Criticisms trail Cross River’s ‘fake’ N1.3trn budget
The N1.3trillion 2018 budget signed into law recently by Cross River governor, Ben Ayade, has come under intense criticism, with analysts describing it as fake and containing a hidden deficit of N1trillion.
The governor had in December, last year, presented the budget to the State House of Assembly after series of postponement. He eventually signed it into law on April 10, 2018, saying: “It is epochal in the history of the state and the nation.
This is the first state to pass the N1trillion mark among states.
The state itself is in continuous gyration and easily agitated. Therefore, we need a stabilising factor, like a budget of this nature, that can change our situation.”
The governor explained that the size of the budget was meant to create room for the warehousing of anticipated investors’ fund, against the backdrop of key projects like the Bakassi Deep Seaport and proposed 274-kilometre superhighway.
“It is a budget that crystallises the depth of our vision into action in the year 2018. It is meant to draw the perspective of a humongous, large, ambitious budget.
It is not enveloped by our purchasing capacity but by the capacity of our thought process. It is designed and tailored to fit our dream,” Ayade said.
He further explained that the choice of a deficit budget was to allow for flexibility, as the state moves to actualise its visionary projects.
According to him, “Deficit budgeting focuses on what you intend to achieve, providing a warehouse mechanism that compensates for a sudden surplus.
If such provisions are not met, if your budget is only limited by your pocket, you have kept aside the intellectual capital, which is a core requirement in budgeting.”
He added: “The deficiency in traditional budgeting has led to the continuous struggle and conflict between budget and its implementation, because dependence on midterm expenditure framework or the strategy paper only allows you to focus based on your proposed income and expenditure, thus creating a misbalance, leading to a distortion of programmes.
A kinetic budget allows me flexibility to dream to the extent that God has given me the intellectual capacity to reach.”
Observers, however, said the budget is a sham, and has failed to meet the requirements of normal processes with realistic input from Ministries, Departments and Agencies (MDAs).
A top civil servant in the budget office who pleaded anonymity said: “How can a governor just come to the House of Assembly and jettison the original budget of about N800 billion we had painstakingly prepared and taken to the House for presentation without any recourse to due process?
What he did was just dump what we had done, bring out a piece of paper from his pocket, and read, announcing the bogus and unrealistic figure of N1.3trillion.
That is not how budget is done. We had no choice but pack what we had done, go back, and reconcile it to meet the N1.3trillion the governor announced.
That was why we had some delay in coming out with the final copy. What the governor presented was just a speech announcing a bogus figure, not a budget.”
He added: “As far as the budget office and the MDAs are concerned, the entire budget is a fluke, given the fact that the 2016, 2017 budgets of N303billion and N707billion were not followed during implementation.
Things were just done haphazardly at the dictates of the governor. You can imagine N707billion was budgeted last year, but performance was abysmally low.
Now, we are budgeting N1.3trillion this year. Is this not a child’s play or a game?”
Also, commenting on the current budget, a fellow of the Chartered Institute of Bankers, Mr. Bassey Ibor, said: “Any budget is given its outlook, assumptions and targets by performance enablers and challenges thrown up by the implementation of preceding estimates.
Such factors would, usually, enable budget preparers to decide to keep the current estimates at the same, lower or higher level than the previous.”
While reviewing the 2017 budget performance, Ibor said: “It is the worst since 1999. Given this abysmal performance of the 2017 appropriation, what should inform the leap of nearly 100 per cent from N707billion to N1.3trillion in 2018? Absolutely nothing.
2018 is an election campaign year when governance is curtailed by nearly 25-40 per cent. No matter the pretentions of political duty bearers, it follows that 2018 would be technically a nine-month year. Again, the assumptions are not different in any significant way from those of 2017.”
He said: “The budget projects a marginal increase of N95billion in 2017 to N113billion in 2018, an increase of N17billion (or 17.97 per cent) under recurrent revenue.
