Tuesday, June 02, 2009

The President, legislators and the budget

RECENT exchanges between President Umaru Musa Yar'Adua and the National Assembly over the implementation of the 2009 budget are a disappointing display that 49 years after independence and 10 years into the current democratic dispensation, the executive and legislative arms of government have refused to work together in drawing up the national budget for the sole purpose of promoting the general well-being of the people as constitutionally enshrined.

In sketchy sequence, Mr. President presented the draft 2009 budget to the National Assembly on December 2, 2008, two months later than was publicly expected. The National Assembly thereafter spent three unhurried months to exercise its constitutional power to appropriate by making several adjustments to the draft, introducing constituency projects purportedly in order to ensure that the entire country could benefit and setting a mandatory time schedule for the President to release funds uniformly for all projects as a way of breaking with (so it was claimed) the hitherto high levels of budget under-implementation.

The 2009 Appropriation became an Act on March 10 when Mr. President, amidst reservations, assented to it. Two months later, the House of Representatives, announcing the discovery of selective implementation of the budget contrary to clauses in the Act, authorised two committees to investigate the realised revenue from January to May and the sums disbursed therefrom. The President thereupon formally apprised the House of reasons militating against the full implementation of the budget as passed.

According to the President's letter, the adjustments made to the initial budget proposals included substantial reduction or outright removal of provisions for power-related projects, arrears of monetisation owed to parastatals and accommodation for security personnel. In their place the lawmakers inserted constituency projects that lacked proper design and costing. Because there was no consultation with the executive arm prior to their inclusion, no provision had been made for their execution to be adequately supervised.

It is common knowledge that the country has been worse off on account of the numerous abandoned and uncompleted public projects into which vast resources had been sunk. Given the very poor state of public power supply over the past decade, it was unconscionable for the legislators to have tampered with provisions for power-related projects. In any case, the constituency projects as portrayed above would merely compound the litter of uncompleted projects across the country from which the populace would derive no benefit. But by wrongly equating the release of funds to budget implementation and inserting clauses impelling mandatory release of funds for the ill-conceived constituency projects, the legislators were only preparing the ground for corrupt self-enrichment. That would amount to looting the treasury through legislation contrary to the provisions of the 1999 Constitution.

Since most of the legislators are members of the ruling political party, the removal of ongoing projects and their substitution with fresh ones in the passed Appropriation Bill bespeaks gross party indiscipline verging on rebellion. Ordinarily, it falls on the President as party leader to draw up a budget that is based on the party programme and which contains core projects to be executed in order of priority depending on available resources. Such projects, which cut across legislative constituencies (not necessarily all), provide overall national benefit.

As often happens in free and fair elections, the successful presidential candidate and the majority of elected legislators may belong to different political parties. Even then, by virtue of the President's national mandate, his budget proposals are not expected to be replaced in the National Assembly with the programmes of the majority party beyond a little give and take. There is no room for the individual preferences of legislators to be substituted for the draft budget proposals. Consequently we strongly advise that consultations and preparation for a rancour-free 2010 budget should begin now in earnest. There is need for the Appropriation Act to be ready well in advance to make it possible for its implementation to commence on Day One of the applicable fiscal year.

Budget implementation aims at both attaining the highest possible level of project completion that is verifiable and creates favourable conditions for the private sector, the main employer of labour, to actively complement government efforts at ensuring full employment. Because the legislative arm, through its oversight function, contributes immensely to successful budget implementation, the executive arm should eschew stonewalling above-board supervision by legislators. For instance, it was anomalous for the House to first carry out investigations in order to ascertain the volume of revenue receipts and disbursements since the beginning of the year.

While we agree with the President that the Accountant-General and all accounting officers of MDAs should in accordance with the principle of the separation of powers report directly to the Executive rather than the Legislature, the President should unfailingly furnish the National Assembly, which is entitled to know, with detailed monthly realised revenue by source not later than the first week of the succeeding month. Hence, the reported over 30 per cent shortfall in the first quarter revenue receipts, which was only made known in May in the President's letter, would have been self-evident to all legislators two months earlier. Early routine full disclosure clips corrupt tendencies, ensures transparent application of available resources, facilitates needful legislative oversight as well as contributes to efficient and high degree implementation of the budget.

On the other hand, as already noted, it was wrong for the legislators to equate the release of funds to budget implementation. Indeed, the existing quarterly blanket release of funds to MDAs for projects that are yet to be executed is anomalous as it not only fuels excess liquidity with serious adverse implications for the private sector but also creates avenue for MDA top shots to manipulate payments for executed projects and other specific commitments while trading with the funds for corrupt self-enrichment. The practice should stop and in its place the Executive should give detailed report to the Legislature every quarter on the stage-by-stage implementation of various projects along with corresponding actual expenditure.

Finally, Mr. President's statement that government was being cautious not to crowd out the private sector from bank credit is incorrect because there has been no let-up since January in both the CBN mopping excess naira supply from the system and the Debt Management Office issuing restructured bonds whose proceeds are simply sterilised, although their annual cost to the treasury by way of unearned interest to banks exceeds 75 per cent of the imperiled draft 2009 federal capital vote of N796 billion. Besides the heavy devaluation of the naira, unattractive lending rates in the region of 20 per cent, soaring inflation despite the substantial drop in Federation Account allocations, delayed execution of capital projects and the worsening state of infrastructure are not business-friendly. The very low industrial capacity utilisation over the past several decades coupled with burgeoning unemployment is ample proof that government's fiscal and monetary policies of printing and sharing naira equivalents of Federation Account dollar proceeds, are inimical to the private sector.