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Is the 2017 budget also another sandcastle? – Henry Boyo

The 2018 Appropriation bill will be laid before the National Assembly by President Muhammadu Buhari on Tuesday 7th November 2017. However, the above title, which was published in December 2016, was this writers’ overview of the proposed 2017 budget. Please read on.

“A fiscal plan is usually a clear and precise statement of what government hopes to realistically earn as income and how much it would spend within a given time frame; invariably, where projected expenditure exceeds actual income, the shortfall will invariably be funded with loans or savings.

President Muhammadu Buhari (M) presents the 2017 National Budget to a joint session of the National Assembly at the National Assembly Complex in Abuja on Wednesday.

Regrettably, Nigeria’s fiscal plans, despite years of bountiful oil revenue, were predicated on increasing deficits, usually funded by borrowing, with inappropriately high interest rates. The 2016 budget is sadly the same, as about N2Tn (over 35%) was allocated to debt service from the projected total spending of N6.06Tn; regrettably, until lately, the Legislature had never publicly expressed concern on such oppressive debt service charges.

Sadly, however, although Budget Minister, Udo Udoma, recently reported “a 79% performance ratio of the pro-rated budget for January-September 2016”, there is clearly, so far, no respite from the social anguish in, an economy in distress, and indications are, that it could get worse in 2017.

The failure of Budget 2016 to reverse the economic downturn was probably foretold by the wide disconnect between the promises of a better life and the actual reality of dashed hopes from preceding fiscal plans, which were unfortunately also heralded as panacea to our economic downturn.

Similar speculation also preceded passage of the 2016 budget; sadly, however, soon after budget enactment, the economy went instead, into a tail spin, clearly against government’s earlier hype of redemption. Although, the writing was clearly on the wall, authors of budget 2016 obviously could not foresee the looming spectre of massive Naira devaluation and over 50% increase in petrol price.

Unfortunately, the 2017 budget process seems destined to follow the same path that has previously yielded negative socioeconomic returns.

Regrettably, 2017 budget has been placed before the National Assembly, probably less than 2 weeks, before the usually extended Year end Parliamentary recess. Consequently, if the Legislature steadfastly commits to a thorough evaluation to achieve consensus, with the Executive blueprint, enactment of the 2017 budget may probably not happen before April 2017.

However, if the legislature simply flips through the budget statement, in an expression of e spirit dé corp with Mr. President, the 2017 budget will most probably also fail to fulfill public expectation. It may be suggested, however, that legislative approval, will be timely, since the 2016-19 Medium Term Expenditure Framework (MTEF), on which the 2017 budget was predicated, was presented to NASS since 30th September 2016. Although, after the initial vociferous calls to return the document to Mr. President to provide supplementary details to the proposals, the Senate eventually soft pedalled and subsequently agreed to appraise the MTEF document. Nonetheless, Senate Leader, Ali Ndume described the document as “completely empty” and also noted that “you cannot build something on nothing”. Furthermore, according to Ndume, the Budget Minister had also failed, to respond to the Senate’s request for “a comprehensive report on 2016 budget implementation.

The Senator leader, was also concerned that relevant information have not yet been provided for the “fiscal rates, taxes, charges, etc from which the projected N6.80Tn 2017 revenue was derived”.

Finally, debt issue, Ndume also demanded a report on the “structure of debt composition, sources of funds and how borrowed funds are to be spent, as well as a reasonable repayment plan and schedule for national debts”.

Similarly, while commenting on the MTEF, Senate Spokesperson, Senator Abdullahi wondered “if the Federal Executive is not padded with people who want to frustrate the government”. Ultimately, however, the consensus across party divide in the senate was that the critical assumptions predicating the 2016-19 MTEF “were clearly unrealistic”.

Senator Melaye, for example, insisted that the N290=$1 assumption adopted was not “achievable and unrealistic” and therefore described the MTEF as a “lie”; while Senate President, Bukola Saraki also agreed that, in addition to exchange rate, the oil price projection of $42.5/barrel, and 3.02% projected GDP growth rate, were respectively also unrealistic. Invariably, the projected oil output of 2.2mb/day may also be unattainable if the scourge of militancy in the Niger Delta remains unresolved.

Apart from the Legislators’ concern on the integrity of the MTEF, one might also add that it would be a grave misadventure, if the imminent danger of inflation spiraling beyond 20% is not also recognized as a virulent spoil sport, in any attempt to reverse our dismal current economic trend, especially when further Naira devaluation could also propel petrol and energy prices. So the question is, will the 2017 Budget, like its predecessors also be the hyped stability of a Sandcastle?

Indeed, despite the imminent drop in crude oil price and output due to the unfolding, clearly foreseeable trend in the crude oil market and restiveness in the Niger Delta, it was unconscionable that the N6.06Tn 2016 budget accommodated an unexpected 33% increase on the now clearly modest 2015 N4.4Tn budget.

Sadly, the bloated expenditure budget for 2016 may have further fuelled inflation to make millions of lives more miserable; worse still, probably against the popular perception of President Buhari’s astute frugality in financial management, recurrent expenditure was inexplicably also significantly increased, only to be partly funded with more high interest loans!

Thus, despite the forlorn hope that the seemingly entrenched practice of treasury looting and several other miscellaneous financial leakages, including billions of Naira salaries to thousands of ghost workers, would be arrested, to tame recurrent expenditure, sadly, the reverse, which would further worsen our already debilitating debt burden is now the reality. Unexpectedly, increasing debt consolidation has also instead quickened and Mr. President’s consideration of a fresh $29.9bn loan may ultimately spur debt burden suicidally, closer to $100bn, such that over 50% of total annual income may ultimately be required to service national debts annually. Clearly, the oppressive constraint that such a monstrous debt profile has on national development and social welfare will certainly become far reaching.

Indeed, according to the Budget and Planning Minister, who spoke at a recent KPMG CFO forum “government had already spent about N3.577Tn out of the N6.06Tn 2016 budget by 30th September; of this sum, N1.138Tn i.e. over 35% was expended on servicing domestic and foreign debts; regrettably, since the 2016 budget, like others before it were also totally denominated in Naira, the minister did not disclose the source of dollars or what Naira exchange rates were applicable to the dollars exchanged to settle these foreign debts.

SAVE THE NAIRA!! SAVE NIGERIANS!!!

 

 


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Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.