Lessons From The Budget Impasse

Taiwo Adisa, Abuja

Yar’AduaPresident Umaru Yar’Adua finally signed the 2008 appropriation into law on Monday, April 14, some six clear months after he presented the bill to a joint sitting of the National Assembly on November 8, 2007. It is the first main budget of his administration and everyone expects him and his courtiers to attach a lot of relevance to the budget document. But no one expected them to cuddle the budget in their arms as if it is one yolk that can’t exchange hands without a loss in quality. While presenting the 2008 budget in November 2007, President Yar’Adua appreciated the fact that the nation’s economy had recorded some growth in recent years.

He stated that such growth needed to be sustained and improved upon, more so as not less than 50 percent of the nation’s population still live in poverty. He also did not rule out the need for partnership with other arms of government, particularly the legislature is seeing through the desire for success. The President had described the budget thus: “The Budget is basically about the ordinary Nigerian. It is about accelerating the provision of basic infrastructure to improve the quality of life of our people. It is about creating jobs and the enabling environment for the private sector to thrive.” In the well received budget speech, President Yar’Adua indicated that the 2008 appropriation bill would consolidate the macroeconomic and budgetary reforms of the past. Its priority areas according to the President include provision for improved physical infrastructure, especially in the areas of power and transportation, human capital development, the Niger Delta, and social safety nets, all captured in the Seven-Point Agenda of his Administration.

The 2008 budget provides broadly for the following:
• N444.6 billion for Security and the Niger Delta, which is 20% of the total Federal Government Budget, up 6.5% from 2007 allocation;
• N210 billion for Education or 13% of the total MDA spending;
• N139.78 billion for the Energy sector, excluding National Integrated Power Projects which will be implemented through alternative funding; and
• N121.1 billion, that is 7% of total budget, for Agriculture and Water Resources. President Yar’Adua also stated in the speech that in furtherance of the administration’s commitment to the Paris Club Debt settlement, the 2008 budget will devote the N110 billion debt relief gains to poverty reduction initiatives in such areas as Education, Agriculture, Water Resources, Power and Social Safety Nets.

The lawmakers set out to tackle the challenges of passing the budget in earnest. Initially, their was the claim that the budget would be passed before the end of December 2008. Chairman, Senate Committee on appropriation, Senator Iyiola Omisore said at a retreat on the appropriation process held in Makurdi, Benue state that the lawmakers were prepared to give the budget the desired attention and ensure its passage before the legislators go on recess in December. But soon after the receipt of that budget, trouble set in, with the National Assembly and the Ministries, Departments and Agencies (MDAs) failing to found a common ground. It was apparent from the outset that the technocrats of the Yar’Adua era want to take the nation back to the learning years of Obasanjo’s presidency, when budgets were kept in abeyance perpetually. Even though the same technocrats witnessed the marked improvements in the later years as far as budget presentation and passage were concerned, they came up with the feeling that whatever the President presented to the National Assembly as budget estimates was sacrosanct.

That was the attitude most committees of the National Assembly came up against in their relation with the MDAs in the first few weeks of budget consideration. There was the issue of revenue profile of the country, which the lawmakers insisted this time must be fully captured and then the issue of hidden funds which were said to have been illegally kept in secret accounts. After the seemingly endless bickering over the secret accounts and the revenue profile, President Yar’Adua’s intervention was needed to break the ice. He instructed the MDAs to cooperate with the National Assembly and at the end of the day, the Senate and the house of Representatives discovered hidden funds amounting to N300 billion. Senate spokesman, Senator Ayogu Eze who spoke to newsmen said that the funds were held in private accounts to yield interests for the individuals.

He also stated that the whole essence of the budget could be easily defeated if the National Assembly had ignored the secret accounts. What the perpetrators of the illegal act used to do was to keep those funds safe in some accounts and release them to the system without the knowledge of the government, in the time of budget delay. Even when there is no delay in passing the budget, the funds were spent outside the budget, thereby causing undue inflation. With all that sorted out late in January, the National Assembly was in position to fine-tune and pass the budget in February and it did on February 12, 2008, when it passed a budget of N2.89 trillion. That budget was forwarded to the President on February 20 and he returned same to the lawmakers vide a letter dated February 22. In that letter, President Yar’Adua raised an eight-point objection to justify his refusal to assent the budget.

He actually sought the understanding of the legislators in reviewing the unsigned budget. Though the legislators had no constitutional provision to justify the review, they chose to adopt the political solution option and then set up a 14-member team headed by the Deputy Senate President, Senator Ike Ekweremadu to review the original budget. Some of the President’s objections the Committee dealt with includethe increase of about 78 percent in the recurrent expenditure of the National Assembly. There was also the contention on the increase in the votes to the Federal Road Management Agency (FERMA), which had a vote of N18 billion in the harmonized budget. The President said that the agency does not have the capacity to manage such a huge fund, while asking that the funds should have been left with the Ministry of Transportation. He asked the legislators to capture the sum of N28.33 billion initially described as Presidential intervention funds for the Niger Delta Development Commission (NDDC) as Presidential infrastructural intervention in oil producing states.

