Stalemate Over Budget 2013: Matters Arising – Henry Boyo

Published:25 Feb, 2013

There are media concerns on the potential adverse impact of delay of budget implementation and the possibility of the Legislature overriding presidential opposition to the 2013 budget enactment.

In reality, late budget enactment has over the years never really affected the disbursement of recurrent expenditure, so long as such expenditure does not exceed the previous year’s recurrent allocations.  Consequently, late budget enactment may in fact only affect the capital budget; nonetheless, the total 2013 capital budget of about N1.5tn (about $9m) can only be an infrastructural palliative when compared with the speculated requirement of over $100bn for the provision and distribution of adequate power alone to consumers nationwide.  Besides, despite the relative paucity of the capital budget, it has become traditional for government’s Ministries, Departments and Agencies to continuously post billions of naira as unspent revenue at the end of each year.  Thus, the present late enactment may not adversely impact implementation any worse than what happened in previous years!

There may apparently also be more to the delayed Presidential assent than the Executive’s earlier reported reservations about late receipt of a clean bill from the Legislature and the later insinuations that the Executive just needed to dot the ‘i’s and cross the ‘t’s before the assent.

Some media reports fingered the zero budget allocations for the Securities and Exchange Commission, the N63bn increase in the capital budget, the Legislature’s alleged inclusion of constituency projects and adoption of $79/barrel crude oil benchmark for the delay.

I recall that in an earlier piece titled “The Return of Arunma Oteh”, we cautioned that “…the legislators may ultimately also see Oteh’s return as unnecessarily provocative and a potential source of attrition and government’s gamble on Oteh’s reinstatement may further assault the integrity of the capital market and ultimately restrain economic growth.”

In the present circumstance, if the Legislature advances its threat to override the Executive’s veto on the 2013 budget, Mr. President may ultimately become wisely constrained to a gentleman’s agreement to quietly ship out the Director-general of the Securities and Exchange Commission to another agency in the near future; in this manner, President Goodluck Jonathan may save face and also avert the unhelpful perception that he does not have the spine to confront the National Assembly.

We may now address the issues of constituency projects and the alleged increase of the 2013 budget by N63bn. In plain language, the Executive contests that the National Assembly has no constitutional power to tamper with the content of the Appropriation Bill.  The National Assembly on the other hand, maintains that the President’s bill has to follow the same process as every other bill laid before the Legislature.  In the event that the Legislature has vested powers to evaluate, amend and pass any bill before it becomes law, it is therefore in consonance with the spirit of the law for Mr. President’s Appropriation Bill to be also subject to the usual legislative process, which may advise omissions or inclusions, as deemed appropriate and agreed  to by both Legislative Houses to any bill before passage.

However, the issue of crude oil budget benchmark is a little bit more complex. On the surface, the Executive projects a conservative and prudent image in adopting the lower crude benchmark price of $75/barrel; its argument is that, if for example, crude oil sells throughout the year above the Executive’s recommended price of $75/barrel, the surplus income will increase our  national reserves!  In addition, in the event that crude prices unexpectedly fall below $75/barrel, the adverse impact of the reduced revenue inflow on expenditure will become less traumatic than if the budget was predicated on a much more optimistic benchmark.

The lawmakers on the other hand argue that deliberate understatement of budget benchmarks around $70/barrel in previous budgets led to the accumulation of huge avoidable deficits in each year’s budget.  In other words, the expenditure budgets generally outstripped the understated revenue projections because of the very conservative budget benchmarks adopted.  The legislature may rightly argue that it does not make sense to fund such resultant ‘ghost’ deficits by borrowing at over 15 per cent interest rates, while accumulating idle reserves from benchmark surpluses with little or no yield.  This argument surely makes sense; however, the legislators themselves may, in fact, be unaware of the destabilising economic implications of spending such increasing dollar revenue realised from the adoption of higher crude price benchmarks!

