Nigeria is now working on instituting an ‘Organic Budget Law’ which would address key constraints and delays in passage and implementation of the National Budget, particularly check executive and Legislative tensions which often characterise the process.
The ‘Organic Budget Law’ is a law specifying the schedule and procedures by which the budget should be prepared, approved, executed, accounted for, and final accounts submitted for approval.
Currently, Nigeria is yet to get the 2017 appropriation bill signed into law, which has become a major source of worry to economic watchers, especially because the planned enlarged spending targets increased economic activities and return to growth.
Ben Akabueze, the Director General of the Budget Office of the Federation who announced this at Times Economist Breakfast meeting on Tuesday in Abuja, said the Budget Organic Law, as proposed would ensure a predictable fiscal year for the nation, which would facilitate swift flow of economic activities, and ensures the government delivers on the promise it makes to people.
He pointed out that Nigeria has never had a budget Law, which would incorporate a calendar, that everyone is committed to.
He said, “There is a draft ‘Organic Budget Law’, and it is already in the legislative Process, and the law when passed, would have set dates for things to happen accordingly, in all of the budget processes, and we are hoping that from 2018, we could return to a predictable fiscal year.”
The N7.441trillion 2017 budget, christened Budget of Growth and Recovery was approved by the National Assembly on 11th May, with a raise N143billion from N7.298trillion to N7.441trillion. Submitted to the Presidency on the 19th of May, the 2017 spending plan still awaits assent as government officials say the Presidency is still consulting.
But there are reports claim that the Presidency is displeased that the leadership of the National Assembly unilaterally introduced over 400 ‘strange projects’ into the budget before belatedly approving it last month. Some of the projects are said to be roads, health centres, recreational centres, water and electricity schemes amongst others.
On the current efforts to have the Organic Budget Law, the DG assured that the budget would ‘soon’ be signed into law and that they are working collaboratively with the National Assembly in that regard.
“Basically, the constitution of the Federal Republic of Nigeria states that our financial year runs from the first of January till 31st of December. The constitution also empowers the National Assembly is empowered to prescribe a different fiscal year, and so we have basically it is the National Assembly that has the power to adjust the dates,” Akabueze noted.
“Nevertheless, between ourselves and the National Assembly, we have agreed that every serious country should have a predictable financial year, to enable it know when the financial year begins and ends, so that it ensures proper planning,” he added.
At the meeting, Akabueze also doused wide concerns that the government was still spending far too much on even things that should not be of priority for a country in recession.
“I can assure you that it is not true that MDAs are spending unnecessarily, it used to be so until last year where MDAs get quarterly releases in the past, but we reset the process. You can put whatever you like in your budget but at the time of implementation you may not get the fund for that item,” he explained.
He disclosed that “Unlike the past where people get uniform capital release, last year while some agencies got up to 80% capital release, other did not get up to 20% because what they had in their budget were not considered priority for the money. You don’t just get what you want,” the DG insisted.
Responding to the issue of increasing borrowing and whether the country’s debt is sustainable, Akabueze said the country still have some fiscal space but that “he cause for concern is that the debt service ratio is beyond what could be considered a sustainable ratio.
He explained that for Nigeria, the rule says not more than 28%, but that eventhough the country has exceeded that, it does not really speak to the excessiveness of the debt but that the “real problem is with our revenues, which are way too low for the size and potential of this economy.“That is why we have the lowest tax to GDP ratio in the whole continent. We are right there at the bottom globally simply because people are not paying taxes and we also have to ensure that even what
people pay is properly accounted for.
“That’s what we need to deal with,” the DG maintained.
While he harped on the need for an intensified Public Private Partnership (PPP) arrangement for infrastructure building, Akabueze suggested that government could consider leveraging the capacity of institutions liken the Nigeria Sovereign Wealth Investment Authority,(NSIA) to help it fund development in an organized and more profitable manner other than giving government agencies funds to implement capital budgets.
“I am looking forward to seeing institutions like NSIA take a bigger hold for instance in future- and this a discussion that is already ongoing – about re-thinking our capital expenditure. So, instead of giving an MDA a N100 billion for capital expenditure, perhaps they should give that N100 billion to an NSIA who can leverage on that money and turn it to trillion and make it available for spending and then bring the sector discipline that is required to ensure that the projects are delivered on time and on cost.
“It is an ongoing discussion to decide on how we can make the capital expenditure going forward, he disclosed.Uche Orji, Managing Director, NSIA, also speaking at the breakfast meeting lauded the Federal government for investing in the Sovereign wealth Investment Fund despite the present economic recession currently confronting the nation.
“The government has continued to show a commitment that is commendable and even in the face of recession to the fiscal discipline embedded in the savings culture. At the end of 2015 for instance, the government announced $250 million dollar contribution. The second contribution was announced in February and we are expecting that any moment from now. The best way to see this is that the government even in recession sees a need for capital accumulation,” Uche noted.
Also speaking, the representative of the director general of Pencom, Aminu Farouk said there has been advanced discussions with the Debt Management Office on possible strategic investments in Pencom assets, since the fund pool represents social contract with retired workers.
Ogho Okiti, the Chief Executive Officer, Times Economics said although Nigerian economy is gradually reeling out of recession, there is urgent need for the government to attract more pool of investments into the country.
“Nigeria must treat the oil resources as an expensive capital, and when we use this expensive capital which is exhaustible to buy Cars, pay salaries, without a prioritising economic growth, that is the misplacement of that capital. We. Must need to address the way we treat our oil resources as a capital,” Okiti noted further.
HARRISON EDEH & CYNTHIA EGBOBOH, ABUJA