Some bright developments on the budget

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Friday, October 16, 2015 09:13AM / FBN Capital Research                                                 

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There are still no appointments to head the federal government ministries but preparations for the 2016 budget are underway, and in a different style to recent years.

 

This emerged from a plenary session on the national budget we attended yesterday at the 21st Nigerian Economic Summit in Abuja.

On the institutional side, there is a close working relationship, described by one panelist as unprecedented, between the Budget Office and the National Planning Commission (NPC).

 

As for the process, we were gently advised not to have nightmares over the introduction of zero-based budgeting.

 

Kyari Bukar, chairman of the NESG, noted that the private sector generally works on a similar basis although it terms the driver of the process as strategy rather than needs.

 

Ben Akabueze said that Lagos State had adopted it when he was its commissioner for budget and planning.


The budget process has become extended (and disruptive to the macroeconomy) due to tussles between the executive and the legislature. The new director general of the Budget Office, Yahaya Gusau, stressed the benefits of engaging with the assembly long before the formal submission of the executive’s budget proposals.

Shamsuddeen Usman, moderator of the session and former federal finance minister, advised from his experience that the process has many pitfalls, not least the practice of the assembly of introducing uncosted projects.

He recalled one year under the Yar’Adua presidency when the two sides almost went to the Supreme Court for guidance as to the lines of demarcation. He also observed that the US Congress has a defined nine-month window for budget scrutiny.

Gusau gave a strong signal that recurrent spending will increase in the 2016 process. He was not departing from the line that it should be cut over time but merely acknowledging that the new administration has social spending plans.

This full session on the closing day of the summit provided evidence of the new close relationship between the Budget Office and the NPC.

They have together produced an initial planning document. This has growth at 3.4% this year and 4.4% in 2016, with crude oil output rising from 2.11 mbpd to 2.20 mbpd. Among policies in the document are giving more space to the private sector, particularly in the infrastructure.


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