Monday, December 15, 2008

Implementing 2009 budget

After two aborted attempts, the 2009 appropriation bill is now before the National Assembly, thus ending the lingering anxiety over the document. Totalling N2.87 trillion, the 2009 budget is 4.45 per cent higher than the initial appropriation of N2.74 trillion for 2008 and 6.42 per cent above the amended 2008 budget of N2.64 trillion.

The President said emphasis would be placed on the completion of some ongoing programmes and projects that are key to development, such as power, transportation, land reform, food security, works and the Niger Delta. Highlights of the budget proposals show that a larger chunk of public expenditure - N1.65trn - is for recurrent expenditure while N796.74bn is for capital.

The proposed budget is predicated on a $45 per barrel of crude oil price, a daily oil production of 2.292 million barrels per day, Joint Venture Cash Calls of $5bn, Gross Domestic Product growth rate of 8.9 per cent and inflation growth rate of 8.2 per cent.

The 2009 budget is coming amid worsening global recession, which is already posing a threat to the implementation of the budget. The plan has a huge deficit component of N1.09trn or 3.95 per cent of the GDP. The National Assembly should prevent the country from being plunged into another foreign debt trap. With the sudden crash of oil prices from a peak of about $147 in July to about $42 for January delivery, the oil price benchmark of $45 per barrel may be too optimistic. The restiveness in the Niger Delta also poses a threat to the oil production benchmark of over two million barrels per day.

Despite some attempts to change its orientation, the budget still retains its old character. For instance, though the new economic instrument is set to increase non-oil revenue, strengthen tax proceeds and fortify the ongoing performance of the non-oil sector, it has once again exposed the nation’s slavish dependence on oil and the inability to withstand the shocks from a crash in crude prices. Thus, it is still a long road to a diversified economy.

The government has also done little to correct the anomaly of big government and ballooning recurrent expenditure, which has always left too little for implementing development projects. The decision to cut some overhead expenses could not address the lopsidedness. Yet this would have been addressed through greater financial prudence and sincere commitment to privatisation of state-owned enterprises.

Considering the importance of railway to an efficient transportation system, the paltry allocation of N8.3bn to the sector is inadequate compared to N48.7bn earmarked for the Federal Capital Territory. The sector should be opened up immediately to private sector participation.

The real challenge, however, is in implementation. In the last nine years, the country has had to contend with poor implementation of the nation’s successive budgets. This is evidently responsible for the pervasive decay in the nation’s infrastructure and the generally poor performance of the nation’s economy. It is instructive that the President himself admitted the failure of the 2008 budget. Perhaps to prevent a repeat of the 2008 scenario where 67 per cent of the capital vote has not been spent, in spite of 100 per cent disbursement, the President said the MDAs would be made to deliver measurable targets.

Critical areas like power, security and others identified in the budget should be faithfully implemented through an efficient utilisation of allocated votes. The success of any budget does not depend solely on the amount allocated but on an efficient structure for the implementation of the document. Despite the need for proper scrutiny, it is gratifying that the leadership of the National Assembly has pledged prompt passage of the budget. The lawmakers should cut areas of waste and avoid self-serving adjustments.