Tuesday, 30 May 2017

Need to address budget, MTEF structural distortion  

WITH the latest update on the 2017 budget upheavals taken to a ridiculous level by the two key arms of the Federal Government – the Executive and the Legislature, we draw attention to the wider policy implication of the continued delay in putting the spending plan into operation. Acting President, Prof. Yemi Osinbajo, is yet to sign the budget trasmitted to him about a week now, neither has he come out to say what is delaying his assent. But of more serious concern is the fate of budget implementation and the collateral damage the delay is bringing into the country’s struggling economy, the fiscal plan in particular.

We note that even if the budget is signed immediately it is transmitted to the Presidency, it is clear that the adverse impact of the delays has already crystallised.

It has introduced structural distortion into the Medium Term Expenditure Framework, MTEF, and the 12-month calendar year cycle of annual budgeting.

The distortion had started with the first budget of President Muhammadu Buhari’s administration, the 2016 budget, which did not become operational until the second quarter of the year, thereby dragging implementation into May 2017.

Though the Presidency and the Ministries of Planning and Finance all bandied different figures of the level of implementation of the 2016 budget all above 70 per cent, no independent report gave it more than a 40 per cent scorecard even after it was stretched fully into the second quarter of 2017. For how long would this continue? Both the Presidency and the ministries last year pledged to do everything possible to avoid this saga foisted on the fiscal plan last year in the name of ‘budget padding’ but no explanation has been given for the failings this year.

It is most likely that at the signing of the 2017 budget the government would probably promise to repent.

Some analysts are worried that probably the government may have resigned to the fate of a new fiscal year regime bestriding two years. But even now that the current budget is set to bestride two years (2017 and 2018) what becomes the fate of the current MTEF which was rolled out and sanctioned by both arms of government in the fourth quarter 2016 to run for three years, 2017 – 2019? Under the framework the MTEF is an accumulation of three consecutive years’ budgets.

With the current bestriding of budgets what would be the fate of the current MTEF as structured to be coterminous with the three-year budget? We expect the government to update us on the remedial arrangement if for nothing at least to guide private sector and other investment communities in their business decisions.

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