Nigeria has once again returned to the January-December budget cycle after President Muhammadu Buhari on Tuesday signed the N10.59 trillion 2020 Appropriation Bill into law.
Buhari’s assent to the budget on Tuesday, less than one week after it was transmitted to him by the National Assembly, marked the third time since Nigeria’s return to civil rule that the country would begin its fiscal year in January.
Apart from the years 2001 and 2007, Nigeria since 1999 has had the signing of its annual budgets delayed late into a new fiscal year, leading to poor implementation of the budget, especially the capital component.
Tables shared by Olakunle Abiola Somoye, special adviser on media to Speaker of House of Representatives Femi Gbajiabiamila
Analysts say returning to a January-December budget cycle was a good signal as it would remove some of the uncertainties associated with delayed budget, including delayed investment decisions.
“Returning the budget to the January-December fiscal year will, to a large extent, remove some of the uncertainties associated with delayed budget,” said Johnson Chukwu, CEO of Lagos-based investment house, Cowry Asset Limited.
“The delay has been known to make business leaders and operators apply brakes in order to know the budget direction before taking their investment decision,” he said.
Chukwu said that since the budget is the strongest fiscal tool that the executive arm of government uses to impact on the economy, its delay or absence would deprive major agencies of the government of funds to embark on key projects that would boost growth in the economy.
Signing the budget in his office in Abuja at exactly 3:39pm on Tuesday, in the presence of Vice President Yemi Osinbajo, Senate President Ahmed Lawan, among others, Buhari said the 2020 budget passed by the National Assembly provides for aggregate expenditures of N10.594 trillion, an increase of N263.95 billion over the executive’s proposal that was submitted in October 2019.
“We have examined the adjustments and may revert to the National Assembly with a request for a virement or other relevant amendments,” he said.
Buhari also said the government was optimistic that it would be able to finance the 2020 budget, hinging his optimism on the prevailing global oil market outlook and the government’s strategic approach to revenue growth.
He said being a deficit budget, an appropriate 2020-2022 borrowing plan would in due course be forwarded to the National Assembly.
“To optimise the desired impact, I have directed the Ministry of Finance, Budget and National Planning and all federal MDAs to ensure effective implementation of the 2020 budget,” Buhari said.
With the budget now signed into law ahead of the commencement of the fiscal year, Chukwu expressed the hope that the government would be able to disburse the cash-backed capital expenditure budget early enough so the country could take advantage of the dry season to implement capital projects in the first quarter of the year.
This, he said, was a departure from “the previous years when the signing was done in the thick of the rainy season, making the country underperform in the implementation of capital budget”.
“It is a good thing that the budget cycle is back to the January-December year,” said Boboye Olaolu, a macroeconomic analyst at Cordros Capital Limited.
“What this goes to show is that there is synchronisation between the legislative and the executive arm of government. Hence, when the latter tries to push up any policy that can spike up the economy, we might be seeing the same positive reaction from the legislative arm, which is a positive one for the economy,” he said in a phone response to BusinessDay.
Buhari had presented the budget on 8th October, 2019 which the 9th Senate promised to pass before end of the year in order to revert the nation’s fiscal year to January to December.
President Buhari had proposed N10.33 trillion while the National Assembly increased it to N10.59 trillion.
The breakdown of the budget revealed that out of the N263 billion increment, the National Assembly increased its budget from N125 billion to N128 billion.
The House on Thursday passed harmonised version, which Senate had earlier passed to ensure that the budget runs from 1st of January to December 31st 2020.
The new budget appropriated N110 billion for the judiciary, Niger-Delta Development Commission got N808 billion.
The National Assembly also increased oil benchmark price to $57 per barrel as against the proposed $55 but maintained the daily crude oil production rate at 2.18 million per barrel, GDP growth rate 2.93 percent, inflation rate 10.81 percent, and exchange rate 305/US$1 as proposed by the executive.
President Buhari, who marked his 77th birthday yesterday, appears to be in the good books of the 9th National Assembly, after his anointed candidates clinched headship of both the lower and upper houses of the chamber, respectively.
Just two days back, President Buhari was granted approval by the legislature for a loan request to borrow as much as $30 billion, which the president said was necessary to fix the country’s dilapidated infrastructure across various sectors of the economy. The move was hitherto rejected by the 8th Assembly, which its members said was presented without a draft plan, and if approved, would skyrocket the country’s already ballooning debts.
The Senate has also got President Buhari’s assent on a N37 billion fund disbursement for the renovation of the Senate chamber, a move analysts say affirms the harmonious relationship between the current executive and legislature.
CORRECTION: The earlier version of this story reported that Nigeria last achieved the Jan-Dec budget cycle in 2013 and also included 2009 as a year in which the cycle was achieved. This has been corrected.
MICHAEL ANI, Lagos, & TONY AILEMHEN, Abuja
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