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Published On: Mon, Jul 17th, 2017

NASS, Executive rift portends danger to 2017 budget

 

EMEKA EJERE | 

With the 2017 Appropriation Bill only recently signed into law by Acting President Yemi Osinbajo, there are growing concerns that the effort being made by the Federal Government to take the economy out of recession may suffered a setback with the lingering rift between the National Assembly and the Executive. The budget was provisionally signed by the acting President based on undertaking and commitment to effect necessary changes that may be required by the executive.
After a long wait by concerned Nigerians, the National Assembly on May 11 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, the question in the minds of many was: Will the Acting President give or withhold assent?
A major thorny point in the budget passed by the NASS is adjustment made which distorted its basic assumptions and outlook. For instance, the budget as proposed had earmarked some important infrastructure projects such as the Lagos-Ibadan expressway, the Second Niger Bridge, and the Calabar-Lagos rail and the Mambilla power plant. But the NASS reduced appropriations for these projects arguing that they are all based in the south and deploying the funds fo boreholes in the north.
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. What this simply means is 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.
Experience has shown that the negative impact of budget delays cannot be overemphasized especially on an economy struggling to come out of a recession.
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.
Our checks reveals that 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.
Analysts believe that 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.
Investigations reveal that since the commencement of the fourth republic in 1999, the country has not implemented any capital budget fully within any fiscal year due to budget delays.
“The government should be concerned about how to put an end to this seemingly intractable challenge,” says James Uwaleke, head of Banking and Finance Department at Nasarawa State University, Keffi.
However, 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 widely seen as a step in the right direction.
But this directive only applies to the Executive arm, which is an unfortunate limitation as 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 striking 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? Uwaleke queried.
Without a clear interpretation of this section of the FRA, Uwaleke believes, the end of budget delays may not be in sight. What is required therefore, beyond an Executive order, he continues, “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, 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’’. Osinbajo’s position further lends credence to a report of the National Bureau of Statistics that the economy contracted for the fifth consecutive quarter by 0.52 percent in the first quarter of 2017.
Despite 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, analysts believe any further delay in the implementation of the 2017 could reverse the modest gains recorded thus far and stall the implementation of the Economic Recovery Growth Plan.
In order to sustain the momentum of recovery and restore confidence in the Nigerian economy, economic analysts are in agreement that government must hit the ground running with regard to the implementation of the 2017 budget since time is of the essence.
Meanwhile the Minister of Finance, Kemi Adeosun, recently revealed that the Federal Government was ready to release N350 billion, being the first tranche for implementation of the 2017 budget. Adeosun who was speaking in Abuja at the public presentation of 2017 Appropriation Act, said that the Federal Government had enough cash available to immediately commence the execution of key projects and initiatives scheduled for the 2017 fiscal year.
“We are ready, we are having a cash-plan meeting very soon and after that, N350 billion will be released as first tranche of capital releases for the 2017 budget,’’ she said.
Also speaking, the Minister of Budget and National Planning, Udoma Udoma, said funding of projects would now be on Project-Based Release System to curb waste of public funds by Ministries, Departments and Agencies (MDAs).
Udoma who said that part of the requirement for capital releases was evidence of compliance with the Bureau of Public Procurement Act, adding that henceforth, no MDA was authorised to enter into a foreign denominated contract without the approval of the Ministers of Budget and National Planning, and Finance.
He also said the federal government would strengthen its monitoring and evaluation framework to improve physical inspection and impact assessment of projects and programmes implemented by MDAs.
On the capital project funding, where allocations were altered by the National Assembly, the minister said the budget would be adjusted after virement applications were sent and approved by the legislature.
“We have agreed with the National Assembly that virement application for them to restore those projects be forwarded to the legislature. Some of these projects include the railway, health and FCT projects. “Until that is done, the budget and the appropriation must reflect exactly what is passed at the National Assembly and this is what the law is, what was passed at the National Assembly is what was signed into law,” he said.
It is this agreement and hope that the rift between the two arms of government may threaten. Government believes the projects are critical to the recovery of the economy and wants to appropriate funds for them. But that can only be done if the warring parties can keep to the pact reached before the budget was signed.
On the lifespan of the 2017 Budget, Udoma said it would run until June 2018 but that with the determination of the current administration to return the nation to a January-December Fiscal Year, it could be overtaken by 2018 budget if passed and signed into law before it runs a full cycle.
“Whenever a new Appropriation Bill comes into law, it overtakes any previous appropriation law, which means that the 2018 Budget will overtake the other one which seizes to be valid.”
The minister said the capital budget would focus more on infrastructure development, especially rails, roads, electricity and water projects for both electricity generation and irrigation.

READ  Emefiele dismisses fears over MPC meeting, insists economy is strong
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