Essentially he asked that National Assembly to delete Clause 13 of the Appropriation Bill which asked that the finance Minister must obtain National Assembly approval before reducing any votes even in the situation of revenue shortfall According to President Yar’Adua the increase in the recurrent allocation to the Defence Forces amounting to N26. 164 billion should be adjusted to N22.198 billion. Another area where the President objected to is the 78 percent increment in the votes of the National Assembly. The President said: “While appreciating the reasons for some increase, especially due to the effort that no National Assembly Committee seeks financial assistance of any MDA before embarking on any oversight function, I still believe that an increase o f of 78% is far too high. In this respect, I would like to advise that the overall increase is kept to no more than 20%.” President Yar’Adua also objected to the following increments made by the National Assembly to the votes of the National Sports Commission (109%) in recurrent votes, and 714% in capital; Ministry of Justice 148%) Code of Conduct Bureau (998%) and the Police Service Commission (662%) increase. Yar’Adua noted that the capital votes of the executive arm of government was jerked up by N285 billion but proposed that all the additional funds earned from the increase in the budget benchmark should be wholly used to eliminate the proposed deficit in the 2008 budget.

He said: “This will not only make the budget balanced and more realistic but will create more room and opportunity for more informed capital spending especially on infrastructure under the supplementary budget that I intend to submit to you soon.” The President noted that the National Assembly has increased Federal Government’s Independent Revenue by about N100 billion, an increase he said cannot be justified. According to him, the increase cannot be accommodated within one year the increment of N100 billion. “I advise nevertheless that this should be discounted for now so that it can, along with other possible additional revenue sources, be discussed and agreed to in the context of how to fund that supplementary budget,” the President said. After a week of deliberations the i4-member Committee which also has as member the Deputy Speaker of the House of Representatives, Hon. Usman Bayero Nafada, the committee agreed on the need to scale down the budget by N150 billion. It also recommended an amendment to Clauses 8 and 13 of the mandatory clauses attached to the Appropriation bill. Clause 10 of the mandatory clauses was also recommended for amendment to give the Due Process Office the mandate of approving projects in 60 days instead of 30 days earlier contained in the budget earlier passed. On March 13, the legislators passed the revised budget, leaving the figures at N2.7 trillion.

The National Assembly immediately transmitted that budget to the President, but that was the beginning of another round of delay. The President, who did not come out frontally to attack the National Assembly wrote another letter seeking the details of the budget as passed. It was a bit of a novel idea to the National Assembly, which was used to sending executive summary of the budget for assent during Obasanjo’s tenure. The feeling in the legislature is that since the budget assent (though a serious official assignment) is largely held in ceremonial atmosphere, the budget details could be forwarded separately. Yar’Adua insistence led to the decision by the lawmakers to forward the clean copy of the budget details to his office. Even at that, the President refused to give his assent to the budget, thus raising tension among the lawmakers. A document from the presidential villa circulated among journalists in Abuja indicated that the President was angry about some areas of the budget, including the approval of new projects and the mandatory clauses. The document made allusions to the increase in the crude oil benchmark which was like a settled matter before the budget passage.

It was apparent that some technocrats were setting Yar’Adua up for a major executive/legislature clash, which would have led to the first budget override in this era. The lawmakers were angry that after they had agreed to bend over backwards, President Yar’Adua still refused to sign the budget, citing similar refrains he had raised before. That anger pervaded the two chambers of the Assembly after the lawmakers resumed from Easter break. A motion by the Chairman, Senate Committee on Public Accounts, Senator Ahmed Lawan was paving the way for the commencement of the process to override the President’s veto on April 8, but for the intervention of the Senate President, Senator David Mark. That same day, the leaders of the National Assembly headed for a meeting with President Yar’Adua, where the contentious aspects of the budget were amicably resolved. The resolution was however a middle-of the road stuff. The President agreed to sign the budget first, while he will present the contentious areas in an amendment to the National Assembly.

So far, a pattern has emerged in the just ended budget impasse. It is to the effect that the executive sees itself as the Alpha and Omega on budget matters. When the budget is tampered with, the technocrats in the executive feel their integrity and wisdom was being questioned. But that cannot be in the contemplation of the Constitution in view of the fact that the legal document guarantees the executive the right to prepare the budget, while the estimates would be submitted to the legislature. The same Constitution cannot deem the legislature a rubber stamp, when it mandates it to look into the votes and appropriate. Thus, the power of the National Assembly to vet projects and appropriate should not be in contention. But that was what the presidency was going to test at the Supreme Court until a truce was broken in the budget impasse. Flowing from the amicable resolution reached last week, it is expected that the presidency would implement the passed budget, not as grudgingly as it was assented to. Having lost four clear months in the fiscal year, it would be difficult to fast track events and meet up the projections. Whatever the Yar’Adua magic is, Nigerians can only look forward to meaningful development and budget implementation from 2009.