Beyond The Budget Hoopla | Independent Newspapers Limited
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Beyond The Budget Hoopla

Posted: May 2, 2016 at 2:00 am   /   by   /   comments (0)



Since President Muhammadu Buhari presented the budget estimates for the 2016 fiscal year, it has generated so much fuss among the citizenry.  The budget yet has a lot of rough edges to be smoothened as a result of the frosty relationship between the Executive and the National Assembly; but the interest and hype it has elicited remain earthshaking. This is understandable. Nigerians have a strong tendency to look up to the budget as the utmost solution to their economic problems and see the annual ritual as the most auspicious ingredient to grow the economy. Thus it is not out of place to hear them voice out the untrue narrative that when the budget is passed, the economy would boom, there would be money to spend, and a lot of things would be easier. When the budget is eventually passed and fails, the blame is put on implementation.

Ordinarily, a budget is an estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals. It is a statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them. It is also an official statement from a government about how much it plans to spend during a particular period of time and how it will pay for the expenses; a plan for the coordination of resources and expenditures, as well as the amount of money that is available for, required for, or assigned to a particular purpose.

Though it counts among the most important administrative tools, a budget serves also as a plan of action for achieving quantified objectives, standard for measuring performance, and device for coping with foreseeable adverse situations. In other words, budgeting is the essence of good management but must be seen as a tool and not an end.

Budgeting is for guidance, not for controlling, and therefore, is neither the solution to economic problems nor the tonic to make the economy boom, more so when the supporting monetary framework is weak.

For instance, experts say the economy has capacity to expand to a minimum figure of $1 trillion, which is twice the value of $510 billion generated through the rebasing stroke of pen. How much of this envisaged new GDP figure the 2016 budget figure of N6 trillion can contribute with N2 trillion capital expenditure remains a conjecture. Inflation is now entrenched; high cost of funds is a big issue besides suffocating exchange rate, especially at the parallel and black market segments of the market.

It is known that inflation erodes purchasing power, takes away jobs, and exacerbates poverty, which governments erroneously attempt to eradicate without success. Endemic excess liquidity in the system is at the root of it all, and it is the responsibility of the Central Bank of Nigeria (CBN) to mitigate this.

It is, therefore, false expectation to believe that the economy will do well when the budget is passed without addressing these fundamental problems. Even when the problems have been addressed, there is still need for activity-based budgeting. As much as possible, budgeting must also be flexible and auditable.

Beyond the euphoria and forlorn expectations engendered by the annual exercise, budgets are also expected to facilitate communication, collaboration, cooperation and coordination.

It is in view of this we advise the citizenry to moderate their expectations from the budget and re-examine their slant of complaints as the exercise for this year dangles between the chambers of the National Assembly and the Executive arm of government. However, we are quick to add that everything must now be done to ensure that whatever grey areas in the 2016 budget are trashed out without further delay. It is not in the interest of any body when the country is portrayed as one that has not been able to hammer out a budget five months after its formal presentation by the President. We have had enough of the friction. All personal considerations must now be drowned by national interest in the interest of the greater majority. Going forward, a repeat of this year’s experience must be avoided.