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REVIEW… 215 days after, where is Nigeria’s 2018 Budget?

REVIEW... 215 days after, where is Nigeria's 2018 Budget?

In what seems a yearly routine, the 2018 budget process has suffered months of delay at every phase of the process like every other budget recently passed into law.

Two hundred and fifteen day after it was first submitted, and twenty five days after the National Assembly had passed the 2018 Appropriation Bill, it has not received the Presidential assent, indicating the implementation of the budget is yet to begin even as we plan to wrap up the first half, or second quarter of 2018.

Normally, a financial year begins in January and ends in December, although governments are at liberty to redefine the financial year, the Federal Government had intended to change the agelong culture of implementing budgets for a fiscal year some months into the year by submitting the 2018 Appropriation Bill early.

Presentation and passage of the budget

President Muhammadu Buhari had on November 7, 2017 submitted the Appropriation Bill for the 2018 fiscal year to a joint session of the National Assembly.

In March, 2018, Vice President Yemi Osinbajo said the fate of the 2018 budget lies in the hands of the National Assembly as the executive arm of the government had played its role and was waiting on the legislature.

But, the budget was passed by the assembly on May 16, 2018, making it 190 days after it was presented.

With the budget passed by the National Assembly, “What is delaying the budget?” is the question begging for answer in the minds of some Nigerians.

Read also: REVIEW… A barking legislature, a deaf presidency

While some have attributed the development to the rift between the executive and the legislative arms of government, others felt it is a way to carefully examine the details of the budget to avoid budget misappropriation.

The delay had drawn criticism from the public and some members of the political class on the whereabout of the nation’s largest budget which aims to “consolidate on the achievements of previous budgets and deliver on Nigeria’s Economic Recovery and Growth Plan (ERGP)” as described by President Buhari.

History of delay in budget process

In Nigeria, the reoccurrence of budget delay at different phases of the budget process dates back many years with similar situations played out in 2014, 2015, 2016 and 2017 having been delayed for 152, 153, 136 and 180 days, after submission respectively.

The table below shows how long it took budgets processes of 2008 – 2018 to reach the final stage, where budgets get signed into law by the Presidency.

S/N  Budget /Date Signed /Days Delayed

1         2008          April 15, 2008                   159

2         2009          March 10, 2009                 98

3         2010          April 22, 2010                   150

4         2011          May 27, 2011                    163

5         2012          April 13, 2012                   122

6         2013          Feb 26, 2013                     139

7         2014          May 24, 2014                    152

8         2015          May 19, 2015                     153

9         2016          May 6, 2016                       136

10       2017          June 12, 2017                     180

11       2018         ************                     215+

National Assembly gives reason for the delay

After taking more than six months to pass the 2018 Appropriation Bill, the Appropriation Committees of both Chambers of the National Assembly had attributed the delay to failure of Ministries, Departments, and Agencies (MDAs) to submit details of the budget proposals and refusal to avail themselves before the standing committees to defend their budgets.

Usually, the budgets of the MDAs are not included in the national budget, but the 2018 budget featured their budgets and the National Assembly insisted that the MDAs should submit and defend the budgets before passage.

But, to fast track the 2018 budget passage, President Buhari ordered the affected MDAs to defend their budgets for the 2018 fiscal year

The National Assembly had also wanted government agencies such as the Central Bank Of Nigeria (CBN), Nigerian National Petroleum Corporation (NNPC), state oil firms, Security and Exchange Commission (SEC) among others to submit their budgets to enable the lawmakers pass them alongside the national budget.

What happened before the budget was passed?

President Buhari presented a budget estimate of N8.612 trillion to the National Assembly, however, the estimate was raised by the assembly to N9.12 trillion upon passage, stating that the upward review was done with “due consultation of the executive.”

According to the Chairman, Senate Committee on Appropriations, Senator Danjuma Goje, the budget was jerked up by N508 billion based on the following assumptions: Oil price benchmark was put at $51 per barrel as against $45 per barrel proposed by the executive; crude oil production was put at 2.3 million barrels per day; exchange rate was pegged at N305/USD.

