Although the National Assembly passed its amended version of 2018 Budget last week, there may still be no respite for Nigerians as the five- month delay in its passage and implementation may have done enough damage to dampen the horizon for the citizens, Daily Sun report.
Coming on the heels of huge worries expressed by both national and international stakeholders on the delicate nature of the economy after its sluggish exit from the worst recession in 25 years there have been rising anxiety that the budget may not run its full cycle before the 2019 general elections and the uncertainties that surround the exercise.
For instance , just last week, the Lagos Chamber of Commerce and Industry (LCCI) lamented that the drama that has kept the 2018 appropriation bill from being passed and implemented to ease the economic strain on the citizens was certainly not the best way to run the affairs of a country struggling to restream an economy that just exited recession.
Earlier, the International Monetary Fund (IMF), shocked by its observation that Nigerians are getting poorer by the day, warned that ‘comprehensive and coherent economic policies remain urgent and must not be delayed by the impending elections and recovering oil prices’.
According to Babatunde Ruwase, the LCCI President, “we are getting close to half of the year, the delay in the budgetary process would further entrench the vicious cycle of poor budget implementation, especially its capital component that is direly needed to further activate the productive sectors. The risk is that recurrent spending will be fully implemented while capital projects suffer the usual implementation deficiency. The delay has implications for planning in both the public and private sectors of the economy. Strategic planning for many organisations takes a cue from the budget structure and the policies that come with it. To the extent that the budget is not in place, uncertainty and associated business risks in the economy are heightened. This is surely not good for investors’ confidence, either from a foreign investor perspective, or from domestic investor standpoint.”
The IMF, for its part had warned that further delays in policy action would lead to continuing falls in real GDP per capita and make the inevitable adjustment more difficult and costlier.”
The Bretton Wood institution, in its annual Article IV review of Nigeria’s economy, had said. For his part, Mr. Segun Ajibola, President of the Chartered Institute of Bankers of Nigeria (CIBN), says the provision of ₦2.8 trillion for capital expenditure in the budget is too low to boost economic development.
Ajibola, who stated while reacting by the National Assembly to the passage of the Budget, said: “Looking at the provision for the capital expenditure, one will say it is too low because there are a lot to be done in economy today in terms of capital projects.
“In terms of infrastructure, we have power projects, railway, refineries, manufacturing and agriculture projects.
“These are capital related projects that require substantial allocation from the budget.
“When one looks at the state of economy today, one will say the provision for capital expenditure is abysmally low.’’
Even with this deficiency, the CIBN boss, however, called for timely release of funds to implement the capital projects.
“We are in May now; we don’t want to hear that funds are not released for capital projects in October. If that is the case, it would means that nothing can be achieved in the implementation of the 2018 budget’’.
On the NASS increase of the budget by ₦508 billion, he said the National Assembly was empowered to do specific adjustment to the budget, adding, however, that the adjustment should be explainable, accountable and beneficial to the economy.
He said that the explanation given by the legislature on the floor showed that the adjustment would promote growth and development.
“It is not the adjustment that will increase recurrent expenditure and compound the already high debt burden.
“They are projects-hiked adjustment; they are adjustment that can be measured.
“Also, I want you to know that the implementation of budget is done by the executive not the legislature, so the President will still do some consultations before signing the Budget.’’
Roman Oseghale, a Business consultant, believes that the 2018 budget does not meet the needs of the people.
In a programme monitored on Channels Television on Thursday. He listed what concerned the people most to include education and health, which do not get the priority attention of the Federal Government Hear him:
“We are running out of the middle class.The middle class are being eroded. Eight thousand people in Nigeria enter poverty every day.Nigeria now has the highest rate of extreme poverty in the world.
Education and health are some of what government owes us. They are investing in us and we give them returns.That is how
it is structured in a good economy. If you look at 2018 budget, education only got 1 per cent, and health got only 1.04 per cent per cent. The budget does not address the needs of the people. There are four things I have always wanted Nigerians to look out for when they read the budget. One the salary, travels, both local and international,.. and allowances. Then training, both local and international.
