A deficit budget is not necessarily a bad thing; but one with a huge deficit is something else altogether.  It was found on close scrutiny that Yar’Adua’s 2008 budget on arrival contained a deficit of about N560 billion.  Now, for an administration that had more time than it ordinarily required to put a decent budget together due to Ettehgate, this is indeed worrying stuff. 

In the days of Obasanjo, budget passage by the National Assembly was a mere formality devoid of any seriousness.  Perhaps a few astute legislators inserted one or two projects to benefit their constituency.  The leadership of the National Assembly however was content to treat it as a yearly ritual for further corruptly enriching themselves.  Well, happily, things seem to be changing.   In eight years, the genius OBJ only managed to implement – maximally - 35% of the budget.  He stuck the rest of the unspent funds in several private accounts.  ‘Excess crude oil revenue accounts’ was the illegal child of this system of deficit budgeting perfected by OBJ. 

The Constitution actually mandates that all monies be paid into the Federation Account.  But the idea behind putting the excess funds (after intentionally and severely pegging the benchmark at an unreasonably low level) was that this prevents pumping too much money into the economy in order not to over-heat it.  This is because it was felt that the government (Central and States) haven’t got the capacity to spend those money.   However, OBJ, periodically, would gather States and Local Government Executives and together, they would divvy up whatever money he put on the table without appropriation or reference to the National Assembly.  The rest of the money continue to sit idly in those private accounts.

The National Assembly (read: the House of Representatives) this time around is properly performing its oversight function and Yar’Adua’s budget is being given some coat of functionality.  About N300 billion so far recovered from those illegal private accounts have been appropriated in the 2008 budget – significantly reducing the deficit therein.  Some 67% of Yar’Adua’s budget is recurrent expenditures (overheads and salaries).  The rest is for capital projects of which about 60% are projects that would service government establishments anyway (i.e., building further government offices).  So what happened to Yar’Adua’s seven point pre-election agenda?

1. Power and Energy

2. Food Security and Agriculture

3.  Wealth Creation and Employment

4.  Mass Transportation

5.  Land Reform

6.  Security

7.  Qualitative and Functional Education

Well, Yar’Adua already said that he is not putting additional money into the energy sector as Obasanjo sank $10 billion (some say that figure is actually between $13 and $16 billion) with nothing to show for it. The other itemised areas were alarmingly under-funded.  Just one example would suffice.  Let’s look at Mass Transportation (roads, etc).  The entire Ministry of Environment was allocated N3 billion for 2008.  With this, and after taking care of recurrent expenditures, it is supposed to fight ecological (erosions, etc) problems, not in a Local Government in Enugu State, but the entire country!  The whole of the Benin – Port Harcourt road was allocated N40 million.  Some bridges were in 2007 allocated N2.5 billion.  Those works were not done and the money was returned.  This year, the same bridges got allocated N1.5 billion.  How realistic is this?  Roads (and infrastructural developments) that were previously funded were completely neglected this time around.  In other words, no funds for maintenance.  When the rains and those trailers demolish the roads; we start again.  Other sectors were similarly given insufficient attention.

A most pitiful sight to behold was the hollow show put up in the National Assembly by Federal Ministers and other agency heads in trying to explain their budget allocations.  Most of these people were glaringly ill prepared and managed to cast themselves in extremely poor lights.  When it took more than three weeks for the budget details to get to the National Assembly after its presentation by Yar’Adua, I knew something wasn’t quite right.  The budget was held up at the National Assembly this long because the legislators are only now doing what the Federal Executive should have done before the budget was presented. Yar’Adua’s rhetoric and budget simply never squared. 

Now, the Central Bank’s new policy of giving the States their monthly allocations in Dollars means that more of that currency would come into the market and the Naira would appreciate.  However, the implication for public finance and Yar’Adua’s budget is that if there is so much Dollars in circulation that the exchange rate falls to say N60 from the present N118, then it would become impossible to implement the budget at N59.  So we may be forced to go back to the era where civil servants’ salaries were delayed or not paid.  The whole thing reeks of incompetence, poor planning, more of the sameness, and ritualistic ceremony for its own sake without realistic or even proper thought.  This whole budget shambles has erased doubts in perceptive people’s minds as to what we now have on our hands. 

The National Assembly is only now looking at such concrete issues and trying to rectify matters as best as it could.  So far, it has increased the budget by some N400 billion.  Because of coups and counter-coups, the Legislature is unfortunately the least developed arm of government.  But they seem to be coming to their own – especially as regards budgetary matters and their oversight function.  They would need to continue to track implementation.  In the last dispensation, the National Assembly passed a bill called “The National Assembly Budget Research Office”.  This bill was to enable that body acquire the capacity to do thorough analysis and monitoring of the nation’s budget.  Predictably, Obasanjo refused to sign it into law.  Now would be a good time to resurrect that bill. 

demdem@hotmail.co.uk

11^th February 2008

Robot  Villager

# 1 var sbtitle2580=encodeURIComponent(Revisiting ...Read the full article. Posted by Robot| 13.02.2008 11:32

aguabata  Villager

# 2 this is a picture of the obstacles we will face if we attempt to do things the right way. I think Yaradua's percieved weakness and rule of law mantra is making the other arms of government strong, his non over bearing character probably made Ribadu more independently minded, being a cautious fan of Yaradua I believe his qualities could lead to negative or positive results, I only hope he is half the orderly man he portrays. Posted by aguabata| 13.02.2008 14:50