The Centre for Social Justice (CSJ), a Nigerian knowledge institution welcomes the approval of the 2017 federal budget by the National Assembly (NASS). This approval is coming five months after the estimates were submitted by the President on December 14, 2016. The late approval is not a best practice; neither is it worthy of replication. It provides the experience for NASS to say “never again” for late budget approval. A conscientious and hardworking NASS will not need more than two months to finish the consideration of the federal budget. It will amount to perpetuating abnormality if NASS also insists like it did in 2016, that the 2017 budget runs for 12 consecutive months. On a good note, we welcome the decision of NASS to make
the details of its budget available to Nigerians. We have always insisted that no one, agency or institution under a constitutional democracy had the right to spend public funds in a way and manner unknown to the public who hold the ultimate sovereign power.
The details The approved budget is in the sum of N7.44trillion being N143 billion higher than the estimates submitted by the President. This is N1.38 trillion higher than the sum approved in the 2016 Appropriation Act, being 22.76 percent increase over the 2016 approved sum. In United States Dollar terms, using the prevailing exchange rate of N380 to 1USD, the budget figure of N7.44trillion is a paltry USD19.58billion. Table 1 shows the disaggregation of the expenditure.
Statutory transfers The provision of section 11 of the National Health Act (NHA) providing for the Basic Health Care Provision Fund being one percent of the Consolidated Revenue Fund was ignored.The provision should have been in the sum of N47.59billion. The conspiracy of the executive and legislative arms of government in refusing to implement the clear provision of the NHA stands condemned; it is an act of callous insensitivity to the plight of poor Nigerians, particularly women and children, whose rights to life and health are violated on a daily basis because the government sees them as expendable persons.
Debt service and deficit financing Dedicating 24.73 percent of the overall budget to debt service is an indication that Nigeria’s debt profile is becoming unsustainable. The capital vote of 29.30 percent is just a little higher than debt service. With a deficit financing of 2.35trilion, the debt service is about 36 percent of our expected revenue. This shows that we may soon be back to the debt situation pre the debt relief period. The debt service compared to capital allocation of ten key ministries shows the opportunity costs of servicing debts. The capital allocation to 10 key ministries as a percentage of debt service is 72.99% while debt service is 84.49 percent of the overall capital vote.
Financing items With a benchmark oil price of $44.5 per barrel of crude oil which is close to the prevalent market rate and revenue assumptions, which though not overtly optimistic, may not be realized based on prevalent economic realities, the sources of funding of the budget may not fully materialise. Although the benchmark production rate of 2.2mbpd is realistic, it is imperative to note that Nigeria is not yet meeting the benchmark as current production figures still fall short of the benchmark. The foregoing may lead to increased deficit financing over the implementation period.
Exchange rate With an approved exchange rate of N305 to 1USD, the budget still insists on a fixation that is not in tandem with reality. The gap between the approved rate and what is obtainable in the market is still very wide. A differential between N380 to 1USD and N305 creates multiple exchange rates in one country.
Failure to publicise approved MTEF 2017-2019 We note with regret the failure of the Budget Office of the Federation to publish the approved MTEF- 2017-2019 on its website or on any other portal or otherwise making it available to the public. The MTEF on its website is the executive proposal which was amended by the legislature. Information about the revenue estimates available to the public have only been picked from the media. The right to access to information demands that this all important document should be available to all Nigerians. As soon as the Acting President assents to the approved budget, CSJ will embark on a detailed review of its provisions including identifying frivolities, policy inconsistencies and good points. It will also proffer suggestions for possible remedial action. Source: Centre for Social Justice
