Fiscal Transparency: Rolling Back the Gains of Reforms?

Premium Times January 8, 2016 Fiscal Transparency: Rolling Back the Gains of Reforms?, By Eze Onyekpere2016-01-08T08:32:56+00:00 Opinion Comment

Buhari Budget 2016

With the enactment of the FRA, one had hoped that transparency will be made the cornerstone of economic and fiscal policy. However, recent developments are pointing in the opposite direction and this leads to the valid question: is change the same thing as lack of transparency in fiscal governance? The 2016-2018 Medium Term Expenditure Framework was presented to the National Assembly in December 2015. During the preparation stage, the Ministers of Finance/Budget and National Planning failed, refused and neglected to hold public consultations as required by section 13 (2) (a) of the FRA. Thus, the opportunity to get stakeholder inputs was lost.

The principle of transparency is crucial to the budgeting process, mandating that information affecting budget decisions should be accurate, true and portray the genuine state of the economy. The information needed by the public will include information on budget allocations, before and after the approval process, development thrusts and programmes, budgetary and fiscal transformation reports, budget implementation reports and reports on the implementation of monetary policies. These information should be available and accessible to the public, open to public scrutiny and written clearly and be readily understood by the public.

Public access to fiscal and budgetary information was virtually non-existent before the enactment of the Fiscal Responsibility Act (FRA). With the mindset of the Official Secrets Act, every government file was marked “secret” and it was presumed that the private sector, civil society and the populace were outsiders that need not be allowed to pry into government’s fiscal affairs. Reports on budget implementation were not available in the public domain; with little or no disclosure, the people did not know how much accrued as revenue and how it was spent. Popular participation was also very minimal. During the budget preparation, implementation and reporting stage, there was little or no room for the participation of “outsiders”, that is individuals and organisations outside of the government. With the exception of the Nigeria Labour Congress and the organised private sector that were allowed to submit budget memorandum, the circle appeared closed to the civil society. No opportunities for participation in public hearings existed either at the executive or legislative arms of government.

If budget information is not available, it is difficult to discuss it. Transparency and accountability are two sides of the same coin, as elected officials will be more likely to make decisions in accordance with their mandate if those decisions are open to public scrutiny. Public officials will more likely follow laid down procedures if their actions are transparent. Indeed, there can be no verifiable accountability without transparency.

Prior to the FRA, there was no enforceable accountability framework that ensured both vertical and horizontal accountability. By vertical accountability, we mean accountability by the government to the holders of Nigeria’s sovereignty – the electorate and the populace through whom government derives all its powers and authority. There were no clear reporting rules and timelines. Horizontal accountability refers to checks and balances between the arms of government, particularly the legislature with the power of appropriation and the executive with the power of execution of fiscal policies and budgets. There were also no clear rules on when the executive will report to the legislature on the implementation of the budget and fiscal policies.

According to Mike Obadan (2002), at an aggregate level, transparency requires the provision of reliable information on government’s fiscal intentions and forecasts. Publication of detailed data and information on government’s operations, including the publication of comprehensive budget documents that embody properly classified accounts of the government and estimates of quasi-fiscal activities undertaken outside the government is imperative. Mike Obadan lists five good points generally associated with transparency as follows. Transparency is at the heart of good governance and helps prevent people and institutions from doing things that cannot stand the test of scrutiny from outside. It helps provide the feedback for informed debate on budgeting issues and policies. Indeed, it is a prerequisite for public debate, which can lead to better programmes and more efficient resource use. If budget information is not available, it is difficult to discuss it. Transparency and accountability are two sides of the same coin, as elected officials will be more likely to make decisions in accordance with their mandate if those decisions are open to public scrutiny. Public officials will more likely follow laid down procedures if their actions are transparent. Indeed, there can be no verifiable accountability without transparency. Adherence to transparency increases faith in governments when citizens understand what is being done on their behalf and how it contributes to the general welfare. Finally, transparency contributes to macroeconomic stability as it prevents the build-up of fiscal crisis in secret, thereby bringing about pressures for change and smaller adjustments sooner.

Even if the executive failed to be transparent in their fiscal dealings, the FRA by section 48 (2) called on the National Assembly to ensure transparency during the preparation and approval of the MTEF, annual budget and appropriation bill. At the last check, both the MTEF 2016-2018 and the 2016 annual budget details are not available on the website of the National Assembly. So, where will the Nigerian find the fiscal information necessary to make inputs into these very important documents?

With the enactment of the FRA, one had hoped that transparency will be made the cornerstone of economic and fiscal policy. However, recent developments are pointing in the opposite direction and this leads to the valid question: is change the same thing as lack of transparency in fiscal governance? The 2016-2018 Medium Term Expenditure Framework was presented to the National Assembly in December 2015. During the preparation stage, the Ministers of Finance/Budget and National Planning failed, refused and neglected to hold public consultations as required by section 13 (2) (a) of the FRA. Thus, the opportunity to get stakeholder inputs was lost. The MTEF was not uploaded on the website of the Ministry of Budget and National Planning; neither was it uploaded to the website of the Budget Office of the Federation. Essentially, the full document was not available to the public except the select few who could find copies if they knew someone in the Ministry or the National Assembly. Again, 15 days after the President laid the budget before the National Assembly, only the budget speech and the Appropriation Bill are available to the public on the website of the BOF. The full details of all the expenditure are nowhere to be found.

The foregoing is against the spirit and letter of the FRA, specifically section 48 (1) which states that the Federal Government shall ensure that its fiscal and financial affairs are conducted in a transparent manner and accordingly ensure full and timely disclosure and wide publication of all transactions and decisions involving public revenues and expenditures and their implications for its finances. Non-disclosure or foot dragging in disclosure cannot by any stretch of the imagination amount to full and timely disclosure and wide publication. Even if the executive failed to be transparent in their fiscal dealings, the FRA by section 48 (2) called on the National Assembly to ensure transparency during the preparation and approval of the MTEF, annual budget and appropriation bill. At the last check, both the MTEF 2016-2018 and the 2016 annual budget details are not available on the website of the National Assembly. So, where will the Nigerian find the fiscal information necessary to make inputs into these very important documents?

…I ask the Minister of Finance and his counterpart in Budget and Planning: why are you rolling back the gains of fiscal reforms? Is this the change we expect or shall we look out for another?

To make matters worse and as a prelude to the foregoing, the last budget implementation report (BIR) available to the Nigerian public through the website of the Budget Office of the Federation is for the second quarter of 2014. Thus the reports for the third and fourth quarter and the full end of year report have not been prepared nor published. Also, for the whole of the year 2015, no single BIR was prepared and published. The FRA comes in handy in section 30 where it succinctly stated in subsection 1 that the Minister of Finance through the Budget Office of the Federation shall monitor and evaluate the implementation of the annual budget, assess the attainment of fiscal targets and report thereon on a quarterly basis to the Fiscal Responsibility Commission and the Joint Finance Committee of NASS. Subsection 2 mandates the Minister of Finance to publish in the mass and electronic media and on the Finance Ministry’s website, not later than 30 days after the end of the quarter, the report so prepared.

In conclusion, I ask the Minister of Finance and his counterpart in Budget and Planning: why are you rolling back the gains of fiscal reforms? Is this the change we expect or shall we look out for another? The ball is back in your respective courts.

Eze Onyekpere is Lead Director, Centre for Social Justice. Follow me on twitter @censoj