Budget 2009, Federal Government and the House of Representatives

FOLLOWING their joint investigation into the implementation of the 2009 Appropriation Act, the House of Representatives' Committees on Appropriation and Finance found that "the Federal Government's actual revenue (expendable fund) was N27.98 billion higher than the budgeted figures during the first four months of the year 2009". Although the Presidency had indicated last May that there was a 30 per cent shortfall in the budgeted revenue in the first quarter, funds were obtained from both revenue sources not captured in the Appropriation Act and the Excess Crude oil account to cushion the projected revenue gap for the year. Nonetheless, the House observed that the President had not followed due process as the right thing to do was for Mr. President to seek the prior approval of the National Assembly (NASS) before endorsing any withdrawal from the Excess Crude Oil account. We agree and urge the President to always abide by the rules.

Given the ostensible excess revenue above, the House rejected any claim that inadequate funding posed any constraint and insisted that the president should implement the budget fully or risk possible impeachment. It will be recalled that, apart from inadequate funding, the point was made that most of the constituency projects which the legislators inserted in the budget without any consultation with the executive arm that would be required to supervise their execution, lacked proper design and costing and were therefore unimplementable.

The report of the joint committees to the House was conveniently silent on the stated make-or-mar requirements for projects to be included in the budget . In the circumstance, we share the position of the executive and hold that such constituency projects have no place in the 2009 budget. Hence, instead of dissipating energy on unnecessary confrontation by embarking on impeachment proceedings against the President, the legislators should accept the home truth that they cannot rig the budget, for self-enrichment as was the intention under the 2009 budget. Therefore, legislators will do well to begin early consultations for an acrimony-free 2010 budget.

We, however, laud the legislators for the present resolve to rev up their oversight activities and put an end to the high levels of the budget under-implementation which the executive arm has exhibited in the last 10 years of democracy. The presidency is expected to implement any well-prepared budget to the highest degree possible. But the National Assembly has to do a thorough job in its laudable mission. For instance, although the House accused the executive arm of selectively implementing the 2009 budget, it is not clear what proportion of the mutually approved projects has been implemented. Every odd Wednesday, the Federal Executive Council announces the award of one contract or another, but that forms only a part of the project execution.

Seven months into the 2009 fiscal year, the news was that some legislators during the consideration of the joint committee's report attributed the current rash of industrial action to the executive arm's failure to implement relevant aspects of the budget. Maybe, with the unimplementable constituency projects out of the way, it is long overdue for the president to submit the promised supplementary budget that will restore the initial projects whose provisions were either slashed or removed outright to accommodate the ill-conceived pet projects of legislators. Going forward, the National Assembly should not only satisfy itself that all mutually approved projects are being physically and verifiably executed as scheduled but also keep the public abreast of achieved levels of implementation in each case at regular intervals.

Now, in the current search for enhanced budget implementation, a number of legislators have wondered why capital votes were usually returned unspent at the end of the year while the unspent overhead component vanished into thin air. For selfish reasons, legislators tend to equate release of funds to full budget implementation. But it is quite obvious from experience that the release of budgeted funds as it currently plays out actually detracts from faithful implementation of the budget. In order to ensure improved budget implementation, therefore, accrued revenue for specific projects should be left in the perfect safety of the federal treasury from where it could be released strictly in direct settlement of client firms or individuals as and when the projects are duly executed or other commitments mature.

What the National Assembly needs to do is to quickly enact legislation barring the premature release of budgeted funds to the MDAs ahead of project execution because the practice, apart from posing problems to monetary policy management, turns MDAs into middlemen that would rather trade with the funds at their disposal to further base interests than faithfully facilitate early and sound execution of the projects for which the funds were earmarked.

Again, in their new-found zeal to ensure that the budget is implemented as passed (we repeat the proviso that the budget be well prepared), the legislators, unfortunately, failed to recognise the mother counter-budget practice that has stunted the national economy for over three decades. All budgets as passed constrain government to expend realised (actual) naira revenue domestically plus a safe and duly specified dose of deficit. Over the last decade of democracy, for instance, the level of implementation of the capital budget in any given year was below 50 per cent officially. Government trumpeted the savings which took the form of unreleased and returned unspent funds. Thus the decade witnessed seemingly unbroken budget surpluses, which would ordinarily foster relatively conducive economic environment.

On the other hand, the prevailing reality of intractable excess liquidity, high inflation, deteriorating naira exchange rate, inhospitable production environment, prohibitive lending rates, comatose real sector and massive unemployment, in the cause-and effect realm of economics, are incontrovertible evidence of excessive government deficit spending.

Since the non-oil receipts are undisputed actual revenue whose expenditure is non-inflationary, we are left to conclude that the naira equivalents that are substituted for Federation Account dollar proceeds for sharing among the three tiers of government and which make the bulk of what the joint committee earlier termed "the Federal Government's actual revenue (expendable fund)" do not meet the test of realised revenue qua revenue.

Consequently the crusade for the executive arm to implement well-prepared budgets as passed in order to achieve high levels of budget execution must begin by getting the executive arm to go through the universal banks in order to convert and properly monetise Federation Account dollar allocations to the three tiers of government into actual naira revenue for government expenditure.