The country appears set for another budget showdown as the executive and the legislature resume their long standing disagreement over budget figures. Finance minister, Olusegun Aganga said last week that the 2011 appropriation bill passed by the Senate is not “implementable” due to the alterations carried out by the lawmakers.
The Senate last week passed a budget of N4.972 trillion, N752 billion higher than the initial figure of N4.22 trillion submitted by President Goodluck Jonathan to a joint session of the National Assembly in December. The appropriation passed by the Senate was predicated on a benchmark of $75 per barrel of crude up from the $64.7 projected by the executive and a crude oil production of 2.3 million barrels per day.
The National Assembly jacked up its allocations for capital and recurrent expenditure by 52.2 percent from N111.24 billion to N232.74 billion, while reducing amount earmarked for debt servicing from N542.3 billion to N445.09 billion.
Mr Aganga recently expressed concern over the volume of deficit and the level of borrowing that this would trigger.
“The 2011 budget is supposed to signal the beginning of fiscal consolidation, but we now have another expansionary budget which is unimplementable. If we are to build our economy on a solid foundation and avoid the boom and burst of the past, it is critical that we embrace discipline in the way we manage public finances. We cannot continue like this,” the minister said.
“If you adopt pro-cyclical fiscal policies then you go into boom and burst all the time so you need to have consistent robust fiscal policies that are relevant to your economy. The level of recurrent expenditure is unsustainable. Unless we deal with that we cannot deal with the problem of allocation to capital projects.” He said a huge budget deficit would translate to government resorting to domestic borrowing, a situation which experts say would further crowd out the private sector from the bond market. “It is one of the reasons why we say we have to look at it again. We need to reduce borrowing and we need to improve the quality and efficiency of spending,” he said.
However, while the minister was lamenting the workability of the budget, the National Assembly is insisting that the budget should be implemented the way it has been passed. Chairman, House of Representatives Committee on Finance, John Enoh, was quoted as saying that no budget that was unimplementable provided the government had the political will and its agencies the requisite capacity to implement its provisions.
“If Aganga is talking about the Federal Government implementing the budget 100 percent, then he may have a point. But which of the budgets passed in the last 10 years has been fully implemented by the executive? ,” he was quoted to have said.
Private sector joins the fray
While the battle rages, the organised private sector has taken sides, on the ground that the economy has been at the receiving end of poorly crafted budgets over the years. Frank Nweke, director general of the Nigerian Economic Summit Group said it was no longer acceptable for the national assembly to stifle the other sectors of the economy.
“This is not acceptable. We recognise that the private sector must speak up. If it is necessary to institute legal action to seek interpretation of the constitution of this country as to who has legal powers to appropriate fund and whether the legislature has the power to distort the budget as it does each year, it is something that we are prepared to take up,” he further said.
He is not alone on this as the Institute of Directors (IoD) of Nigeria is also prepared to challenge the issue in the court. Chike Nwanze, president of the Institute said it was time the legislators begin to put the entire country into consideration before tinkering with the budget. “If we have to institute legal action, we are ready to consider that option,” Mr Nwanze said.
Opeyemi Agbaje, lawyer and senior consultant at Resources and Trust Company Limited, a strategy and business advisory firm said it was better for the executive to have this confrontation with the National Assembly once and for all. “Under Obasanjo, this was a recurring problem but in the end Obasanjo chose to implement only those portions of the budget he found acceptable. Yar’adua basically always allowed the NASS to have its way, leading to huge fiscal expansion between 2007 and 2010.” According to him, the constitution allows the previous year’s recurrent budget to operate for six months (till June 2011) so that the operations of government can continue in the event of non-passage of the budget. “It may also be useful if the Supreme Court resolves the legal duties and roles of the executive vis-a-vis the legislature once and for all. Unfortunately the impasse will hold up capital expenditure proposals contained in the budget,” he said.
Constitutional crisis
However, Mr Aganga expressed fear about the ambiguity of certain aspects of the constitution. “We expect to have a dialogue because we all have to work together and usually it is resolved but the constitution in some areas is not clear on the roles and powers of the executive and legislature on this. If the executive decides not to sign the budget, then after 30 days, the legislature can actually hold a resolution and pass it. That is the constitution we have today.” With elections underway, deliberations on the budget may not hold under the current house leadership. A new legislative session may not commence until well after the swearing in on May 29. Under the current scenario, only a political solution may resolve this imminent logjam. What then is the way out?
