Unveiling The Fiscal Responsibility Index (2).

For budget credibility, we cannot be working and budgeting in a vacuum. Let the administration identify its policy goals early enough so that budget expenditure, especially capital votes can be tied into the clear goals. The costing and work plan of the Ministries, Department and Administrations should become more evidence-based and barring changes in macro-economic fundamentals such as inflation and devaluation, it should provide a clear guide for project implementation. This will reduce deviations between planned and actual expenditure. For an infrastructure-deficient economy like ours, it will make no sense to insist on a budget that provides less than 40 per cent of total expenditure for capital projects. Yes, we must pay salaries and run overheads but we need as well to build the physical and human infrastructure needed for economic growth and development.

Considering that the Medium Term Expenditure Framework guides the composition and sectoral distribution of the annual budget estimates, it is imperative that the zero-based budgeting idea be introduced at the time of preparing sectoral strategies and the MTEF. This will facilitate the choice of priority projects and programmes. Otherwise, the preparation of the zero-based budget may violate the provisions of the Fiscal Responsibility Act if it introduces new projects and programmes that had not been approved in the MTEF. The administration needs to come out with a template for the preparation of budgets under the new zero-based approach. The template should also be available to stakeholders so as to inform a proper analysis of the strengths and weaknesses of the approach. For 2016, we have missed the timing of the MTEF and the annual budget as stated in the FRA. But we do not need to waste further time. The new Minister of Budget and National Planning should proceed expeditiously to work on the MTEF and the budget and in so doing, open up the process for stakeholder input.

The Vice-President, Yemi Osinbajo, was widely reported in the media to have stated that the 2016 federal budget will be in the neighbourhood of N8tn. The 2015 federal budget and budgets of previous years have been about N4.5tn. A quantum leap of this nature at a time of declined crude oil prices will seem to be a miracle. The miraculous nature will be accentuated by the fact that we are finding it difficult to fund the 2015 budget as only salaries and a few overheads have been assured. Where will the money come from? It is possible the government knows a few things about new sources of revenue which it has refused to share with the populace. Maybe, it has recovered a lot of money that was stolen from the public treasury. Or, it has plugged leakages which will release funds for development. Maybe, it wants to borrow massively to fund a deficit budget or it wants to increase taxation in a depressed economy. Whichever option that fits the bill for the proposed funding of the 2016 federal budget should be put in the public domain for robust discussions before a final decision is taken. But, we must take cognisance of the need for sustainability of the national debt.

For budget implementation, we need to take more seriously the implementation of the Public Procurement Act which seeks to introduce transparency, accountability and value for money into public procurements. Effective procurement planning is at the core of good budget implementation. The Bureau of Public Procurement has done some excellent work in setting out the formats and guidelines required to plan procurements, get the best bidders, suppliers and services providers and ensure that good and fit practices are followed to the letter. Meticulously following the provision of the PPA in procurement planning, calling for bidders, contractors and service providers, examination and evaluation of bids, domestic preferences among others hold the key for good capital budget implementation. This will involve the mainstreaming of open competitive bidding in procurements; publication of the details of awarded contracts, involving civil society and professional groups with relevant capacity in procurement monitoring. It will also involve the production of regular implementation reports and updates; sharing the results of monitoring and evaluation with stakeholders and for appropriate lessons to be drawn from such monitoring exercise.

Background tasks that prepare a project for inclusion in the budget should be completed before their inclusion. Projects must be fully prepared and contracts should not be awarded with preliminary engineering designs. Community issues relating to land acquisition should be settled in advance of award of contracts. A situation where cash-backed funds are not utliised by the MDAs will no longer be acceptable in the new dispensation of fiscal responsibility. But this comes with a caveat that the Ministry of Finance ought to release and cash-back the funds when they are needed to achieve optimum results. Releasing funds meant for capital projects in November and asking that unspent funds be returned to treasury in mid-December are not the ways of fiscal responsibility.

The full implementation of the Treasury Single Account in all agencies, where this is possible, should be pursued to the letter. Already, there is loud bickering in the public service about how the TSA is purportedly crippling government business. Every MDA is appealing to be removed from the TSA. The obvious facts flowing from this development are that the process of its implementation needs to be fine-tuned so as to accentuate the gains and reduce the downsides and challenges that come with its implementation. Already, there is evidence that government has gained from a decline in cost of borrowing “its money” from deposit money banks.

Internal and external audits are central to fiscal responsibility. A situation where it takes weeks and months to respond to audit queries is not ideal and could compound abuse of fiscal laws, rules and regulations. Although President Muhammadu Buhari gave an order for audit queries to be answered within 48 hours, an order which seems like it is impossible to comply with, the administration must ensure the timely response to these queries. Audit recommendations are not made for fun. They are part of monitoring and evaluation whose results should feed into the next budgeting cycle. Thus, if audit recommendations were not part of the considerations hitherto used for new budgets, they should influence the 2016 budget this time round. The idea that public audits should be a secret process between the Auditor-General of the Federation and the Public Accounts Committees of the National Assembly does not belong to modern times. The stagnation of audit principles and the fact that no remedy is provided to government through the auditing process renders the audit function redundant. It is either we scrap the audit process and stop wasting money pretending to be doing something serious or we begin to use the outputs emanating from the audit process. The National Assembly needs to sit up to its responsibility. The fact that the National Assembly failed, refused and neglected to adopt the reports of the Public Accounts Committees since 1999 is a national disgrace and calls for change of attitude.

The timing of the submission of monthly and yearly returns and transcripts by the MDAs to the Accountant-General of the Federation is also another issue worth improving upon. Government needs to produce timely accounts of its income and expenditure to be able to transparently run its affairs. A situation where the transcripts and returns do not come in on time delays the Accountant-General’s work which in turn, at the end of the year, delays the Auditor-General’s work.

Continued

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