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Okonjo Iweala’s third budget bites the dust

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By Dele Sobowale

“If you can keep your head while others are losing theirs…Rudyard Kipling, 1865-1936.

In that now forgotten long poem, which we memorized in our secondary school days, Kipling listed several instances of forbearance which would, in the end, qualify anyone to be called “a Man, my son”. But Rudyard lived in a different age than our own – which is increasingly becoming the Age of Uncertainties.

These days, if you can keep your head while others lose theirs, you must either have superior information at your disposal or you must be misinformed or a blinking idiot. Budgeting, even in more stable environments, is at best intelligent guesswork.

Luck is always an element in whether people get it right or not. But, it is not all about intuition. At all times those charged with preparing budgets must attempt to hang them on some sort of solid rock. Budgeting, as far as I am concerned, can also be regarded as a claim on resources during a period. By that I mean that officials charged with budget preparation are also saddled with the responsibility of deciding the reasonable expectations for revenue and expenditure. The revenue estimates generally come first and define to a great extent the limits of expenditure.

A sound budget should ordinarily not be off by more than five per cent either way. Thus when we are now talking about a national budget, for 2015, which shows deviations of 22, 30 or 35 per cent, obviously, something must be wrong with those preparing the budget. It is very doubtful if a Minister in any of the countries we want to emulate in Europe or Asia or Latin America, could present three failed budgets and survive the ordeal. The most baffling aspect of the whole exercise is the outward calmness demonstrated by the Minister of Finance and the President to the unfolding calamity.

Granted Jonathan is not an economist and must depend on the economists on his staff to determine how to proceed. But, most astute world leaders have developed the habit of requesting for complete copies, instead of cuttings made by staff, of leading newspapers. That way they can read for themselves what is actually going on and what is being said about their government. The truth is, most staff of any President or Prime Minister try to hide the unfavourable truth from the boss. Presidential staff, generally, would tell the Chief Executive what he wants to hear instead of what he must know.

The purveyor of bad news soon becomes ostracized. Sometimes the gap between the official report and reality is so wide one would think they both refer to different countries. Perhaps President Jonathan can borrow a page from Napoleon Bonaparte, 1769-1821, the Emperor of Europe at one time. His instruction to his subordinates was: “Bring me the bad news as fast as possible; I can wait for the good ones”. Time, an economic resource, quite often under-estimated, can become a factor is whether a crisis becomes a calamity.

A stitch in time still saves nine any day and anywhere. At the moment, leaders in Europe and Asia, as well as Stock Markets worldwide are in turmoil over the rapidly tumbling price of crude oil. At the time of writing this article, it had gone down to $51 per barrel and there is no end in sight. Almost universally, the feeling of global economic doom is pervasive. The only exception is Nigeria – where the official lines are still summarized in two statements. The first said “we are not broke”.

The second pronounced that “even if crude oil prices continue to go down, Nigeria’s economy will remain stable.” Whether those two declarations by those holding our nation’s fate in their hands can be believed is another matter. But, at the moment, one thing is clear. The third budget, in as many months, submitted by the Federal Minister of Finance, Dr Ngozi Okonj0-Iweala, had just gone the way of the first two. It is headed for the waste paper basket.

The budget, which was based on $65 per barrel benchmark, suffered its first setback a few days after it was presented to the National Assembly – complete with the usual stew of illusions about spending and allocations. Bearing in mind that the first budget was based on $78 per barrel, which we declared unrealistic, at the time; and the second, on $73 per barrel, which was again dismissed here; the third failed attempt represents a 22 per cent negative variance from the current price, 30 per cent from the $73 benchmark and 35% from the original budget based on $78 per barrel.

Readers should not forget that we are not sure if the bottom had been reached yet. But, one thins is certain – the third budget cannot be implemented as it is. In fact, the National Assembly should not even consider it – because it makes no sense. By now, what should be bothering those of us who still have our thinking caps on is this: for how long will President Jonathan be kept in the dark about the impending economic doom? As it is, all governments in Nigeria will not be able to pay their staff by March or April.

Even if Jonathan wins again, in February, he will face a daunting task in the effort to prevent a nationwide rash of strikes by public servants. Unpaid public servants could bring government to a halt; and, since the Police and the military will also be affected by the failure to pay, it is anybody’s guess what might happen When President Jonathan announced a few days ago that Nigeria’s problems are mounting, he probably had not taken into consideration the “Mother of all problems” – governments’ inability to pay workers; as and when due.

In fact, wild cat strikes and disruption of work by civil servants, nationwide, might eventually make the Boko Haram menace, which directly affects less than fifteen per cent of the population, appear like a minor irritant. A nationwide strike by public workers will affect everybody. The first thing to do is for the President to candidly address the nation on this matter. He should discard the assurances given by Dr Okonjo-Iweala – because she had been wrong three times. She is undoubtedly a brilliant economist.

But, forecasting is not economics – it is a blend of one third science, one third art (history) and one third intuition. Even the greatest economists might not be good forecasters – just as the best musician might not be good at composing.

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