When the National Assembly passed the 2018 Appropriation Bill there was an additional N500 billion to the original N8.6 billion bringing it to N9.1 billion.
Presidential aspirant and public aff airs analyst, Jaye Gaskia believes NASS did not need to increase the budget figure.
In this chat with BENJAMIN UMUTEME, he bares his mind on other issues.
Do we really need such an increase in the budget at this time? I think what is most important about the budget is to even understand what the purpose of a budget and I think part of the challenge we have had as a country particularly since 1999 is that we have been having people in government who lack the basic purpose of budgeting and that in itself is a reflection of why people are going into government without purpose.
And what they don’t understand is that the basic anchor of governance is delivery of public service.
The purpose of governance is to be able to fulfill the aims and ends of governance.
And that is why there is so much craze for high numbers particularly in this All Progressive Congress (APC) administration because it has a policy that says we need to refl ate the economy, we need to spend our way out of the economy.
It basically assumes that it is equivalent to borrowing.
And so what we have seen since 2016 is that they have been having infl ationary figures, but when you look at the fundamentals and the rudiments, it is an unrealistic budget.
So you will ask yourself; why do you want huge figures if it is going to be unrealistic? Over the years, we have never met the target in terms of the fundamentals like crude oil production.
We’ve had between then and now a higher crude oil price than the estimated benchmark, but we are not saving and it’s not helping us as the Excess Crude Account is not growing.
The difference between the benchmark and the price of crude oil is what ought to go into the ECA.
That the ECA is stagnant tells you that we’ve not been able to meet up to that requirement; that means we are not selling the required number of barrels per day that will enable us meet our budget target and to be able to save.
Now, we have a N9.12 trillion budget and the deficit component is still close to N2.8 trillion while the capital component is still just N2.4 trillion.
Remember, we were told 2017 budget and the performance of it was less than 50 per cent.
Capital votes suff er, but you must pay overheads.
So you will see that recurrent will nearly always be close to 100 per cent.
So, when the budget under performs, you are actually looking at the capital component, which means that 50 per cent of what was budgeted for capital projects was not completed.
We are not able to realise the money to fund that; and then of course, we are not able to fund the deficit.
This regime has borrowed so much in three years roughly what we borrowed in a decade.
And it’s been spent on things that don’t have revenue generating effect on the economy.
The administration says they are borrowing for infrastructure-yes it is fi ne! We borrow for all these things yet none of them are integrated.
So you have an inland port in Kaduna but there is no cargo airport where you can then have When the National Assembly passed the 2018 Appropriation Bill there was an additional N500 billion to the original N8.6 billion bringing it to N9.1 billion.
Presidential aspirant and public aff airs analyst, Jaye Gaskia believes NASS did not need to increase the budget figure.
In this chat with BENJAMIN UMUTEME, he bares his mind on other issues.
Jaye Gaskia planes that brings goods from Lagos to the dry port.
You also don’t have a cargo rail line going there.
Now if these borrowings were spent on targeted, focused and integrated infrastructure, then you can say in the medium term, the impact will be felt on the economy, and we can recover the funding for this, but that’s not the situation right now.
We are building railways just to carry passengers, not to carry goods, not to carry other things that are required to grow the economy.
Instead of borrowing, why don’t we increase our investment drive so that private capital can fund these projects? I would like to say that when this administration came into office, they probably needed to borrow in their first year if they wanted to refl ate the economy.
All you really need is a balanced budget and keep your monetary policy tight so that you can spend on only what is necessary.
After the second year and after we started seeing appreciation in the global market and then the rise in foreign exchange, one would have expected a switch in policy to a situation where you actually draw funds from the foreign reserve to stand as guarantor for foreign investment because we actually need to mobilise domestic investment, business people in the country who want to invest in the economy.
You attract them and their foreign partners but you have a guarantor and you say ‘these are our priorities’; and your policies must be such that they align with your priorities and create an enabling environment for your priorities to thrive.
The moment you do that you then set funds aside; ‘if you can mobilise 70 per cent of the funds for this investment, we will match you with 30 per cent’, and also guarantee liability for your 70 per cent in case of political instability.
That’s how you build confi dence in the economy, that’s how you then attract private investment.
Where I will diff er is that our constitution actually frowns at leaving our economy solely in private hands that is why I say we need that matching grant because of the public sector sake in all of these investments.
All you need to do is to create an investment arm for the federal government that manages the investments as a commercial entity, but nobody is thinking in that direction.
Is it not the line of thinking that prompted the setting up of Focus Labs? Underlying the setting up of the Focus Labs is that we want to attract foreign investment but you are not creating the enabling environment for investments to thrive.
Firstly, if you are creating Focus Labs you must have a policy that encourages and spurs local or indigenous investments because if I want to invest in an area and the people who are wealthy in that country are not investing in that economy I won’t have the confi dence to bring my investment into that country.
It says a lot! The first thing is to build confidence in indigenous investors to invest.
In fact, when you are setting up Focus Labs indigenous investors should be the core, the nucleus of those Focus Labs.
It is around them that you then attract foreign investment because you are attracting foreign investment for the economy because it is when the government is generating revenue that it is able to fund itself.
Secondly, the Focus Labs are built around the ERGP but that also is a plan that in itself is very faulty and shaky because you have identifi able milestones without identifi able goals.
Do we need a whopping N500bn increase in the budget when we should be thinking of how to reduce the deficit? Absolutely, I was expecting that we’ll use that to block part of the deficit.
The money they claim they can get because they increased the benchmark-which is still within crude oil prices internationally.
What use are they putting it to? We should ask ourselves, is it funds that we should have saved or funds that we should have used for investments because right now it has been injected into some capital components of the economy.
But we all know that it goes simply into payment of contractors and this is an election year, and many of the contractors are politicians.
