Budget Cycle Inconsistency Hindering Economic Development – Experts — Leadership Newspaper
Connect with us
Advertise With Us

BUSINESS

Budget Cycle Inconsistency Hindering Economic Development – Experts

Published

on


Financial experts have decried inconsistency of Nigeria’s budget cycle which has been without a definite pattern, giving room for speculations and poor implementation. The experts in separate interviews said that the inconsistency does not bode well for the economy.

According to data obtained from the Fiscal Responsibility Commission (FRC) 2016 Annual Report and Audited Accounts, from 2011 to 2017, the time of approvals of the budgets is well into the New Year.

The earliest was that of 2013 which was submitted to the National Assembly on Oct. 10, 2012 and assented to by President Goodluck Jonathan on Feb. 26, 2013, indicating a five month time lag. All others were presented to the National Assembly in December and assented to in April, May or June.

Head of Research, BudgIT, Mr Atiku Samuel, said the economy depends on fiscal, monetary and trade policies to power it. “Monetary authorities look closely at the budget for direction and that is why the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN), was reluctant at its first meeting in 2018 to take action.

“Trade policy formulators sometimes bury decisions inside the budget. As such, the budget is an important planning tool within any functional economy’’, he said.

He added that inconsistency in the budget cycle meant that both monetary and trade policy formulators could not act or take informed actions at the appropriate time. “That typically cascades across the economy, making decisions irrational and sometimes irrelevant. The organised private sector also suffers. For instance, government spending accounts for about 50 per cent of construction related spending.

“If the budget is not presented and passed at the right time, an inconsistent pattern follows as we have in Nigeria and players in that sector will also have to restructure. They cannot recruit in anticipation of an increase in spending and that inevitably kills jobs.

“Some even sack workers because revenue is inconsistent, as we have seen in the construction sector.’’

Lead director, Centre for Social Justice (CSJ), a Civil Society Organisation (CSO), Mr Eze Onyekpere, said the fact that the nation no longer had a fixed budget calendar had introduced inconsistency and uncertainty into the economy.

He said this trend had influenced poor economic performance in terms of Gross Domestic Product (GDP), growth and ability to meet sectoral objectives.

“This has also led to haphazard budgetary and economic policy implementation. Capital budget implementation has suffered under this budgeting scenario.’’

He, however, said that the executive and legislative arms of government had specific roles to play in rectifying and addressing the budget calendar and implementation challenge.

“First, the executive have to start the budget preparation process early through the Medium Term Expenditure Framework (MTEF).

According to Onyekpere, there should be a commitment on the part of the legislature to approve the budget before proceeding on Christmas and New Year vacation.

This, he said, would enable implementation begin on Jan. 1 of the New Year. Mr Victor Muruako, the Acting Chairman FRC, also said the trend reduces predictability and affects planning even within the Ministries, Departments, and Agencies (MDAs), and with those doing business.

“It is also not very encouraging to investors because government being the highest spender, it is good that there should be a level of predictability’’, he said.

Muruako, however, said that though the inconsistency was not a good precedent, the commission was working closely with other MDAs, particularly the Ministry of Budget and National Planning, Budget Office of the Federation and Ministry of Finance to improve on it.

This, he said was to ensure stricter compliance with timelines so that the right thing would be done at the right time.

“It is an evolving thing and we are not there yet but I believe that with the level of commitment of the Federal Government, particularly the financial team, I see a silver lining in the horizon and we will definitely get there.

“We are hoping that we will soon see a January to December financial year, but there is need to improve the relationship between the executive and legislative arms of government, because that is another thing that affects it.’’

He recalled that the budget was submitted to the National Assembly in the first week of Nov. 2017, but was only passed by the legislature in May, adding that the legislature had a greater role to play.

Muruako said there was the need for better relationship between the executive and legislature so that there would be synergy.

He also said that if the legislative arm was involved from the point of formation or articulation of the estimates, there would not be need for too much scrutiny.

“The theory of separation of powers is there, but they are supposed to work as one.

“Anytime they are not working together, it is evident and this is affecting the nation, but I believe that democracy is still evolving here and we will get there soon,’’ he said.

The FRC report also said that a strict budget timetable should be incorporated into the Fiscal Responsibility Act (FRA), 2007.

It said that through that, relevant agencies would be committed to specific tasks, timelines and deadlines, which if enforced would help solve the perennial problem of late preparation and passage.



Copyright LEADERSHIP.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from LEADERSHIP Nigeria Newspapers. Contact: editor@leadership.ng







Advertisement

You must be logged in to post a comment Login

MOST POPULAR