*Appraising President Jonathan’s Fiscal Framework

By Dele Sobowale

“What’s in a name?”
Shakespeare, 1564-1616, in Romeo and Juliet.

In those pleasant days when Nigerian schools still taught kids anything worthwhile, Romeo and Juliet, was every secondary school student’s favourite love story –irrespective of gender. The name given to the nation’s latest attempt to re-introduce fiscal discipline should induce in those old enough to remember when budgets were sacrosanct the quip, “What’s in a name?”

BUDGETS FROM GOWON TO 1999 AND MTEP
Multiple years fiscal planning is not new to Nigeria. Back in the 1970s, especially the administration of General Yakubu Gowon, the Super-Permanent Secretaries, including Chief P.C. Asiodu introduced the Medium Term Economic Plan, MTEP, or multiple year budget planning. And it has retained that name till now when it has been renamed MTFF. In fact, the change of name and acronym reflects the decline in fiscal discipline starting from the reduction of budget to a meaningless annual ritual; especially since 1999.

In the 1970s and to some extent during the Babangida administration, budgeting and implementation was a serious business. Medium Term Economic Plans were introduced because many programmes under capital appropriation cannot be completed within one fiscal year.

A good example was the Lagos-Ibadan expressway which from conception to completion took over three years. MTEPs took care of that; a certain percentage was budgeted for each year based on anticipated accomplishments. They also served the purpose of ensuring that projects started by one government are not abandoned by a successive government and left uncompleted; as the government of Goodluck Jonathan has recently discovered.

After several years of paying lip service to MTEP, the governments of Generals Sani Abacha, Abubakar and President Olusegun Obasanjo finally gave it an undeserved burial.
The Minister of Finance might not remember that the current year’s budget was proclaimed by President Jonathan, on December 15, 2010, as the first budget to be based on “The Vision 20:2020’s First National Implementation Plan”, with the implication that it was the first in a series of multiple year plans leading to 2020. Yet, before the year runs out the name has changed again to MTFF. But, what’s in a name? It is the results that count..

BUDGETS FROM 1999
TILL NOW
Budgets became an annual joke from the first one presented by President Obasanjo to the National Assembly for the 2000 fiscal year. Hitherto, the Head of State would provide a summary of the achievements of the previous year, especially with regard to Gross Domestic Productivity, GDP, growth; exchange rate i.e N/US$; prevailing interest rates; inflation and the general level of employment. This would be followed by a summary of all the key projects completed and those about to be completed. The summary would not be complete without mentioning whether the government achieved a budgetary surplus or managed to balance its budget or ran a deficit. In the event of a deficit, the sources of financing the deficit would also be disclosed. That was the model for fiscal discipline which the governments of Obasanjo, Yar’Adua and now Goodluck Jonathan had dispensed with.

Since 2000, the Executive branch, in collusion with an irresponsible National Assembly, NASS, had presented one budget after another without giving account of the previous year’s budget. The NASS had passed the budget, taken its own share of the appropriations and allowed the Executive branch to do what it wanted with the rest.

The constitutional requirement for checks and balances had been ignored; only to be exercised each time the legislators wanted more money for themselves. At least late President Yar’Adua was honest enough to admit, while presenting the 2010 budget that “government has failed to implement the [2009] budget”. The 2010 budget was probably the most unfortunate in the series of budget failures for which civilian governments have been responsible.

Five months of the year were taken up with uncertainty with regard to who was in charge of government. Yar’Adua was kept captive by a selfish cabal and Jonathan was too scared to act – until May. Nobody needs a Nobel Prize in economics to understand that nothing substantial would be achieved with five months wasted out of twelve in the year. However, even if little was achieved, the actual still needed to be presented to the NASS; otherwise, there is no basis to assess the performance of government and there was no foundation on which to build the 2011 budget – which has turned out to be another disaster.

BUDGET OF FISCAL CONSOLIDATION: 2011
The current year’s budget sent to the National Assembly on December 15, 2010 was named the BUDGET OF FISCAL CONSOLIDATION and it was categorically announced that it is anchored on the VISION 20:2020 Agenda. The current Finance Minister, then a Managing Director of the World Bank, and as such had no reason to accept the official illusions, had three weeks before the budget presentation remarked on the Vision 20:2020 agenda. According to her, “no nation in the top 20 generates less than 60,000 MW of power”. She also went on to mention that the bulk of their goods are carried on functional railway services not on trailers and trucks. She had then wondered how Nigeria would increase power generation from 4,000 MW, unsteady in 2010, to 60,000 MW in 2020 – just eleven years ago. Yet, on such shaky foundation was the 2011 budget based and it carried a bill of N4.2 trillion.

The chronicle of the budget’s journey from budget presentation to passage and back again to the National Assembly, for reconsideration, would have been comical – if it does not portend dire consequences for the nation. At least one particular error of judgment deserves honourable mention. Because the budget exercise started around September 2010, neither the Federal government, nor the state governments, included provisions for the payment of the wage increases which later emerged after the agreement on Minimum Wage.

Yet, the bill, if implemented fully would require all governments to spend their entire budget on payment of staff salaries alone; and they would still need to borrow to meet up. That explains the tension which is now pervasive between Labour and governments nationwide – governments were unprepared to pay the bill. That excuse will no longer be tenable in 2012. Curiuosly, the 2012 appropriation bill, we are told will be N4.8 trillion; a mere 15% increase; despite possible 150% increase in the wage bill!!!