“Faith is a sounder guide than reason. Reason can only go so far, but faith has no limits.” Blaise Pascal, 1623-1662.
(VANGUARD BOOK OF QUOTATIONS, VBQ p 54.)
Budgeting has never been and will never be an exact exercise because it frequently depends on variable in the future over which the budgeters have only partial or no control at all. At the same time, it is not an exercise in wishful thinking and should not be based on figments of imagination.
Virtually, all of our budgets have called upon our reserve of faith and patriotism because most of them have been so flawed from the start such that repeatedly such that “In our times [in Nigeria] it would be hard to live if one had not faith.” [Leo Tolstoy 1828-1910]. The most common remedy offered for Nigeria’s numerous problems by Nigerians is “prayer and fasting” – not better governance or economic policy. It is obvious that we need both in equal measures.
That explains why most analysts of budgets start from an overview of the past – which cannot be changed. As Agathon, 447-401, BC, irreverently but truthfully, has reminded us, “Even God cannot change the past.” What God cannot change, this analyst will not attempt to do. Consequently, the starting point for assessment of the 2018 Budget is a brief summary of annual budgets since the first civilian budget under President Obasanjo in 2000.
It is on record that no single budget since Obasanjo’s 2000 Budget has ever been successfully implemented by any government. Almost invariably, the revenue estimates have been estimated and the expenditure estimates were frequently understated. In 2009, late President Yar’Adua did something unprecedented in the history of Nigeria since the military intervention in 1966. He actually admitted that the 2009 Budget was badly executed and promised to do better with the 2010 Budget. Unfortunately illness and the death of Yar’Adua played havoc on the 2010 Budget which former President Jonathan had to execute from April of that year. It ended up as another mess for which nobody claimed credit nor accepted blame.
Since then, Nigeria had experienced one failed budget after another. The last three years – 2015 to 2017 – have been particularly traumatic. Granted, the All Progressives Congress, APC, led by President Buhari inherited a 2015 Budget which could not be implemented as it was, the new government was slow to identify the causes of the country’s economic calamities and to introduce sound macro-economic policies which could have reduced the devastating impacts of the 2016 recession – which virtually all analysts knew was inevitable. The FG under Buhari inherited a seriously damaged economy in May 2015 but it has failed so far to address the fundamental causes of our present predicaments. It is still applying the old remedies to new problems – at least up to 2017.
The most urgent question now facing every observer is: has the 2018 Budget sufficiently addressed the economic issues confronting the nation and will it get the nation out of the rut? The answer is: it depends on all of us in Nigeria and not the elected officials in Abuja and State Governors’ offices. It has a chance of working if we develop the collective will to make it succeed. It will not, if we lack the determination to get the results promised in those documents called the APPRORIATION BILL 2018.
The first step is for the National Assembly to pass the budget by December 31, 2017 after performing a thorough interrogation of several aspects of the bill to ensure budget integrity and for the lawmakers to be familiar with their responsibilities under the bill.
Passing the budget before going on their Christmas recess will ensure that for the first time in over seven years, the annual budget can become operational from January 1. Thereafter, the Executive branch will have very little excuse not to fully implement the 2018 Budget. Furthermore, getting the budget passed by the end of the year will mean that the benefits of the budget for 2018 can accrue to the nation for the entire year instead of for only half of the year as we are now experiencing in 2017 – with disastrous results.
That alone will be a landmark achievement breaking with the past and bringing with it the promises of a better future – starting next year. Incidentally, 2018 will mark the last full year in the Buhari administration’s four year’s in office. Experience has taught us that from about June of next year our elected officials will be so totally focused on politics that it is better to have economic policy measures fully in place before then.
Finally, our lawmakers need to be reminded that time is also an economic resource – just like capital, funds and human resources. Our prodigal waste of it in the past has contributed immeasurably towards low economic growth and retarded development. The time for positive change has come and we must seize the opportunity.
Titled Budget of Consolidation, the 2018 Budget is based on the following assumptions.
· Crude Oil price — $45 per barrel.
· Oil production — 2.3mbpd
· Exchange rate — N305/US$1
· Real GDP growth – 3.5 per cent
· Inflation rate — 12.4 per cent.
· Consolidated Revenue – N8.6 trillion.
· Debt Service — N2.23 trillion
· Capital Expenditure – N2.4 trillion
· Recurrent Expenditure – N3.4 trillion
Compared with the 2017 Budget and actual performance these are all significantly higher estimates. The 2017 Budget had a Consolidated Revenue of N7.44 trillion, which is N1.4 trillion less than the 2018 estimates and the projected growth rate was only 2.5%.
WILL IT WORK?
Perhaps the most important question on the minds of everybody in Nigeria as well as the global community is: will it work?
Before answering that question in full next week, the following observations must be made.
First, it is an ambitious and very optimistic budget judging from the fact that the 2016 Budget promised GDP growth of 4.5 per cent and ended up with a recession and -2.5 per cent GDP growth. The current year started with optimism for 2.6 per cent GDP growth but it is likely to deliver far less than that.
Second, in both 2016 and 2017 actual revenue had lagged behind the budget estimates. Thus each year, the actual Capital expenditure had been less than the amounts projected in the budget.
Third Exchange rate had been higher than the benchmark each year.
So, given the immediate past experience it will be understandable why any analyst will dismiss the 2018 bill as another exercise in futility. But, that would be a mistake. The past does not often accurately predict the future. The 2018 Budget has something in its favour which did not occur in the past. There are new elements in Economic Recovery and Growth Programme, ERGP, which signpost a radical departure from the past and which provide the basis for cautious optimism. Privatisation is one.
Several critics of former and the current administration have pointed to the government’s retention of ownership of businesses which are best left to the private sector – refineries for example and airports for another. Public funds which are now allocated to those enterprises can best be diverted to providing the other services which the private sector will not touch while leaving it to handle the sectors it knows best how to operate. The ERGP – for the second time – is making another bold attempt to engage the private sector more constructively and to make it the engine of growth of the Nigerian economy.
Then, there is oil. For the first time in five years crude oil prices might be heading upwards. And, what a relief that will bring.
This is certainly an optimist’s budget – at a time we need all the optimism and patriotism we can get.