With this new estimate, Nigeria is apparently getting set to start the implementation of its largest budget in history, if the President eventually assents to it after both the legislative and the executive arms of the government had delayed it for 215 days so far, making it the most delayed budget since the return of democracy in 1999.

What happened after the budget was passed?

The Senior Special Assistant to the President on National Assembly matters, Senator Ita Enang, had in May 25, 2018 confirmed in a statement that the Presidency has received the 2018 Appropriation Bill, stating that he was transmitting it to President Buhari.

While the Presidency has not breached any constitutional provision as “the President is currently reviewing it,” concerns are being raised over the negative effects of the delay on the economy, even as the process of the budget is still within the stipulated 30-day time frame for the executive arm to sign bills passed by the legislature into law.

These concerns are, however, expected as the time frame has just five days left, since it has not been signed despite the assurance given by the Minister of Budget and National Planning, Senator Udoma Udo Udoma, that the Federal Government would work on the budget “very quickly” when the Presidency receives it.

Section 58, subsection 4 of the 1999 Nigerian constitution as amended stipulates that “Where a bill is presented to the President for assent, he shall within thirty days thereof signify that he assents or that he withholds assent.”

Although, the Secretary to the Government of the Federation, Boss Mustapha, said that the President reserves the right to assent or withhold assent to bills transmitted to the Presidency, saying not “everything” passed by the National Assembly would go as passed.

Effects of delayed budget on the economy

Several investment plans are inherent in the 2018 budget which are expected to drive the Nigerian economy to new highs when implemented, if the budget is not passed as and when due, it would not only deter some of the lofty ideas from being actualised but would also batter the economy.

However, the Minister of Finance, Mrs. Kemi Adeosun, had in May assured that the Federal Government would mitigate the negative impact of the delay in the implementation of the 2018 budget on the economy.

She noted that the Federal Government would have to realign its priorities since five months had gone already.

How Nigerian economy has fared

There was sustained positive sentiments in the Nigerian economy over the stability in the foreign exchange market due to CBN intervention, oil prices increase on the heels of geo political tensions between the United States and Iran leading to the withdrawal of the former from Iran nuclear deal.

This, however, reduced Crude Oil exports from the world’s third largest exporter of Crude Oil, supply cut policy of the Organisation of Petroleum Exporting Countries (OPEC) also contributed immensely to the rise in Oil prices, causing a boost in the nation’s foreign reserves.

The positive sentiments were also driven by the easing inflationary trend, dropping for the 15th consecutive month from 12-year high at 18.72 per cent in January, 2017 to 12.48 per cent in April, 2018, and also by the Q1 2018 Gross Domestic Product (GDP) report, indicating an expansion of 1.95 per cent up from -0.91 per cent recorded from a year earlier, according to the latest GDP report by the National Bureau of Statistics.

However, the growth shrank from 2.11 per cent when compared to the preceding quarter, while data from the CBN shows that the nation’s foreign reserves have lost $374 million between May 18, 2018 and June 7, 2018.

The manufacturing sector Purchasing Managers’ Index (PMI), an indicator of the economic health for manufacturing and services sectors, grew sluggishly in May to 56.5 index points from 56.9 index points recorded in the previous month.
While the delay persists, the positive sentiments and confidence of investors, who are watching the stability in the country’s political landscape, are being eroded gradually.

Outlook for the 2018 Budget

To restore the confidence of these investors, which the President Muhammadu Buhari-led Federal Government has cited as one of its key objectives, we expect a feedback on the 2018 Appropriation Bill from the President this week.

While the Presidency may sign, reject or send back the details of the budget to the National Assembly for a review, the President’s decision would go a long way in influencing some investment decisions and policy instruments having great impact on the Nigerian economy.

By Oluwasegun Olakoyenikan…

 

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