On the 16th of May 2018, the National Assembly passed a budget of N9.12 trillion for the 2018 fiscal year. This budget represents a 6 percent increase over the N8.61 trillion budget proposal presented by President Muhammadu Buhari on the 7th of November 2017 before a joint session of the National Assembly. It also represents a 22.6 percent increase over the N7.44 trillion appropriated in 2017. The fiscal operations of the 2018 appropriation are to result in a N1.95 trillion deficit, amounting to 1.73 percent of GDP, which represents a N60 billion reduction compared to the 2018 proposal by the Executive arm of government (with a deficit of 1.77 percent of GDP) and N450 billion reduction compared to the 2017 budget where the deficit was 2.61 percent of GDP. This reduction in deficit is in line with the ERGP’s objectives
|The problem with the 2018 budget began with the late approval of the 2018-2020 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) which is the policy document that articulates the assumptions underlying the budget and, thus, should ordinarily precede the presentation of the budget to the National Assembly.|
|The MTEF which had earlier been presented to the National Assembly had to be withdrawn by the Executive for further review. It wasn’t until 8th December 2017 (more than a month after the presentation of the 2018 budget) that the MTEF was finally approved, making it the first time the budget presentation will be made before the passage of the MTEF since the enactment of the Fiscal Responsibility Act in 2007.|
|In passing the 2018 budget, the National Assembly raised the oil benchmark price from the $45 per barrel proposed by the Executive to $51 per barrel, while daily oil production was retained at 2.3 million barrel per day. Other parameters such as the exchange rate and GDP growth rate were also retained at their original figures of N305 to $1 and 3.5 percent respectively. This change in the benchmark price increased total revenue which allowed for a reduction in fiscal deficit and an increase in expenditure.|
|Issues surrounding the delay
It took more than 6 months after the President presented the budget proposal for it to be passed. This delay was due to a number of issues raised by the lawmakers, including:
The executive however debunked the allegations that the 2018 budget proposal was submitted to the National Assembly without details for some MDAs. It stated that while the National Assembly may require additional information with respect to the budgets of State Owned Enterprises, this should not affect the early passage of the ‘main budget’ of government.
|Implications of the late passage of the Budget on the Economy and Businesses
Some of the implications of the late passage of the 2018 budget include:
Delay in Nigeria’s budget process has become the new norm in recent years, and has often been caused by disagreements between the executive and legislative arms of government. It is crucial that both arms work on improving the schedule of the country’s budget process.
Going forward, the executive order of May 2017 by the Vice-President Professor Yemi Osinbajo, which placed emphasis on the timely submission of the annual budget estimates of MDA’s, needs to be strictly adhered to. The executive order directs all federal government MDAs to submit their schedule of revenue and expenditure estimates for the next three years to the Minister of Finance and that of Budget and National Planning on or before the end of May of every year. It also directs the MDAs to forward their annual budget estimates to the two Ministers on or before the end of July every year.
LAGOS CHAMBER OF COMMERCE AND INDUSTRY
8TH JUNE 2018