When you look at travels, benefits and allowances; you look at training, both local and international. You will understand where the funds in this country go to.”
“The Nigerian economy is slowly exiting recession but remains vulnerable. Lower oil prices, tighter external market conditions, heightened security issues, and delayed policy responses are the main downsiderisks.
“ Higher oil prices would support a recovery in 2018 but a ‘muddle-through’ outlook is projected for the medium term under current policies, with fiscal dominance and structural constraints leading to continuing falls in real GDP per capita. Further delays in policy action — including because of pre-election pressures — can only make the inevitable adjustment more difficult and costlier.”
Last Wednesday, the Senate passed the 2018 Budget after increasing it to N9.12trillion from the N8.612 trillion proposed by President Muhammadu Buhari last December.
Many people have blamed the non-passage of the Appropriation Bill on the National Assembly which was accused of using the budget as a tool against the executive. But, NASS, in turn, blamed the Ministries, Departments and Agencies for their failure to come up with their details within the stipulated time.
Not carried away by the blame game, Ruwase advised both the executive and legislature to work together in future to avoid the current crisis:
“Going forward, there is need for better communication between the National Assembly and the Executive arm of government. They need to be on the same page with regard to the fundamental principles of the budget.
It is also necessary to clearly define the boundaries of responsibilities between the executive and legislature in budgetary appropriations to avoid the recurring problem of delays. It is imperative as well for all arms of government to demonstrate an unequivocal commitment to the spirit and letters of the Nigerian constitution and other complementary legislations.”
Other stakeholders that reacted to the budgetary provision for the year, have argued that the budget may not be sufficient to meet the needs of the people. According to Mr Bismark Rewane, the Managing Director of Financial Derivatives Company(FDC), in an interviewed monitored on Channels Television Tuesday in Lagos, stated that the country would need between N10 trillion and N11trillion to take care of minimum wage and subsidy which were not originally captured by the President’s version submitted to the NASS.
“The oil prices is about 45 per cent higher than the budget threshold, the country is now in better revenue position. And since the fuel subsidy is not in the original budget, somebody is going to bear the cost. Also minimum wage is not in that budget, that means there would be supplementary budget. All these show that the N9trillion will not be enough. A budget of between N10 to N11trillion will not be too much. That is just below 2 per cent of the GDP. But I urge the government to spend efficiently. Spending and investment should not be confused. What the country need s now is investment. Investment in power, aviation and in petroleum resources. That is what can create jobs”, he added.
The Organised Private Sector also believe that the House of Representatives must have taken the decision to increase the budget out of necessity.
The President of the Manufacturers Association of Nigeria (MAN), Frank Jacobs, though said he would need to get the details of the increase maintained that the action no doubt would be in the positive interest of the country.
“For them to do this, they must have come up with something that needs to be taken care of, which the budget as presented must have omitted”, he said.
He reasoned that even the amount added may not be enough for the Minimum Wage being proposed by the Organised Labour if that was part of the reason for the increase. “The N500 billion would not even take care of what labour is asking for, going by that proposal being presented to the committee”, he added.
Commenting on the development, a Professor of Banking and Finance and Head of Department, Nassarawa State University, Prof Uche Uwaleke, said he was totally in support of the actions of the National Assembly’s raise of the 2018 budget from N8.6 trillion to N9.1 trillion.
According to him, a budget, prepared around July last year and presented in October cannot perform optimally in May 2018 if eventually passed.
He added that all the estimates used to prepare the budget were no more realistic today.
“The 2018 budget was prepared and crude oil price was hinged at $45/barrel. But today, we are inching closer to $80 per barrel but the National Assembly pegged the new budget estimate at $550/barrel. That’s quite realistic. From all the market and industry forecasts, it can’t crash to the point of hurting this new budget proposal.