The reason behind the unexpected negative impact of increasing dollar revenue is the Central Bank of Nigeria’s obtuse monetary policy framework, which substitutes monthly naira allocations at unilaterally determined rates for distributable dollar revenue.  Consequently, the larger the dollar revenue (as in crude prices constantly well above conservative benchmarks), the greater will be the apex bank’s naira creation and ultimately the greater will be the burden of excess cash (excess liquidity) in the system.  Excess liquidity in turn fuels high inflation and interest rates, and further pushes the naira value downwards, with disastrous economic and social implications.  Consequently, from the National Economic Management Team’s perspective, it will be unhealthy for us to earn and spend such increases in dollar revenue because of the attendant problems of excess liquidity, when the higher crude oil dollar incomes are substituted with naira creations.

Thus, both the executive and legislature may mean well, but the truth is that neither position is beneficial to economic growth or the creation of employment opportunities.

It will be difficult for the economic management team to satisfactorily explain the double paradox of rising national debt in the face of excess cash and that of fortuitously increasing dollar revenue and deepening poverty to Mr. President.  However, despite the EMT’s acquiescence to this reality, the contradictions and paradoxes in our economy will only be resolved, such that increasing dollar revenue will bring about improved social and economic welfare, when the CBN stops the poisonous process of substituting naira allocations for dollar revenue and instead adopts the instrument of dollar certificates for the payment of allocations of dollar-derived revenue.

In spite of the foregoing, both the Executive and the National Assembly appear unduly concerned about the contentious unverified extra-budgetary issue of over N2tn, which inevitably will be required to supplement projected total expenditure of about N4.9tn and inadvertently tilt the 2013 budget deeper into deficit; thus making further government borrowing necessary.

Incidentally, the adoption of dollar certificates as suggested above will alter the market dynamics for naira and consequently strengthen the naira; fuel prices will fall as a result, and ultimately eliminate the crippling burden of subsidy. This, sadly, is the road not taken.


Henry Boyo (

Read the original article via Punch

Related Posts

Recent Posts

Dabiri-Erewa Urges States To Domesticate Violence Against Persons Act

A former federal lawmaker, Mrs Abike Dabiri-Erewa, on Thursday in Lagos called for the domestication of the Violence Against Persons Prohibition Act in all the states. Dabiri-Erewa made the call while speaking on "Nigeria’s Progress in Gender Development’’ at a public lecture, organised by Genesis House in collaboration with Access Women Network and Freedom Foundation. The theme of the lecture is "Empower Women to End Violence’’. She expressed worry over the increase in violence against women, including rape, battery, widowhood, forced ejection...

Terrorism Is Our Common Enemy – Hollande, Putin

Russian President, Vladimir Putin on Thursday praised efforts by his French counterpart, Francois Hollande to set up a coalition to fight the Islamic State terrorist militia. "You're putting a great deal of attention and effort into the creation of a broad anti-terrorist coalition. "What's more, we think this coalition is absolutely necessary and that's where our positions coincide", Putin said in a meeting with Hollande. The meeting became imperative owing to Nov. 13 terrorist attacks in Paris, Oct. 31 downing of the...

Senate Gives Ministry, Others 2 Weeks To End Fuel Scarcity

The Senate on Thursday gave the Ministry of Petroleum and all relevant agencies two weeks to end the scarcity of petroleum products and price discrepancies nationwide. The assembly also directed the permanent secretary of the ministry to do everything within the jurisdiction of the organisation to ensure that products were available at government approved prices. The Committee on Petroleum Downstream, headed by Sen. Uche Ekwunife (PDP-Anambra Central) gave the directive when officials of the ministry and other agencies came to explain...

Court Dismisses Corruption Charges Against Timipre Sylva

A Federal High Court, Abuja,on Thursday dismissed a 50-count charge bordering on alleged corruption against former Bayelsa governor, Timipre Sylva and six others. Justice Adeniyi Ademola, in a ruling, held that the charges as filed by the Economic and Financial Crimes Commission constituted an abuse of court process and the court lacked jurisdiction to hear the case. He further held that the charges were “frivolous and lacking in merit’’. Specifically, Justice Ademola held that...

