The Presidency has just Tuesday next week to be able to fulfil its promise of getting the 2018 budget to the National Assembly in October.
The Federal Executive Council (FEC) only yesterday approved the 2018 budget but said that a mutually agreed date will be agreed with the National Assembly for them to receive the budget from the Presidency.
But sources at the Senate have told BusinessDay that they are yet to receive a letter from the Presidency requesting to address a joint session of the National Assembly to present the 2018 budget. To meet the October target, President Muhammadu Buhari will have to present the budget on Tuesday, October 31.
The plan was to let the national assembly have the budget in early October, so that they would have enough time to debate and have it ready for the president’s signature in December and the budget ready for implementation by January 1.
With the October target now likely to be missed, sources at the National Assembly now say that the budget is unlikely to be ready on December 31.
There is also the request for virement in respect of the 2017 budget as well as the approval request for a US$5.5 billion external borrowing plan which are all still pending in the Senate.
This means that the 2018 budget, even if presented next week to the National Assembly will queue behind all these requests. March 2019 is seen as a more realistic date for the 2019 budget to be passed into law, sources in the National Assembly have told BusinessDay.
This comes as the Executive may have flouted the Fiscal Responsibility Act, 2007 which provides that the Medium Term Expenditure Framework (MTEF)/ Fiscal Strategy Paper (FSP) shall be the basis upon which the annual budget is prepared by the Executive.
Although President Buhari had forwarded the 2018 to 2020 MTEF/FSP to a joint session of the National Assembly on October 17 for approval, both legislative chambers are yet to consider it.
A source in the National Assembly who spoke on condition of anonymity, declared FEC’s approval of the 2018 budget as ‘illegal, null and void’.
Citing Section 18 of the Fiscal Responsibility Act, the source said the MTEF/FSP out to have been approved and sent back to the Executive before it prepares the budget.
This, he insisted, is like putting the cart before the horse.
Section 18 of the Fiscal Responsibility Act states that: “Notwithstanding anything to the contrary contained in this Act or any other law, the Medium-Term Expenditure Framework shall: (1) be the basis for the preparation of the estimates of revenue and expenditure required to be prepared and laid before the National Assembly under section 81 (1) of the Constitution.
“(2) The sectoral and compositional distribution of the estimates of expenditure referred to in subsection (1) of this section shall be consistent with the medium term developmental priorities set out in the Medium Term expenditure Framework”.
Another source posited that the same budget crisis that marred the 2017 budget could rear its head in this year’s appropriation bill if things are not done properly.
“You will recall that the same scenario played out in the 2017 budget presentation where the President presented the budget at a time the two chambers were still considering MTEF. By the time the document was finally approved by the National Assembly, what they approved was different from the parameters the budget was predicated upon; thus setting the stage for a major crisis between both arms of government”, the source who did not want his name mentioned told BusinessDay.
Although, no figures were released on Thursday, the earlier MTEF document released by the Budget Office shows that the government is proposing a total budgetary allocation of N8.6 trillion for 2018, which is a 15.5 percent increase over the 2017 budget.
“It is the prerogative of the president to give the details of the budget to the National Assembly, not me, so be patient until he presents the budget,” Udoma Udo Udoma told reporters in Abuja after FEC meeting.
“We did promise that the budget will be ready in October and it will be ready in October.”
“We are liaising with the National Assembly because they have to approve the date for the president to come and address them to submit the budget”
But he also announced that capital releases for 2017 budget amounted so far to N450 billion, which is just about 20 percent of the total N2.2 trillion capital expenditure target, a signal that releases for the capital expenditure could underperform again this year.
However, FEC also yesterday approved the new federal government Tax Relief Scheme for Road Infrastructure a policy under the Road Trust Fund (RTF) as part of government efforts to facilitate and incentivize private sector involvement in the provision of Nigeria’s Federal road infrastructure.
The new policy according to the Minister of Finance, Kemi Adeosun, is a form of Public Private Partnership that will accelerate the provision of Federal Roads by allowing private sector operators to collectively fund road provision in exchange for tax credits
The Finance Minister noted that the policy will help to complement Federal Government’s budgetary allocation to road infrastructure.
Giving further details on the new federal government road infrastructure policy, the Minister of Finance said “Council approved the memo for the establishment of road trust fund structure.
The memo, according to her, “was presented with the input of the minister of power, works and housing. It is the PPP initiative that will allow the private sector to get involved in road construction in exchange for tax credit”
What is unique about the scheme is that it is building on an existing scheme that avails tax credit but is one company per road and we have found that only two companies have been able to take advantage of it”
“The tax will be recovered over a three-year period. We expect this to mobilize significant capital into road provision across the country. The ministry of works will be approving the design and the cost of those roads. The BPP will also provide certificates of no objection to make sure that the costs are reasonable, ministry of works will supervise.”
“What we expect is significant road delivery especially in areas for example industrial clusters affected by very bad roads. They can get together, so the road and recover their money through the tax credit system.”
“We expect the impact on revenues to be neutral because we are tightening our tax code but we still put in a limit that no company can apply and use more than 50 per cent of the tax within a year for this scheme.”
“A company doesn’t have to be active in that area, so a bank, Oil Company, service company could get involved. We are really trying to widen the pool of funds for road construction”
The Minister of Power, Works and Housing, Babatunde Fashola, also announced that the Federal Executive Council approved the construction of 14 kilometer 330KVA transmission line by Transmission Company of Nigeria to get them ready, to evacuate Azura power plant in Edo State when it is ready in May 2018.
The contract, he said, is for the sum of N796.6 million for a period of seven months, just about when Azura should be ready.
Meanwhile as the Executive and Legislature bicker over the implementation of the 2017 budget, President Muhammadu Buhari met with leadership of the National Assembly Thursday evening to plead with the law makers over the 2018 budget.
The meeting between the President and leadership of the National Assembly, though said to be part of a normal routine, Business Day gathered that it was not unconnected with threats by the lawmakers not to touch the budget until issues around the 2017 budget implementations are resolved.
The Senate is said to be unhappy about claims by Finance Minister, Kemi Adeosun that 50 percent of the 2017 budget is going to be rolled over to 2018 as only 50 percent of the 2017 budget will be implemented this year.
The Minister had last week alleged that the Senate had refused to approve its borrowing plans.
But the Senate President, Bukola Saraki in his reaction had declared that “There is no request before us about borrowing that we have not approved. We approved all the requests before we went on break. I needed to make this explanation because of what the Minister of Finance said that the National Assembly is holding on to borrowing requests sent by the executive,”
The impasse, Business Day gathered is currently responsible for the inability of both parties to agree on the actual date for the presentation of the 2018 budget, which was approved Thursday.
Tony Ailemen
