The National Assembly will receive the 14th Appropriation Bill from President Goodluck Jonathan today in a special session. Presentation of budget estimates by the executive and their eventual passage into law after much inter-arm sparring and buck-passing is routine. But for a government in dire need of trust and public confidence, this budget, as a departure from others, must perform for a peaceful 2015, TORDUE SALEM writes.
Today, President Goodluck Jonathan will lead his entire cabinet with a coterie of aides to the National Assembly to present his proposal for 2014 Appropriation Act (Budget). To go with the ritual, security men are armed to the teeth as a frightening cordon greets entrants to the National Assembly.
The lobby of the two arms is laced with a red carpet from the floors of the back door to the chamber of the House of Representatives, which is flung open to allow the Presidential train untrammelled access to a hallowed chamber with a sea of expectant lawmakers. The House is the hosting arm as it is the tradition.
Because the House is seen to be more organically representative of the people than the Senate. While the Senate represents the equality of states, the House represents the population or demography of Nigeria.
The budget would have been presented last week Tuesday November 12, but the President sent in a quick memo to the Senate President, David Mark, and the Speaker, Aminu Waziri Tambuwal asking for a postponement, which was granted for today.
A circular signed by Dr. Ishaya Habu Sarki, a Director of Management Personnel on behalf of the Clerk of the National Assembly, and made available to National Mirror, gave the announcement on Thursday, November 7.
A day earlier to the announcement of the postponement (Wednesday, November 6), the House of Representatives was thrown into a row as a letter from President Goodluck Jonathan notifying lawmakers of his intention to present the 2014 Budget on November 12 was read by Tambuwal. Hon. Aliyu Madaki (PDP-Kano) had raised a motion under "Personal Explanation" to oppose the intention of the President to come with a fresh budget when he was yet to present the Medium Term Expenditure Frame Work, MTEF, of the government.
The mover of the motion also regretted that the 2013 Budget must be performed to at least 80 per cent before a new budget estimate is received from the President. Lawmakers who took sides with the motion, insisted that the 2013 Budget performance has not been impressive, therefore, presentation of the 2014 Budget proposal should be postponed until a reasonable implementation is recorded.
The Deputy House Leader, Leo Ogor, had moved a motion to admit the president and his entourage in a joint sitting with the Senate on Tuesday, November 12, to present the 2014 budget proposal when a counter-motion was raised by Madaki. After Hon. Mohammed Ibrahim Idris (PDP-Kogi) had seconded the motion, Madaki coming under matters of personal explanation on the poor implementation of the 2013 Budget argued that the House should not receive the 2014 proposal until an appreciable state of implementation is attained.
Madaki said the 2014-2016 Medium Term Expenditure Framework, MTEF, earlier submitted by the president to the House has not been considered and approved, insisting that the lawmakers should shift the presentation of the budget until further notice.
He warned that "we must not turn the budget into an annual ritual where the president comes and we make a ceremony and then the budget is never implemented. Let's shift this budget presentation until we are convinced that this year's budget is implemented at least 80 per cent.
We are not asking for 100 per cent." Madaki's submission was supported by Hon. Ben Nwankwo (APGAAnambra), who argued that his motion seeking to review implementation of the 2013 Budget two days earlier was stood down pending the outcome of the House completion of oversight on the extent of implementation therefore, the budget presentation should also be put off.
Hon. Friday Itulah (PDP-Edo) also explained that since section 81 of the 1999 Constitution (as amended) provides that the president could lay the budget anytime within the financial year, the presentation be suspended. Others argued that the MTEF of the government needed to be considered, as is the norm, before admitting Jonathan to present his budget estimates.
But Hon. Raphael Nnanna (PDP-Imo) kicked against the motion, saying the presentation should not be stopped. Also opposing the motion, Hon. Warman Ogoriba (PDP-Bayelsa) submitted that there was no law barring the president from laying the budget.
In his argument, Hon. Nkem Abonta (PDP-Abia) said the president should be allowed to present the budget and any other issue would be discussed during consideration. It was later gathered that, one of the reasons for Jonathan to have postponed the presentation of his budget was because he wanted the National Assembly to take the MTEF first. But while considering the MTEF on Thursday to pave way for the 2014 estimates today, the House was again divided.
This time, clearly along party lines. Though the House approved the 2014-2016 MTEF, Fiscal Strategy Paper, FSP, the opposition won the day, as the benchmark price of crude oil was raised from Jonathan's proposal of $76.5 to $79. After a three-hour executive session on the M-TEF, division among factions of the Peoples Democratic Party, PDP, still resurfaced, with the new PDP in cooperation with the opposition All progressives Congress, APC, winning the day. The new PDP and APC got 79 votes while the old PDP garnered 62 votes, when the decision on the money document was put to vote.
This contrasted with the figure passed by the Senate which stood unchanged from the proposed $76.50 it received from the executive. Adopting the recommendations of the report on the MTEF and FSP submitted by the Committees on Finance, Budget and Research and Aid, Loans and Debt Management, the lawmakers also pegged the average crude oil production at 2.3883 million, 2.5007 million, and 2.5497 million barrels per day for 2014, 2015 and 2016 respectively. The average exchange rate of N160 to a dollar was approved for the next three years with corporate tax fixed at 30 per cent and Value Added Tax, VAT, at five per cent respectively.
Other recommendations include that: "The government should strengthen and consolidate its fiscal strategy to narrow the gap between projected and actual revenue for the period 2014-2016 curtailing oil theft and diversifying the economy to increase tax bases so as to increase tax revenue. "The details of SURE-P projects to be executed be attached as an addendum to the annual budget estimates for approval by the National Assembly."
