The delay in signing the appropriation bill is hurting the economy
We are in the fifth month of the year yet the 2014 Budget has not been signed into law as both the executive and the legislative arms of government continue to bicker on the details. Speaking after the weekly Federal Executive Council (FEC) meeting last week, the Minister of Information, Labaran Maku, noted that except the distortions in the figures are properly addressed, it would impact negatively on the economy and for that reason, President Goodluck Jonathan cannot assent to it as passed. “ It is very sad that we have almost entered the middle of the year and we don’t have a budget. It is sad that the budget has taken so long in coming and practically we have less than seven months to execute the budget,” said Maku.
While there was no firm word on how the differences would be resolved, Maku nonetheless promised that efforts were being made in that direction. “There are few areas of distortions and there are those areas that are very serious and we think there is a need to look into them because of the negative impact those distortions may have on the implementation of the budget,” Maku said.
In the proposal submitted by the executive, the recurrent expenditure was put at N2.4 trillion while capital expenditure was N1.1 trillion. In approving the estimates, the Senate and House of Representatives had raised the figures to N4.695 trillion from the initial N4.642 trillion estimates submitted by the executive. But since then there has been no agreement on the issue and for that reason, as we approach middle of the year, there is still no budget for 2014.
It goes without saying that a budget is intended to provide financial control and serve as the basis against which developmental activities can be monitored. A delay therefore suggests that the Nigerian economy is not operating optimally and economic development is hampered. First, capital projects which are critical for development cannot be executed since contractual agreements cannot be initiated without budgetary approval. Second, following the fact that capital projects cannot be executed, contractors cannot be paid and other businesses which provide services directly or indirectly to the contractors are affected by the squeeze. This leads to cyclical unemployment and a dwindling in some small businesses. For instance, the food hawker who hitherto provided food to labourers at a construction site may be out of business whilst projects are delayed. Third, the economy contracts at a rapid pace due to the liquidity squeeze. And four, the government is dependent on borrowing to fund recurrent and other essential expenditure which is not prudent.
We recall that the battle over the 2014 budget started with a fierce disagreement on the benchmark price of oil and after several weeks; a consensus was eventually reached and a benchmark of $77.5 per barrel and crude oil production of 2.3883 million barrels per day was adopted. It is useful to note that the price of crude oil has not fallen below $100 this year. More recently, a stalemate emerged on the figures to be passed. The National Assembly has increased the amount which the executive sent to it by a whopping sum of N53 billion and the two are yet to agree on how and why this has occurred.
While we agree that the discrepancy in figures between the legislative and executive arms needs to be addressed, we disapprove of the time it is taking to resolve such matter, especially at this most critical period. It appears that people in position of authority do not exude as much care as is required to resolve this issue due to the fact that they are not adversely affected by the delays.
