The delay in passing the 2019 budget which was presented to the National Assembly on December 18, 2018, is affecting the economy negatively

By Anayo Ezugwu

WHEN President Muhammadu Buhari presented the N8.83 trillion Appropriation Bill on Wednesday, December 19, 2018, many Nigerians expected the National Assembly to commence consideration of the budget proposal before the 2019 general elections. But more than two months after, the legislators are yet to pass the budget.

Investigations have shown that Nigerians might have to wait a little longer before the National Assembly will pass the budget. This is because the quest for re-election on the part of the legislators made them to abandon the budget presented to them by the president. Right now, there is no sign that the appropriation bill will be considered anytime soon because many of the legislators have failed to win their re-election bid.

But Senator Ahmad Lawan, leader of the Senate, said the National Assembly would prioritise the consideration of the 2019 budget upon resumption. “We should be able to work hard to pass bills that are fundamental and central to revamping the economy. Bills that are central to re-engineering and re-orientating the social environment, and generally make Nigeria a stable and a safe country. We are determined to do that,” he said.

Obviously, the delay in the passage of the budget has negative implication for the government. The delay would affect the performance of the capital expenditure component of the budget. While government will continue to spend money on recurrent expenditure, spending on capital expenditure will have to wait for the new budget to be passed.

This contributes in the present slow pace of economic growth in the country. As at December 2018, the government had spent less than 50 percent of its 2018 capital expenditure. For instance, the president admitted that capital releases with respect to the 2018 budget only commenced after the signing of the budget on June 20, 2018. And of the total appropriation of N9.12 trillion, only N4.59 trillion had been spent as of September 30, 2018.

The delay will also affect investors as most of them would be in confusion on the direction of government policy for the year bearing in mind that some of those that formulated the current economic policies may not continue when Buhari will constitute new government come May 29.

As a result of this, financial experts have called for speedy passage of the 2019 budget saying incessant delay in the approval of budgets over the years contributed to the downturn in the economy. They stressed in separate interviews that the legislature needed to fast track the passage of the budget to commence economic activities in the year.

Sheriffdeen Tella, professor of Economics, Olabisi Onabanjo University Ago-Iwoye, Ogun State, said perennial delays in passing yearly budgets showed that the legislature was ignorant of its responsibility. “The perennial delay in passing budgets indicates that the legislature is either ignorant of this responsibility or deliberately frustrating the efforts of the executive arm to perform,” he said.

Tella said early passage of the budget would promote economic growth and development. “The Nigerian economy depends on government’s budget to function properly. The private sector particularly needs to see government direction to plan and execute their plans.

“Early passage of budget helps in this regard. The private sector is the major participant in the capital market. Growth enhancing activities in the capital market are negatively affected by the delay in passing the budget.”

According to Tella, passing the federal budget in good time  is capable of promoting economic growth, assisting private sector for optimal business performance as well as energising money and capital market activities. He explained that early budget passage would promote planning in the lower levels of governments and the private sector.

On his part, Sola Oni, economic analyst, said delay in the passage of the budget is highly injurious to economic growth and development. “Budget sends signals to stockbrokers and other investment advisers on the sectors to watch and where to raise red flags annually.

“This enables them to advise their clients on taking positions and reviewing their portfolios accordingly. At macro level, early passage of the budget implies prompt implementation of capital projects. This is critical to the growth of the economy as it has impact on growing the Gross Domestic Products, GDP,” he said.

Oni said the executive and the National Assembly should be on the same page in terms of timing. “It has become a recurring decimal for both parties to be enmeshed in controversies either politically motivated or genuine.”

Likewise, the Institute of Chartered Accountants of Nigeria, ICAN, said the delayed in the passage of the 2019 budget and slow investment choices that may arise as a result of expectations from the general elections may stall Nigeria’s growth prospects in 2019. ICAN disclosed this during the institute’s Economic Discourse Series titled, ‘2019 Economic Outlook’, positioned to proffer feasible social and economic interventions in the country, devoid of sentiments and parochial interests.

Razak Jaiyeola, president, ICAN, said among other factors, the security challenges in the country; projected decline in crude oil prices in the global market, the general elections and developments in other trading economies may affect the country’s economy negatively. He noted that in sub-Saharan Africa, growth is expected to pick up from about 3.1 percent in 2018 to 3.8 percent in 2019, but it would still be a far cry for stimulating the expected jobs to meet the demand of the growing population in the region.

It should be recalled that President Buhari had in December presented a N8.83 trillion budget for 2019 before the joint sitting of National Assembly. The fiscal plan for 2019 is smaller in size compared to N9.12 trillion budget for 2018.

The proposed budget shows that about a quarter of the sum, N2.14 trillion will be spent on debt servicing, while capital expenditure is expected to gulp N2.03 trillion. Government also intends to spend N4.04 trillion on recurrent expenditure and N492.36 billion on statutory transfer in the course of 2019 fiscal year. The fiscal policy is predicated on crude oil production of 2.3 million barrels per day, oil price of $60 per barrel and exchange rate of N305 to the dollar.

– Mar. 8, 2019 @ 15:45 GMT |