ANALYSIS: Medium Term Expenditure Framework as veritable instrument for budget passage

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Inadequacies in annual budget system has, in recent times, forced many countries’ government into searching for a more appropriate framework.

Such countries look for a system that supports the reform of policy makers’ plan on expenditures and resources applicable to the most important activities, providing sound revenue estimation.

In search of such systems, the Federal Government adopted Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) to help in the budget process.

MTEF is a transparent planning and budget formulation process within which the cabinet and central agencies establish credible contracts for allocating public resources to strategic priorities while ensuring overall fiscal discipline.

The World Bank says the process entails setting fiscal targets and allocating resources to strategic priorities within these targets.

Further to this, the Fiscal Responsibility Act 2007 makes statutory provisions requiring the Federal Government to prepare the MTEF/FSP; a three-year planning tool that defines government’s economic, social and development objectives and priorities, among others.

Economists say the act articulates the nature of fiscal significance of government’s debts and measures to reduce such liabilities.

They note that budget process in Nigeria before the adoption of MTEF was facing numerous challenges that led to different reforms from one government to another.

According to them, the challenge include lack of political will and commitment to abide by stipulated rules and budget guidelines and inability to develop a proper macro-economic framework for budget formulation.

They observe that MTEF is a government strategic policy expenditure framework which balances what is affordable (in the aggregate) against policy priorities of the government.

Observers note that over the years, the MTEF as a government framework would be presented to the National Assembly before presentation of the budget to the lawmakers.

However, the 2018-2020 MTEF/FSP was presented by President Muhammadu Buhari weeks after presentation of the 2018 Appropriation Bill.

Chairman Senate Committee on Finance John Enoh said the delay was caused by “some discrepancies’’.

According to Enoh, there are some matters that are contained in the report of the Senate Joint Committee on Finance, Appropriation and National Planning at the moment that need to consult further with the Joint Committee in the House of Representatives.

Nevertheless, the two chambers of the National Assembly on Dec. 5, passed the 2018-2020 MTEF/FSP.

Both chambers adopted 47 dollars per barrel as oil benchmark for 2018 budget and retained the 2.3 million barrels per day oil production and market rate of N305 to a dollar as proposed by the executive.

Similarly, the chambers recommended adoption of projected N5.28 trillion for non-oil revenue and adoption of N1.70 trillion for new borrowing.

The Senate recommended that relevant committees of the National Assembly should constantly and closely oversee ministries, departments and agencies on the implementation of programmes to ensure effective targeting of beneficiaries.

The joint committee recommends the adoption of 3.5 per cent growth rate.

It also recommends that the National Assembly should insert in the 2018 Appropriation Act, a clause which makes it mandatory for the executive to refer to the National Assembly for any expenditure in excess of the benchmark.

President of the Senate, Dr Bukola Saraki, said “we hope that those relevant revenue-generating agencies will ensure that they meet the target they have set for 2018.

“The NNPC should also ensure that the bench mark production we have set should be met.”

Similarly, the House of Representatives urged the National Assembly to amend relevant sections of the Fiscal Responsibility Act and other extant laws to strengthen budgeting and enthrone accountability.

Rep. Betty Apiafi (Rivers-PDP) wondered why the proposed utilisation of the recovered looted funds was not captured in the list of recommendations.

But House Leader Femi Gbajabiamila said it was unnecessary to bring up the issue and appealed to Apiafi and other members to support the endorsement of the framework.

Gbajabiamila’s position notwithstanding, Speaker of the House Yakubu Dogara advised Apiafi to do a motion that would capture her thoughts on MTEF and use of the recovered funds in funding the 2018 budget.

Whatever arguments among the lawmakers, the Federal Government said all the parameters used in drafting the country’s 2018 Appropriation Bill were realisable.

Minister of State, Ministry of Budget and National Planning, Hajiya Zainab Ahmed, said government was expected to generate N6.6trillion revenue in 2018 as projected in the budget, representing a 30-per cent increase over 2017 projection.

According to her, this is based on key strategy adopted by the relevant ministries to block revenue leakages and effective revenue collection and management.

She stated that the proposed 45 dollars oil benchmark in the budget was carefully adopted by the executive to provide the amount needed to fund the budget deficit of N2.01trillion, representing 1.77 per cent increase.

According to her, other parameters include oil production estimate of 2.3 million barrels per day, real GDP growth of 3.5 per cent, inflation rate of 12.4 per cent and exchange rate of N305 to a dollar.

Concerned citizens, therefore, call on National Assembly to continue to scrutinise budgets of ministries departments and agencies to produce a cleaner budget.

* A News Analysis by Naomi Sharang, News Agency of Nigeria (NAN)

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