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Three budgets, N1trn palliative deepen policy chaos

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2027: North's plot against President Tinubu thickens

The plan by the Federal Government to extend the lifespan of the 2023 Appropriation Act and Supplementary Appropriation Act till December 31 alongside the 2024 Appropriation Act is raising concerns, with experts pointing out contradictions with prospects of unintended consequences.

The National Assembly had on Thursday approved President Bola Tinubu’s request to extend implementation of the capital component of the N21.83 trillion 2023 Appropriation Act, and the N2.1 trillion 2023 Supplementary Appropriation Act, till December 31, 2024.

Besides in the next couple of weeks, the President is expected to transmit the 2024 supplementary budget to the National Assembly, thus making it a total of four national budgets in the 2024 fiscal year.

Business Hallmark recalls that on the President’s request, the National Assembly had in December 2023, extended the implementation period of capital component of the budget for that fiscal year from December 31, 2023, to March 31, 2024. It also extended the lifespan of the 2023 Supplementary Budget, which was passed in November of same year.

Also, both the Senate and the House of Representatives further extended the implementation period for the budgetary appropriations from March 31, 2024, to June 30, 2024, on the 19th and the 20th March, this year, respectively, following another request by the President.

Ironically, this is coming at a time the Central Bank of Nigeria (CBN) is consistently implementing stringent monetary policies aimed at reducing the amount of naira in circulation and control inflation.

Experts are worried that an influx of funds from the extended budget implementation could counteract these efforts, creating a challenging economic environment, where the CBN’s policies may lose their efficacy.

But the President does not seem to be sharing the inflationary concerns as he continues to toe the line of injecting more money into the system. Also on Thursday, Tinubu announced a National Construction and Household Support Programme, which will see 100,000 families in each state getting N50,000 grant for three months, N155bn to be disbursed for assorted foods, N540bn for household grants even as 36 states and the Federal Capital Territory will get N10bn allocations each for CNG buses.

The N50,000 planned for 3.7 million families across the 36 states and the FCT, the N10bn allocation each for CNG buses in the 36 states and the FCT, as well as the N155bn spending on assorted foods, are estimated to cost over N1tn. This palliative also shows that government really did not have a plan on how to cushion it’s policies, such as fuel subsidy removal and exchange rate unification, that have impoverished Nigerians. One year after the policies were implemented, there nothing to mitigate them.

While emphasising the urgency of boosting food production in the country, the President urged state governors to work together to meet the needs of citizens, stating his willingness to provide the needed support to ensure that Nigerians are relieved of hardship.

The President’s comments followed multiple economic challenges plaguing the country. High inflation driven by his removal of fuel and electricity subsidies and exchange rate unification have exacerbated cost-of-living crisis, leaving Nigerians struggling to afford necessities.

However, there are concerns that should multiple budgets run at the same time, frivolous projects in the 2023 budget and the 2023 supplementary budget will compete with essential projects in the 2024 budget amid scarce resources available to the government, thereby compounding the suffering of the Nigerian people.

Call for caution

Meanwhile, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has warned of the economic implications of the Federal Government’s decision to extend the implementation of the capital component of the 2023 budget to December, saying it must be carefully managed to avoid adverse effects, such as inflation and currency devaluation.

In a statement seen by our correspondent, the President of NACCIMA, Dele Oye, said: “This move demonstrates a commitment to completing vital projects that are crucial for national development. It is essential to acknowledge that timely completion of infrastructure and other capital projects can catalyze economic growth, enhance productivity, and improve the overall quality of life for Nigerians.

“However, while the intention behind this extension is commendable, it is imperative to consider the broader economic implications, especially in light of the Central Bank of Nigeria’s current monetary policies aimed at reducing the amount of naira in circulation. The decision to inject substantial funds into the economy through capital expenditures must be carefully managed to avoid adverse effects, such as inflation and currency devaluation.

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“Pumping too much money into circulation can lead to inflationary pressures. Inflation erodes the purchasing power of consumers, leading to higher costs of goods and services, which can adversely affect both businesses and households. In an economy, where the private sector is the primary driver of growth, uncontrolled inflation can disrupt business planning, reduce consumer spending, and, ultimately, slow down economic progress.’’

