For some weeks now, the 2013 Appropriation Bill presented to the National Assembly by President Goodluck Jonathan has been a matter of intense disagreement between the Executive and the Legislature. This is coming even before a formal debate on the details of the N4.93 trillion budget would commence at the two chambers of the National Assembly.
At the centre of the row is what should be the appropriate oil benchmark upon which the proposed oil revenue in the budget was formulated. The Presidency has premised the revenue on $75 (USD) oil price per barrel. However, the two chambers of the National Assembly – The Senate and House of Representatives – differ on their own benchmark. While the senate has fixed the oil benchmark at $78 per barrel, the House of Representatives insists on $80 per barrel. In their arguments, each camp has defended its position.
The position of the National Assembly is contained in the Medium Term Expenditure Framework (MTEF) and Fiscal strategy, which the two chambers passed on October 9, and October 16, respectively. But the Executive maintains that the $75 oil benchmark is more realistic, and went ahead to state that the benchmark proposed by the two arms of the National Assembly was not fair or sensible, or even economically and mathematically logical. Leading government’s arguments are the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala and the Governor of the Central Bank of Nigeria (CBN), Mr Sanusi Lamido Sanusi.
Together, they contend that the economy would be at great risk if government succumbs to pressures of the legislature to benchmark the budget above $75 per barrel. But at a recent joint committee to examine the MTEF, the House claimed that the Federal Government has over stated the risks in anticipation of a possible sharp fall on oil price. It therefore recommended a reduction of government’s projected deficit and domestic borrowing from N700 billion to N400 billion.
Government has kicked against that recommendation by the House joint committee.According to the Finance Minister, government arrived at its benchmark based on an economic module that estimates between 5 and 10-year moving averages in line with the standards used by most oil-producing nations in the world in planning their budgets. Fundamentally, Dr Okonjo-Iweala said, “benchmark prices are not things you just sit down in a room and concoct”.
They are based, she said, on key economic indicators. Besides, she said, going the way of the legislature would cost Nigeria the opportunity to access the $1.2 billion concessional loan already approved for the country by the World Bank for next year. Sanusi equally debunked the legislature’s argument, noting that a higher benchmark as proposed does not translate to increased revenue accruable to government. On the contrary, Sanusi stressed that rather than stick to its guns, the sensible thing for the legislature to do is to formulate legislations that will make the Nigerian National Petroleum Corporation (NNPC) more transparent and accountable in the discharge of its obligations.
The International Monetary Fund (IMF) is backing the Federal Government’s position, cautioning on the need to curtail spending in order to avoid putting pressure on crude oil benchmark. All things considered, it is not unusual that the Executive and the legislature are disagreeing on such an important issue like the budget whose impact could be felt both at home and abroad. Our concern is that if the issues in contention are not resolved quickly or are allowed to boil over, the country may suffer unpleasant and unintended consequences resulting from either a late passage of the Appropriation Bill.
That possibility is growing every day. Meanwhile, the economy is still groaning under the lack of implementation of the 2012 Appropriation Act. Indeed, the way the two arms of government – the Executive and Legislature – have handled the benchmark issue seems to suggest that there could be other issues that are hidden from the public. Whatever the issue(s) might be, Nigerians need a realistic budget that will serve the interest of the people and the country, definitely not a budget that will serve the narrow interests of a few.
What is needed now is for a bipartisan cooperation on the matter. All sides should harmonize their positions and reach a common ground as quickly as possible.