“The glimmers of hope are however overshadowed by a few other pitfalls such as government’s plan to spend almost N42.48 billion of the capital allocation budget on the procurement and purchase of office furniture and fittings, computer software and new vehicles,” BudgIT said in its analysis of the budget.
The mismatch between the avowed commitment of the Buhari administration to reduce waste in all aspects of national life has dampened the initial enthusiasm of Nigerians about the N6.08 trillion spending plan, with allocation of N1.8 trillion, or about 30 per cent for capital expenditure, is an improvement on the N557 billion capital vote of 2015
While the Zero Based Budgeting Approach which the government has so much trumpeted emphasizes that each government agency will justify each line item in its budget before being allocated funds for it, there was no evidence that the Buhari administration followed this through in the preparation of 2016 fiscal proposal, noted the organization.
“There is no fact to show that the proposed 2016 Budget was formulated on a zero based approach. More priority is admirably placed on Power, Works and Transport and Defence, but the vast majority of line items leave the impression that the level of scrutiny stipulated by Zero Based Budgeting techniques were not applied to the proposed 2016 Budget,” noted BudgIT.
The observed lapses in the appropriation document has put the National Assembly in the saddle as the lawmakers seemed to have now taken on the task of rectifying the errors and fraudulent allocations in the bill. Going by the country’s past experience, there are fears that the lawmakers may also exploit the position to feather their own nests. As it has happened in the past, such alterations not usually ends up distorting the document, but derailing government’s intentions with its fiscal plans.
Thus, it was gathered that the Minister of Budget and National Planning, Senator Udoma Udo Udoma, met with the National Assembly leadership earlier in the week to appeal to it not to tamper with the allocation for capital expenditure in the budget in whatever corrections it wanted to do in the document.
The Minister repeated this appeal when he appeared before the joint sitting of the Budget Committee of National Assembly to defend his ministry’s budget. “We are in challenging times, we want to use the 2016 budget as a solution to our economic problems, especially the 30 per cent capital allocation component in the budget. We want to move from the past administration’s faulty traditional ways of managing our economy without development strides,” the Minister said. Reports indicated that the Federal Government has set up a committee to probe how some of the funny allocations got into the budget with the promise that those indicted will be punished. But the seemingly fraudulent allocations are just one of the problems confronting the appropriation plan.
Key benchmarks like the oil price which was projected to sell at $38 per barrel is already proving to be unachievable. The glut in the global oil market has pushed the price of oil well below the projected price, thus jeorpardising the nation’s plan earning N820 billion of the N6.08 trillion budget proposal from the sale of the commodity. Achieving the projected 2.2 million barrels of oil production may also not be realistic given the continuous sabotage of oil facilities, divestments by oil majors and most importantly, lack of buyers for Nigerian crude which is already turning out to be a major disincentive to investments in the sector.
Thus, the Buhari’s administration hopes of earning revenue of N3.8 trillion to fund the budget which already has inbuilt into it a deficit of N2.2 trillion is already in danger. There are fears that the failure to realize projected revenue, especially from oil sales may push the deficit in the budget close to N3 trillion especially if the National Assembly approved it in the present format. However, government has said the reforms of and appointment of new leadership for its key revenue earning agencies like the Federal Inland Revenue Service, IFRS and the Nigerian Customs Service, the Nigeria National Petroleum Corporation will help bring more funds into the purse to fund the budget.
Also, government said the excess funds which government departments and agencies have before now been frittering away on frivolous expenditure which is now being raked in through the implementation of Treasury Single Account, TSA will also be used to fund the budget. Over N2 trillion, according to the Minister of Finance, have been raked in through the TSA already.
In the same vein, though the exchange rate was fixed at N197 to one dollar in the budget, Nigerian currency is already selling at over N300 to the Greenback at the parallel foreign exchange market with strident calls for further devaluation of the naira. President Buhari has insisted so far that he will need more convincing to heed such calls which he had likened to “killing the naira.”
The Buhari administration came under fire of public opinion over the shoddy preparation of its first budget proposal the same week it faced its first national dissent over increase in electricity tariffs. For the Buhari administration, the honeymoon seemed to be over as Nigerians are now demanding for the dividends of the change.
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