The 2023 budget breakdown, as presented by the Minister of Finance, Budget and Planning last week, brought out the good, the bad and the ugly content of the proposal as expected. The magnitude of the deficits had generated controversy at the time the President, Major General Muhammadu Buhari(retd.), presented the budget originally. Almost half of the proposal represents a deficit of N10.7tn and it could be more, given the struggle to generate revenue to meet the expenses as in the case of the current budget. Already, over N5tn deficit has been recorded in the implementation of the 2022 budget with three months to the end of the year.
One of the considerations in the formulation of a future budget is the performance of the existing one. The performance would be on both sides of the coin, namely revenue and expenditure. The N5tn deficit at the end of September 2022 signifies caution in deficit budgeting for 2023, and there is the need for the legislature to be concerned when considering the details of the budget at the legislative cycle for authorisation. Even if the ministry looked at some other factors considered in budget preparation or formulation, none of them favours the huge deficits. For example, the movement of prices upward in recent period does not favour deficit budgeting, nor is the current low level of tax generation and debt crunch.
A budget is not just about spending and generating funds but must ensure efficiency and effectiveness in the implementation of public sector programmes. As we were taught in elementary public sector economics, a budget as a document specifies expenditure items, costs, time and nature of the expected results; thus acting as a tool of economic management. That is, it can be used to stabilise the economy. The Nigerian economy at this point requires some significant level of stability in domestic prices, exchange rate and even income distribution. Do the economic managers know this?
It seems the concern is about spending and sharing money, not even generating money from production efforts. Rather, it is rent collection individually and collectively as well as borrowing, and now the sale of assets. Rent collection is not an everyday affair. The rent for this year has been paid or so it seems. The sources of borrowing are narrowing down as creditors and potential creditors are trying to be careful and concerned with our repayment ability. So, the country’s managers have to look for another easy way out, thus settling for the sales of national assets. But are the sales of national assets bad? We shall return to it shortly.
Another short course in public sector economics identifies the sources of financing budget deficits as internal borrowing from financial institutions and the non-bank public through bonds of various maturities, treasury bills, public works on credit including public-private partnership arrangements. Also is external borrowing through bilateral and multilateral arrangements with other countries, private funds from euro currency or bond market and institutional funds from the African Development Bank, World Bank and the like. Other sources beside grants and aids from international donor agencies or borrowing from the country’s central bank are referred to as unfunded liability and sales of unused and/or abandoned assets. You can see why the Federal Government has to pay more than lip service to education. I could recall this ECO 304 because I was taught when the lecturers were well motivated and the environment was very conducive to quality learning. The Academic Staff Union of Universities is not asking too much for the youths and future generations. Pardon me, it is just a digression!
It should be clear that the sale of unused and abandoned assets, whether by federal or state government, is part of the menu for funding deficit budgets. Thus, the decision by the government to sell such assets, which invariably constitutes some cost to the government if unsold, is in order from an economic point of view. It seems like a waste of resources if you have an old car that you decide to keep even when you have another functional vehicle. The space it occupies in your garage or compound is equally a cost just as the space it occupies in your daily thoughts. By nature, Nigerians like holding on to property that no longer benefits them. A study of the stock market behaviour of Nigerians showed that some people still keep the certificates of shares of companies that have long gone bankrupt or ceased to be in existence. Less than two years ago, I saw my Dunlop share certificate! We refer to such an attitude as ‘buy and hold.’
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We can assume that the skepticism expressed by the public when the issue of sale of government property to finance the deficit in 2023 budget is likened to this ‘buy and hold’ behaviour even though I know it is more than that. It is the justified lack of trust in the government. The actions of the government with respect to public finances lack transparency and accountability, and sometimes the brazen contempt for the public. If you sell your old car and are not in need of the money to buy another, you are likely going to spend the money on another item of relevance given the significant value of the sold item. Actually, members of your family would probably know, a priori, what the money would be committed to. Nigerians are sure that the assets that will be sold eventually are not just the unused and abandoned property but those that are still generating significant revenue. The property will be sold cheaply by proxy to ‘themselves,’ and even the proceeds will be shared, not invested, within a caucus of unknown politicians and civil servants. Eventually, what is supposed to be a win-win situation for the economy becomes a loss. Please sell the unused and abandoned assets, but let us know what you intend to do with the money so that we can hold you accountable.
A budget is expectedly closely linked to a national or state or local government development plan in terms of being a tool for implementation. In this connection, the budget determines the financial resources required to execute each phase of a development plan and ensures the implementation of programmes and projects included in the plan. Our budgets are not linked to any development plan. That is why the government can just wake up and think about how to sell public property in order to share the proceeds among politicians.
In the last 20 years or so, how many dams have they built in anticipation that there could be flooding when Niger Republic, Cameroon, or Benin Republic releases water from their own dams? How many refineries have they built to compete with private ones? How many hydroelectricity projects have they executed successfully to give us light? How many river basins have they built or renovated to make functional to promote some level of mechanized agriculture? We can continue to ask how many.
Emerging information from the breakdown of the 2023 budget seems to be pointing at the desire of this departing government to settle themselves and their predecessors before they wind down. A report in the Saturday Punch on the budget breakdown explained that the Federal Government budgeted N13.8bn for Obasanjo, Jonathan, IBB, Atiku, and others while another part equally reported that N10.5bn was being allocated to retired civil servants. There will be many more of such largesse to be doled out by a government emersed in huge debt, crying about revenue shortages and pushing the country further into an abyss of poverty.
Why did the Olusegun Obasanjo government, that was able to pay off our debts, and leftover $60bn in reserve, failed to pay what was due to it? Why did the Goodluck Jonathan administration, that enjoyed the longest period of oil boom before plunging us into recession, fail to pay Obasanjo functionaries even if it could not pay its government? Why must it be now that Nigerians below the poverty line have increased tremendously, with unprecedented income inequality, that this government should be thinking of deepening the inequality? The deficit of N10tn is based on largesse to the political class. It looks like a slap on the right cheek. As religious people, we should be ready to turn the other cheek.
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