Reports by various analysts have shown that the 2015 Budget Appropriation Bill as presented to the National Assembly on December 18, 2014 is not in consonance with the practice of austerity measures.
While the benchmark price for oil according to the budget stands at $65; per barrel, with a production figure of 2.27m barrels per day, it is still evident that the international price of oil, which Nigeria relies upon for profit in the exportation of this product has continued, be on the downward trend.
With just a little above $50 per barrel, the international price of oil may likely remain on the downward slope for quite a while. Previous reports have also shown that when Nigeria had the chance to build upon its allocation resource for capital expenditure; that segment of the economy continued to suffer, in all of government’s budget proposals and financial plans for decades. It is on record that; when oil price stood above the $79 per barrel benchmark used in estimating the 2013 budget, the Nigerian government had to resort to borrowing (N744billion) to meet her capital expenditure obligations due to revenue shortfall.
Currently, the price of oil has gone far below the price it was, when the 2013 budget was created for last year. Yet rather than intensify its effort, ‘practically’ towards ensuring that Nigeria can meet up with the challenges of 2015, the budget proposal by the Coordinating Minister for the economy and Minister of Finance, Ngozi Okonjo-Iweala indicates that capital expenditure which has greater impact on the economy, for the benefits of the masses, will suffer a whopping 15 per cent decline, from the meager 24 percent, allocated for its purpose last year. In fact, it has been reported that Capital expenditure dropped from N1.55tn in 2014 to N387bn in 2015. That’s from 24 per cent to per cent of overall budget.
Put succinctly, Nigeria has in its usual manner negated the need to make proper plans towards an unarguable impending difficult time for the economy. It has belittled the principle of austerity which seeks to check exorbitant expenditures of government, such that money is only expended on crucial areas that facilitate economic growth.
These areas consist of infrastructural facilities that can only be created with the funds accrued from capital allocations in each fiscal year.
Capital expenditure implies the cost of infrastructures such as bridges, hospitals, schools, etc. It’s through capital expenditures that infrastructure and other critical services that touch majority of the people are provided. As indicated by analysts, the only way to directly feel the impact of the budget as a citizen is through the capital expenditures.
Ironically however, this very segment of the budget has been slashed to further enrich its economic opposite; the recurrent expenditure, which makes up 91 per cent of this year’s intended spending rates.
An important question asked by a crucial observer goes thus; “Why will personnel costs increase from N1.77trillion (2014) to N1.84trillion (2015)? Is the government planning a massive recruitment drive in an austerity year? Or is this being brought on by the proposed elections in 2015?”
In other wards; is this a strategy to manage the working condition of Nigerians and prevent unnecessary strike actions before the period of the elections?
Already Nigeria’ debt burden has remained on the rise, with its figure rising from, with domestic debt rising from N4.55trillion in 2010 to N7.65trillion as at September 2014. Fiscal deficit was also slashed from N993.68bn in 2014 to N755.04 billion in 2015, while the debt servicing fees have risen from N828billion in 2013 to N943billion in 2015, an equivalent of 22% of the aggregate expenditure.
To service these impending challenges, the Federal Government says it will ensure a rise in the level of Internally Generated Revenue (IGR) to ensure stability in the flow of income and consequent improvement of the economy, starting from the first quarter of this year.
But development economists have stated that “IGR to Budget in Nigeria is barely 12 percent, whereas in most countries it’s more than 90 percent.
“The little IGR generated or declared in Nigeria is diverted “legally’’ to the extent that in 2009, for example, N3.06tn was declared generated but only N46.8bn was remitted to government; in 2010, N3.07tn was generated, but N54.2bn remitted; in 2011 N3.17tn, only N73.8bn was remitted. Thanks to section 22(1), this legalized this diversion”.
“Reducing fiscal deficit from N993.68bn in 2014 to N755bn in 2015, makes no sense when a pro-growth, pro-investment and pro-jobs government should increase deficit spent even beyond the three percent GDP as the ceiling required by section 12(1) of the 2007 Fiscal Responsibility Act”.
What all of these mean is that government has set the ball rolling for greater debt burden on a country, already suffering from the many effects of its previous debts.
As explained by keen observers, “If oil prices stays below $65 per barrel, there will be more borrowing. If the volume of crude oil sold falls short of targets, Nigeria will resort also to borrowing and if the highly optimistic IGR falls below target, the next option will still be borrowing”.
And as always, the masses will be made to suffer. Nigerians have not forgotten days when government had to retrench staff, in the name checking or controlling undue expenses.
In fact, as explained by Rowland Okechukwu, a business man based in Abuja, he says:
“I am not surprised about your question regarding what the outcome of shortfalls from the budget will be for Nigerians. We all saw how oil price fell in the international market and Nigeria exports its oil for the economy to thrive. We have a set of leaders who only believe in the policy that will enrich their purse. And they are not making this wrong polices like they want to harm us; they have in fact programmed the economy just like they programmed the constitution to suite them. They will have a good explanation, in defense of their actions, even if they are taken to court, where the need arises. Such is the kind of leadership we have”.
“Many analysts advised government against inflation, while addressing the loopholes of this budget, but God help us! U will see what will happen; we are all here. My prayer is that it doesn’t get too hard that they start chasing out poor Nigerians from public offices, in the name of cushioning their excesses.”
In a similar vein, this anonymous respondent adds that; “Our leaders don’t have the masses at heart. How can they make polices that will ensure the provision of facilities for the poor, when what they care about is how to make unnecessary allowances for themselves. I have read in previous reports that Nigerian lawmakers are about the highest paid in the world. With the level of economic challenges we have, what more can prove that this people care less about us?”
“They will never do what is right, unless we stand together against their corrupt practices”.
While a united mass of followers may be a way out of this mess, the call for the National assembly to look into the need for a reduction of its allocation for the good of the people, may also be an aspect necessary to be digressed by economic analysts.
As indicated by a previous report on the subject; “For the 2015 Budget to adequately oil the machinery of governance and Nigeria’s economy calls for a miracle, as estimates on the revenue end is overly optimistic. We have recurrent receipts which must be paid, as well as pressing capital expenditure obligations to citizens. Interesting times indeed lie ahead. Let’s pray for miracles. Nigerians need it now”.
In a nutshell, Nigerians hope that 2015 does not bring with it; economic turmoil like that currently forced on innocent Nigerians in the political terrain.
The humane expectation of most people is that as the year unfolds our leaders will quit the rhetoric face realities, and stop Nigeria’s economy from further deteriorating to the detriment of the masses; yet what hope is there of such miracle from a set of leaders, so distant from their followers?