On the risk of duplication and the need for vigilance, the NACCIMA President stated, “Another critical aspect to consider is the transparency and efficiency in the utilization of the extended budget funds. While the details of the projects involved in this extension have not been provided, there is an inherent risk of duplication in the current budget. Duplication not only wastes valuable resources but also undermines the effectiveness of public spending. It is crucial for the government to ensure that the projects funded under the extended budget are unique, necessary, and contribute positively to the country’s development goals.

“To mitigate these risks, rigorous monitoring and evaluation mechanisms should be put in place. The government must adopt a meticulous approach in project selection and execution, ensuring that each naira spent delivers maximum value to the economy. This approach will help in maintaining fiscal discipline, preventing wastage, and ensuring that the extended budget serves its intended purpose of fostering sustainable development.”

“NACCIMA urges the Federal Government to balance the need for infrastructure development with the imperative of maintaining economic stability. Transparency, efficiency, and careful planning should guide the execution of the extended budget to ensure that it delivers the desired economic benefits without triggering unintended negative consequences.”

In its intervention, Nigerian civic-tech organization, BudgIT, described the budget extension as an anomaly. Its Country Director, Gabriel Okeowo, in a statement described the extension as worrisome, saying that it would amount to severe budget credibility issues.

“The concurrent implementation of four budgets will lead to severe budget credibility issues, as revenues projected in 2024 alone would most likely be used in implementing four different budgets, negatively impacting service delivery in critical social sectors and the provision of essential public infrastructure.

“If allowed to be implemented, the practice would convert Nigeria’s annual budget into a biennial one, a practice neither provided for by the 1999 Constitution nor the Fiscal Responsibility Act of 2007.”

Okeowo said BudgIT identified many frivolous items in the 2023 Approved Budget and 2023 Supplementary Budget that would compete with essential projects in the 2024 Budget for the meagre resources available to the government.

The organization, therefore called on the National Assembly to return the budget cycle to the January-December period.

“To this end, we call on the Federal Government and the National Assembly to amend the complications of this convoluted budgeting system and return to a disciplined January to December Budget Calendar.

“We also urge the Federal Government to identify and implement only the projects and programs that align with Nigeria’s overarching development goals, reduce inequality, and improve the lives of citizens, the bulk of whom are multi-dimensionally poor.”

Corroborating BudgIT’s position, Labour Party presidential candidate in the 2023 elections, Mr. Peter Obi, faulted what he described as a concurrent implementation of four national budgets by the Nigerian government, saying it is a recipe for chaos, confusion, and catastrophe.

In a post on his X handle on Saturday, Obi said it is a blatant disregard for fiscal responsibility, transparency, and accountability.

The former Anambra State governor also stated that the government’s action will lead to frivolous items in the approved budgets competing with essential projects for limited resources, further exacerbating the suffering of the Nigerian people.

He wrote: “All available evidence has confirmed that the Nigerian government is implementing four national budgets concurrently. This is in blatant disregard for fiscal responsibility, transparency, and accountability. It is also a recipe for chaos, confusion, and catastrophe.

“This intentionally reckless action will lead to frivolous items in the approved budgets competing with essential projects for limited resources, further exacerbating the suffering of the Nigerian people.

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“I respectfully appeal and, in fact, demand, that this situation be reversed immediately in preference for a more responsible and transparent approach to budgeting.

But the government is insisting that the budget cycle was extended to December to ensure that the capital projects contained in the appropriations were not abandoned.

Special Adviser to the President on Information and Strategy, Bayo Onanuga, said; “There’s really no issue here. The National Assembly has already explained its reason for this. There are many projects in the 2023 Budget and the (2023) Supplementary Budget that have not been executed. The idea is to achieve the implementation of such projects in the previous budgets.

“For instance, the Ministry of Agriculture and Food Security has some allocation in the 2023 Budget and the Supplementary Budget, which, as we’re talking, have not been given the cash backing to embark on the projects, automatically they have to take such projects forward to be implemented. Apparently they weren’t able to implement because they didn’t have the funds.’’

 

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