Ending delay in presenting budget to parliament

Ngozi Okonjo-Iweala, coordinating minister for economy and finance minister and Bright Okogu, director general of budget office of the federation, are at it again. They have put on display their habitual tardiness in presenting annual budget proposals to the National Assembly (NASS) with consequent delay in enacting the Appropriation Acts.

Available data confirms that the time-lag between presentation of the Appropriation Bills to the NASS by the executive and assent by the president averaged four months and 10 days in the 12 years from 2002.

The problem of slippages in the annual budget cycle dates back to the Obasanjo presidency when the highest time-lag of six months in Nigeria’s fiscal history occurred in 2005. However, the Obasanjo administration achieved a feat when the 2007 federal budget received presidential assent on 22nd December 2006.The executive sent the 2007 budget proposals to the NASS on 6th October 2006.

International best practice requires that the budget should be signed into law before the commencement of the target fiscal years. This has eluded Nigeria’s fiscal policy managers over the years. Sadly, the finance ministry under the watch of Okonjo-Iweala has failed to correct this obvious and costly failure.

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Presentation of the budget to parliament is an important item on the annual calendar for budget preparation. As every school girl knows, the annual budget outlines government revenue and expenditure for a given period of time, usually a year.

It is the government’s financial statement which reviews past performance and sets out the government’s fiscal objectives for the ensuing year (on an annual basis) within a medium term expenditure framework (MTEF). More significantly, the annual budget reflects the choices that government has to make, and is the tool it uses to achieve its economic and development goals.

The government has to balance a wide range of legitimate demands with limited resources at its disposal. In the budget, government sets out what it is going to spend (expenditure) and the income it collects through taxes (revenue), which it needs to finance expenditure.

In a country notorious for policy inconsistency, the annual budget signals to citizens the direction of public policy and how it will impact deferent income groups. Business owners and managers look up to the budget to know how they can use the document to their advantage. In addition, government remains the biggest industry in our country.

Consequently, most people crave to see the budget as soon as possible. Delaying its presentation to the law makers and citizens tends to be frustrating for decision makers in and out of government.

This is particularly so because with youth unemployment estimated at over 60 percent, Nigeria’s army of unemployed graduates want to see the extent to which government will in 2015 use the budget to promote a certain level of employment, stability in prices, economic growth, environmental sustainability and external balance.

Presentation of the annual budget to the national assembly is one of 10 main activities in the budget preparation process in Nigeria as in most countries. In Nigeria, this key activity is slated for November of each year. The remaining nine steps are tied to the annual calendar.

For instance, January and February are devoted to submission of budget memoranda outlining priorities of MDAs. March sees the federal ministry of finance in consultation with ministries, departments and agencies (MDAs)  review the medium term macro framework and sectoral ceilings. In April and May, the finance ministry prepares and circulates budget preparation guidelines popularly called budget call circular.

The months of June and July are devoted to engagement with identifiable groups notably, civil society organisations including the media. Running concurrently with engagement with civil society is policy hearing conducted among MDAs which spans June and August.

The next activity is technical hearing expected to take place in September. October is spent to procure cabinet approval while November is for presentation of the budget to parliament. Parliament is expected to approve the budget in December, sometimes with amendment.

Strict adherence to the budget preparation timeline ensures that budget implementation kicks-off in earnest in January of the target year. This is significant for many reasons. First, delay in presenting the budget to parliament frequently leads to its passage out-of-time with serious consequences for budget performance.

For example, our recent experience has shown that enactment of the appropriation law could drag till March or April often providing the finance ministry with excuses for not releasing the first quarter capital budget within the first quarter.

Secondly, the lack of synergy between the budget circle and the nation’s climate has often contributed to poor capital budget implementation. Releasing funds for capital projects when the rainy season has set in makes it more difficult to achieve acceptable levels of budget implementation. The least our elected officials can do for longsuffering citizens is to avoid delays in enacting the annual appropriation law in furtherance of good governance.

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