, these cannot be implemented until the budget is approved. This can lead to lower-than-expected revenue collection for the government, affecting its ability to finance critical programmes and potentially increasing the budget deficit.”

He cautioned that late budget presentation can create a ripple effect that impacts nearly all aspects of the economy, from government spending and investor confidence to inflation, borrowing costs and funding of the social sector.