The National Assembly on Wednesday passed the 2018 Appropriation Bill of N9.120billion. The amount, the highest in the nation’s budget history, is N508m or 6 per cent higher than what President Muhammadu Buhari presented six months ago before a joint session of the National Assembly on November 7, 2018. The approved budget also came with fiscal deficit of N1.955bn, representing 1.73 percent of the Gross Domestic Product (GDP).
The budget is premised on oil benchmark of $51, crude oil production of 2.3mbpd and exchange rate of N305/$1USD. Highlights of the budget show that N530.4bn is voted as Statutory Transfer, N2.2trn for Debt services. Out of this amount, N1.766trn is budgeted for domestic debt servicing, N254bn for external debt, and N190bn for Sinking Fund to retire matured loans. Also, N3.5trn is for Recurrent Expenditure and N2.8trn for Capital Expenditure. The Ministry of Power, Works and Housing, received the highest allocation of N682bn, followed by Transportation, N251bn, Defence, N149bn, Agriculture and Rural Development, N147bn, Education, N102.9bn, Health sector, N86.4bn.
The good news is that, finally, the nation has got a budget to work with after six months delay. Unarguably, both the executive and the legislature share the blame in the perennial delay in the passage of the budget. Besides, the frequent disagreement between the National Assembly and the presidency has taken its toll on the budget process.
It is rather sad that the neglect and sometimes refusal of heads of some Ministries, Departments and Agencies (MDAs) to honour invitations to defend their budget proposals have been reported as one of the causes of the delay and the late passage of the 2018 budget. This, to say the least, is most unhelpful.
Lessons should be learned from this to avoid a repeat occurrence. This has become necessary because the budget addresses growth in spending on critical areas relevant to the welfare and security of the people. The budget also helps both the public and private sectors of the economy to plan properly.
Therefore, there is need for both the executive and the legislative arms to improve on their communication, especially in the formulation and passage of the budget and define the boundaries of responsibilities. This will minimise delay and other stumbling blocks in the budgetary process. In future, government should think deeply on how to reduce spending in areas where the private sector is better placed to handle. This will help free up funds for critical sectors like health, education, water and environmental/sanitation services, among others, that have not been receiving adequate allocations. But, of critical importance is the implementation of the budget. What the delay in the passage of the budget has done is that, once again, many economic activities might be at risk to meet their planned targets. Almost into the half-year period, capital projects, which are key to socioeconomic growth, will suffer again due to poor implementation.
It is not heartening at all that over the years, successive budgets had never achieved more than 50 per cent implementation, in particular, the capital components. Early this year, the Minister of Finance, Mrs. Kemi Adeosun, disclosed that only 21 percent of the capital component of the 2018 was achieved as at December 2017. It will be a rare feat if the current budget will surpass that mark. Government and the various MDAs should strive to achieve about 70 percent of the capital expenditure.
The reality, however, is that our fragmented planning process does not align with our annual budget. In that regard, the government should strengthen the linkage between plans and budgets in order to ensure effective implementation of projects and programmes. The fact remains that the lofty objectives of any budget will be nothing without faithful implementation.
The President should expeditiously sign the budget into law. If he has any misgivings about the contents of the budget regarding either reduction or increase by the legislature, he should submit a supplementary budget to cover such needs.
We urge the government to steer our economy and the nation’s revenue generating capacity away from oil revenue. With the current windfall from oil prices going much higher than budget estimates, saving for the rainy day has become extremely important.