Kogi Election: APC Group Endorses Abubakar Audu’s Son

The All Progressives Congress (APC) critical stakeholders and delegates from Kogi East Senatorial District have resolved that the late political icon and APC candidate in the November 22 governorship election that was pronounced to be inconclusive, Mr Abubakar Audu, be substituted with his son Mohammed Audu in the event that the party goes for fresh primary. This was contained in a communique read by Daniel Isah, the Kogi East Zonal Chairman at...

Huge Crowds As Pope Celebrates First Mass In Africa

Pope Francis held his first open-air mass in Africa on Thursday with huge crowds hailing heavy rains as "God's blessing" as they sung and danced in the Kenyan capital.  Thousands of people queued through the night braving torrential downpours to take part in the historic mass, the first celebrated by Francis on African soil. The 78-year-old pontiff received a tumultuous welcome as he arrived in an open-topped Popemobile, smiling and waving as...

Woman Who Made Bread Using Yeast From Her Vagina Ate The Bread

British Blogger Zoe Stavri whipped the Internet up into a frothy bread mix frenzy earlier this week, after writing about a sourdough loaf she'd begun to make from scratch, leavened with yeast from a vaginal infection. She sourced the yeast with the help of a dildo. Her first tweets on the subject chronicled her yeast making her dough rise — "IT'S ALIVE"! she wrote, in an acceptable use of all caps — and a blog post also documented...

Boko Haram Conflict Deadline ‘Unrealistic’, CCC To Buhari

Senior military, security and intelligence figures in Nigeria on Thursday questioned President Muhammadu Buhari's December deadline for an end to the Boko Haram conflict, calling it "unrealistic". The Centre for Crisis Communication, a research and advisory body independent of government, said the deadline was "not tenable" given the continued wave of bombings in the northeast. The CCC...

Reps Summon Aviation Minister, Stakeholders Over Sack Of Staff By Virgin Atlantic

Following the recent retrenchment of staff of Virgin Atlantic Airline, the House of Representatives on Thursday summoned the Minister of State in charge of Aviation, Hadi Sirika and relevant stakeholders to appear before its Committees on Labour and Productivity and Aviation with the view of resolving the issue amicably. The resolution followed the unanimous adoption of motion of urgent matter of public importance sponsored by the House Leader, Hon. Femi Gbajabiamila on the matter at plenary...

Drogba To Manage Chelsea

Former Chelsea  striker Didier Drogba says he has an agreement to return to the club once he finishes playing and wants it to be as manager. Drogba, who now plays in Canada, scored 164 goals in two spells with the Blues. “I want to give back to the club which has given so much to me. I have agreed that with the club directors,” the 37-year-old told BBC Africa. “Why not manager? Why not...

FG Moves To Amend Charges Against Orubebe

The scheduled commencement of trial in the case against former Minister of Niger Delta Affairs, Godsday Orubebe was stalled Thursday by the Federal Government’s decision to amend an earlier charge of four counts filed against Orubebe. Orubebe is charged with false asset declaration and acceptance of bribe totaling N70 million. The prosecution, led by Peter Danladi had on November 9, 2015 sought an adjournment for two weeks to enable it prepare its witnesses for trial.

I Am Kogi’s Governor Elect, James Faleke Writes INEC

The running mate to late Abubakar Audu, the candidate of the All Progressives Congress in Saturday’s governorship election in Kogi State, has asked the Independent National Electoral Commission, INEC, to declare him governor elect. James Faleke, in a November 26 letter to INEC Chairman, Mahmood Yakubu, insisted that under Section 187 of the 1999 Constitution, he was duly elected as deputy governor of Kogi State. While expressing sadness over the demise of his principal, Abubakar...

Senate Committee Gives Petroleum Minister Two Weeks To End Fuel Scarcity

The Senate Committee on Petroleum Downstream has given the Minister of State for Petroleum and the NNPC two weeks to end petrol scarcity in the country. The committee handed down this directive at a meeting with officials of the Ministry of Petroleum, NNPC and agencies in the petroleum sector. For nearly three weeks, there have been long queues at different petrol stations across the country; a situation that has defied solutions by previous administrations and...