And on the other hand, and very curiously, capital inflows are estimated to skyrocket from N619billion to N1.1trillion, a quantum leap of over N508billion or 82 per cent. The budget, therefore, comes with a technical/hidden deficit of over N1trillion.”
He explained: “The hidden deficit will manifest during implementation and will increase the debt profile of the state. We may go into huge borrowings to continue to hide the deficit.
It is a non-workable budget, because the process of private public partnership (PPP) and for money to come out cannot be this year.
Many investors cannot come in at a campaign year, because they want to watch what is going on. Again, calling for bids on deep seaport is deceptive. You cannot call for bids ahead of preliminary approval or consent by the Federal Government, which is yet to come.”
Ibor concluded: “The 2018 budget is dead on arrival. It is not premised on any verifiable, state-relevant and sustainable variable.
It is very fluid in itself, standing on fluid pillars and could produce crystals that would choke the state and roll its development strides many years back.”
On his part, Nigerian Ambassador to Uganda, Chief Nya Asuquo, said: “Any governor that is doing a trillion naira budget is a jester. Even the Federal Government finds it hard to get to a budget of a trillion.”
Asuquo, 79, who is aspiring to be governor of the state in 2019, said: “If a governor wakes up in the morning and has had a bad dream and he puts the budget at a trillion, then we should pray for him.
We have heard so many things – super highway, deep seaport, solar power and garments factory – so many things.
And we have not seen any. Yet, the same governor employs or appoints hundreds and thousands of aides whom he cannot pay. And many of the appointees are roaming the streets in the state capital.
The government we have today in Cross River State is a total mess. Public water supply is no longer functioning. Anybody who does not see the retrogression in our state is living in a different world.”
A top member of the All Progressives Congress (APC) in the state, Mr. Cletus Obun, described the budget as “ambitious and hallucinatory, representing the ambition of one man who thinks he can do big things.
It is daydreaming to contemplate our budget in trillions, when even more endowed states are dealing with billions. But Cross River is going for a budget of N1.3trillion, which is the budget of about seven states.
The people of Cross River must rise above this level of financial masturbation. It makes us a laughing stock.”
But the Chief Press Secretary to the governor and Senior Special Assistant on Media, Mr. Christian Ita, insisted that Cross River was not getting any loan to fund the budget.
He said: “We have commenced construction of the deep seaport and we are going full blast for the construction of the super highway. And if you remember, it is through a PPP arrangement. This means that we are getting people to invest in those projects.
“So, the budget allows us to capture the funds these people are going to bring into these projects. It is PPP – you build operate and transfer. It is not a loan. Cross River State cannot even borrow.
That is what people are forgetting. Under this government, we cannot borrow because Cross River has reached the threshold of borrowing.”
The House of Assembly, in its document passing the 2018 budget, assessed the performance for 2017, indicating that that year’s budget was N707billion, to be financed as follows: recurrent revenue – N95billion and capital receipts – N619billion.
About 14.07 per cent (N87,220,899,255) of the capital inflow was expected to come from loan to finance governance according to the following: personnel cost- N28 billion; overhead costs – N22billion; statutory expenditure – N36billion; capital receipts mainly for the deep sea port, super highway, social housing, etc., – N619billion, bringing the total to N707 billion.
The 2017 budget performance, as presented by the House, shows that overall revenue performance of the 2017 appropriation was 13.72 per cent.
Specifically, while federal sources (statutory allocation) achieved 57.27 per cent, capital receipts recorded a paltry 7.43 per cent, with the Paris Club remittance recording 20 per cent collection (or N23,450,827,635). Of this amount, only N1.6billion, representing 7.15 per cent, was applied to gratuity and pensions payments.
On the expenditure side, recurrent was 24.92 per cent by December 2017. The House attributed this very low performance in the year under review to poor release of overheads to MDAs, while the performance for capital expenditure was less than 10 per cent, considering the N619billion that was earmarked for capital receipts.
The House said: “The low performance was due to the paucity of funds…as a result of the dwindling revenue and capital receipts, following the economic downturn faced by the state and the country.”