On the Excess Crude Account, ECA, the lawmakers approved that "the distribution to the tiers of government of N666.9bn from the excess crude account as proposed by the executive and augmentation from the ECA should the projected crude production falls below budgeted, provided there are funds in the account."
In more than 10 years, that would be the first time the House would be so divided on the M-TEF. But again, it tallies with the signs of the time. The 2014 Budget like the previous ones in 2003 and 2010 has been contentious and controversial, because it is the budget that would almost decide Jonathan's fate in 2015.
For example, the National Assembly is already in a battle with the Finance Minister, Dr. Ngozi Okonjo-Iweala over the percentage of the 2014 budget implemented. The issue of the ECA is also yet to be resolved as well as the issue of the Sovereign Wealth Fund, SWF, which is being contested in court by the governors.
Also, the Senate last week described the pace of implementation of the 2013 Budget as unreasonable and unsatisfactory, even as it regretted that the impact of its implementation remains unimpressive. The lawmakers also expressed concerns that the budget has followed the old practice of heavy recurrent and light capital projections.
The position of the red chamber was contained in the report of its joint committees on finance and appropriations on the 2014-2016 MTEF and FSP, which was accepted and approved after protracted debate by the lawmakers.
However, the passage of the MTEF report was not a smooth sail as many senators criticised the contents and projections contained in the document. They also faulted many of the assumptions contained in the budget as well as the inability of the formula tours of the paper to have consulted widely with all the stakeholders before coming up with the document.
It took the strong intervention of the Senate President, Mark, to dissuade the lawmakers from jettisoning the report before the lawmakers finally voted to accept the report. According to Mark, discarding the report subjectively would imply the rejection of the document, which would deny Senate's input in the 2014 Appropriation Bill.
In a passionate appeal, Mark urged his colleagues to avoid regional and party sentiments as the document in question affects the economy of the nation. "We need a document that will help us make our input when we consider the budget.
That is what this paper is all about. And it has given us all the highlights that we need when we are making our own input into the budget. So, if you say 'reject this paper', then, you are saying 'reject looking at this input when you are looking at the budget. "So, there is no need of rejecting the paper. It is a report from our own committee and it is saying that we should look at these issues when considering the budget.
If you are saying that when we are looking at the budget, we should not look at the shortfall in oil production, it is saying, 'look at the shortfall in oil production, remedy it when you are making your input'. "It is not a matter of assumption. It has looked at all the figures. In their recommendations, they are saying that the ECA is not a legal entity and that government is not rendering a proper account.
"So, if we say no to the report, we are saying ECA is a legal entity and that government is giving proper account. We should not look at it on any partisan or regional basis.
It is a paper that affects the economy of the country and I think the committee has done an excellent job. "These are the issues we truly need to address when we are making our input into the budget. Keeping the external reserve so high at the expense of local infrastructural development is unacceptable. That is what the paper is saying," Mark said. Consequent upon this appeal, when the report was put to vote, those in support managed to outweigh those opposed to it and it was thereby passed.
The MTEF and FSP provide the basis for the annual budget planning as required by the Fiscal Responsibility Act, 2007. "An assessment of the performance of the 2013 budget shows that reasonable progress has not been made," the joint Senate committee report observed.
It stated: "From the progressive, optimistic but cautious MTEF and FSP projections and policy objectives over the years, the nation has not moved from the old practice of heavy recurrent and light capital projections and subsequent poor implementation of the budget in the years past." The 2013 budget act and the amended act contained an aggregate regular expenditure of N4.987 trillion.
The projected regular revenue for the budget was N4.1 trillion, while the aggregate expenditure is made up of statutory transfers of N388 billon, debt services of N591.76 billon, recurrent non-debt expenditure of N2.415 trillion, and capital spending was pegged at N1.591 trillion.
The report by the joint Senate Committees on Finance and Appropriation observed that of this sum, only N872 billon had so far been released and cash-backed for the implementation of capital projects as at the end of the third quarter of 2013 for reasons the executive claimed were occasioned by reduced revenue inflows from oil and non-oil revenue sources, especially revenues from the Nigerian Customs Service.
The MTEF report, which was passed by the Senate contained the following projections: benchmark oil price $76.5 per barrel of crude oil, up from the $74 projected by government. It adopted the 2,3883 forecast for crude oil production per day by government, while it also adopted the exchange rate of N160 to the US Dollar by government.
Regarding domestic borrowing, the Senate observed that the current rate of N7.53 trillion and the budget deficit of 1.90 per cent of GDP proposed for 2014, which would partly be funded through borrowing, cannot be said to be the best approach to economic development. It said already, the 2014 budget is contemplating new borrowing of up to the tune of N572 billon.
If approved, according to the report, it would raise our debt profile to an all-time high sum of N8.25trillion, excluding the AMCON contingent liability, which could be in trillions of Naira. In view of the foregoing, the report recommended that fiscal prudence should be exercised by government in line with the Fiscal Responsibility Act 2007.
Concerning the issue of ratio of recurrent to capital expenditure, the report expresses concerns over the overwhelming advantage of recurrent to capital expenditure and recommended drastic reduction in the cost of governance and improved revenue collection with a view to attaining a recurrent/capital expenditure ratio of 60/40. Also, the Senate approved the joint committee's recommended corporate tax and VAT rate of 30 per cent five per cent.
We all know how important budgets are especially to a country as big as Nigeria. We must get it right
Well let us just hope this would result into something positive for this country.
We pray so