Op-Ed.
LITTLE SUBSTANCE IN 2024 BUDGET
The recently passed and signed 2024 budget is in all probability a more of the same old game. It promises renewed hope, but inspires little hope. A budget is a constraining statement of revenue and expenditure intentions to move an entity to the next level of growth and development.
It is an imperative government document, which must go through the legislative process and signed into law, the breach of which is an impeachable offence. It should bring about a positive change of fortunes if thought-through, adhered to and judiciously implemented.
The substance of a budget can be measured by the track record of adherence by the operators and, more importantly, by the end intended seed of growth and development sown into it: by the configuration of revenues and expenditure, and by the indices of efficient resource allocation therein, and the prospects in it of macroeconomic stability, with particular reference to interest rate, exchange rate and general price levels, which would reinforce the cycle of production, employment, incomes, savings and investment.
In particular, the 2024 budget should address the inflationary spiral arising from the precipitate fuel subsidy removal and Naira floatation, which have resulted in the three-fold increase in the exchange rate of the Naira and the pump price of petrol. Composite inflation has spiked above 28 percent, driven by food inflation, which is above 32 percent, at present.
Businesses are shutting down with higher frequency, rendering more people unemployed. All these incidents are out of tune with growth and development and needed to be addressed by the budget.
Business Hallmark concern with the 2024 federal budget is three-fold: (1) the indices do not stick with the imperatives for growth and development; (2) there is a reflection of the history of profligacy, which has often derailed the budgets, and (3) the APC-led government has not demonstrated the austerity, diligence, prudence, transparency and managerial capacity required to make a budget fruitful, going by the manner of its largely wasteful 2023 supplementary budget.
The obscene allocations in the 2024 budget for renovation of the palatial residences of Mr. President in Lagos, and his Vice in Abuja, the presidential fleet etc are insensitive and inhumane.
Of the N28.3 trillion aggregate expenditure in the 2024 budget, only N8.7 trillion (less than one-third) is devoted to capital expenditure, which is the major driver of growth and development. There is no guarantee that this paltry allocation would even be properly administered and accomplished, going by historical performance and the over N9 trillion deficit. (In 2023, for example, barely 25 per cent of the projected N8.43 trillion capital expenditure was achieved). Regretfully, the rest will go to the less productive recurrent expenditure, including debt service, which, in 2023, has gulped 98 percent of the revenues, meaning that we are at the threshold of the debt trap where we must continue to borrow in order to even ‘breathe’.
The revenue projection of N18.32 trillion (2023, N9.73 trillion) on the presumption of higher crude oil and tax proceeds – is considered too ambitious. Oil theft still persists. It is largely for that reason that we have been unable to meet our production quota in the Organization of Petroleum Exporting Countries.
As a corollary, the projected deficit of N9.18 trillion and the projected borrowing of N8.88 trillion are considered grossly understated. The eventual deficit would be much higher. Typical of the APC-led government, rather than curb cost, to bridge this huge deficit, it would, definitely, be filled by borrowing, even for consumption, which is a recipe for greater macroeconomic instability.
Businesses are closing down and those with significant foreign ownership are leaving the country (the latest being Procter and Gamble) due to the operating environment, characterized by escalating cost of energy, transportation, high and unstable interest rates and exchange rates, weak institutions and systemic corruption and bureaucracy, among other setbacks, which worsen by the day.
Foreign investors know more about us than we think and would also rely more on the report of their embassies and compatriots, rather than on the propaganda of government. We must get our acts together at home, before foreign direct investment can materialize.
Our view is that, everything considered, hope for the economy in 2024, lies mostly outside that budget, and in the petroleum refineries coming on stream, to curb the humongous waste (about N7 trillion in 2022) of foreign exchange on the subsidy of imported petrol.
Public office is for service and accountability to the people and not for their exploitation and subjugation, as has mostly been our case. It is not for unbridled access to public resources nor for the office holder’s aggrandizement.
Another area for change is in plugging leakages in the flow of public revenues. We have only heard about measures but no action has been seen.
Our view is that only cultural change and the refineries coming on stream can save the substantially flawed 2024 budget. All hands must be on deck to accomplish them.