Edo Lawmakers Walk Out Female Commissioner For Improper Dressing

Members of Edo State House of Assembly on Wednesday asked the Commissioner for Health, Aihamuwa Eregie, to vacate the House for improper dressing. Eregie was asked to leave the hallowed chamber during the presentation of the 2015 budget performance of the Ministry of Health. The Deputy Speaker, Bright Osayande (APC- Ovia North-East II), who raised the observation, said the commissioner was not properly dressed and should not be allowed to appear before the House. Adjoto Kabiru (APC Akoko-Edo), who concurred...

Northern Lawmakers Kick Against Birth Control, Says It Is Anti-Islam And A Direct Attack On Their Religious Beliefs

A member of the lower chamber of the National Assembly, Babatunde Gabriel Kolawole on Tuesday, November 24, moved for the motion titled "Need for the federal government to curb population explosion in Nigeria." Kolawole in his arguement urged the Federal Government to come up with a policy to check the alarming rate of population growth and to educate Nigerians on the importance of family planning through the National Orientation Agency (NOA). The Lawmaker based his arguement...

YBNL Boss Olamide Loses Dad

Top Nigerian rapper, Olamide Adedeji has announced the death of his father. Olamide who just released his 5th studio album, Eyan Mayweather, announced the sad news on his Instagram page on Thursday. While praying for the peaceful repose of his father, the YBNL rapper wrote a farewell message via his Instagram thus: “O God, who hast commanded us to honor our father and our mother; in Thy mercy have pity...

We Need N8.7billion To Effectively Fight Boko Haram – IG Of Police, Solomon Arase

Inspector General of Police, Solomon Arase says the Nigerian Police Force will require N8.7billion to effectively fight Boko Haram. Arase said this while speaking at an interactive session with members of the House of Representatives Committee on Police Affairs today November 26th. He told the house members that there was a N57bn outstanding due to the Nigerian police that was appropriated but has not been released till date.

27 APC Aspirants In Race To Replace Audu

Few hours after the All Progressives Congress (APC) opted for a fresh primary to fill the vacuum created by the death of its governorship candidate in November 21 polls in Kogi State, there were indications that no fewer than 27 aspirants are warming up to grab the party’s ticket. Electoral umpire – the Independent National Electoral Commission (INEC) has asked the APC to replace its late candidate for the supplementary election scheduled for December 5.

118 Shops Burnt Down In Jos Market

A raging night inferno razed 118 shops at the Kabong market in Jos North on Thursday morning, the News Agency of Nigeria (NAN) reports. A reporter, who visited the market, could not access the burnt section as some shops were still in flames. Others also had thick smoke billowing from them, making visibility very difficult. The actual cause of the fire could not be ascertained, but Mr Christopher Jama, Chairman, Kabong Market Traders Association,...

Declare Wada As Winner Of Kogi Election, PDP Tells INEC

The national leadership of the Peoples Democratic Party (PDP) has called on the Independent National Electoral Commission (INEC) to declare its candidate, Governor Idris Wada, as the winner of the November 21 governorship election in Kogi State. The party is also seeking the exclusion of the All Progressives Congress (APC) from the supplementary election slated for December 5. The INEC had declared the election inconclusive following the cancellation of the poll in 91 units across 18...

100 Women Die Daily In Northern Nigeria During Childbirth- UNFPA

Ms Ratidzai Ndhlovu, Nigeria Country Director of United Nations Population Fund ( UNFPA), says no fewer than 100 women die daily across Northern Nigeria during childbirth. She spoke on Thursday in Sokoto at a consultative meeting with the theme: “Accelerating the Reduction of Maternal Deaths in Northern Nigeria: The Role of the Traditional and Religious Leaders.” Ndhlovu decried the high maternal mortality figure, and stressed that collective efforts must be stepped up to redress the...