Budget Office Offers Explanation for 2017 MTEF Controversy

• Says personnel, overhead costs reason for proposed high recurrent expenditure

Iyobosa Uwugiaren in Abuja

The increase in provision for non-debt recurrent expenditure in the 2017 budget is driven mainly by changes in the personnel and overhead cost outlays, a senior official in the Budget Office told THISDAY in Abuja tuesday.

In the 2016 estimates, non-debt recurrent expenditure was put at N2,646,389,236, 196, while capital expenditure was N1,587,598,122,03; but in spite of the federal government’s touted fiscal responsibility measures and the discovery of thousand of ghost workers, the provision for non-debt recurrent expenditure jumped up to N2,949,139,301,963, a difference of N302, 750,065,767.

At the interactive session with the House of Representatives Joint Committee on Medium Term Expenditure Framework (MTEF) on Monday, the Minister of Finance, Mrs. Kemi Adeosun, told the lawmakers that the federal government had made capital releases to the tune on N831billion to date, more than 52 per cent. The 2017 provision for capital expenditure is N2, 078,941,770,803, about 31 per cent of the entire proposed Appropriation Bill.

The source, who spoke with THISDAY in confidence, added that in a bid to drive down cost of governance, the federal government decided during the preparation of the 2016 Budget that a 6.5 per cent across-the-board reduction in the 2015 budget personnel cost estimate per MDAs should be applied to arrive at the 2016 provisional budget estimates.

“While this was adopted with the hope that the full implementation of the IPPIS and other policies of the administration would help make some savings, the outcome was not as intended,” he explained

He said this was largely due to inadequate budgeting provision for IPPIS implementation in the 2016 budget; prompting the Office of the Accountant General of the Federation (IPPIS Department) in the course of the year to report that several MDAs had exhausted their respective 2016 budget personnel cost provisions as early as the third quarter.
He also pointed out that the Presidential Initiative on Continuous Audit (PICA) submitted claims of salary shortfalls for non-IPPIS MDAs, saying, “These partly necessitated the government’s virement request in respect of personnel cost.”

Since then, the source stated that several MDAs had continued to forward claims of unpaid personnel costs including promotion arrears, new recruitment and annual increments.
He added: ‘’So, in preparing the 2017 personnel cost proposal, verifiable salary shortfalls as reported by the Accountant General’s Office were consequently taken into consideration, a situation which resulted in the increase in 2017 personnel cost compared to the 2016 estimates.’’
It was also gathered that the further depreciation of the naira against the US Dollar pushed up the salary (and overhead costs) of foreign service personnel particularly those of the Foreign Affairs Ministry, Immigration, and also military budgets.

THISDAY further gathered that just as it was with personnel cost, the overhead cost outlay was similarly reduced across board in the course of preparing the 2016 Budget.

However, within the fiscal year, several MDAs reported unpaid utility bills such as electricity, water, cleaning services, among others, a development which reportedly grounded activities in the affected MDAs.

‘’Learning from that experience, the MDAs were cautioned, while preparing the 2017 Budget, against allocating scarce resources to frivolous expenditures like foreign travels and training, overseas board meetings, colour-printing, and conference sourvenirs. The savings from these exclusions were to be applied to areas of need,’’ our source explained.

It was also learnt that some essential costs which were omitted from some MDAs provisions in 2016 were considered in the 2017 proposal; especially in the Civil Defence Corps and National Youth Service Corps, because of their peculiar mandates.

Other variables responsible for the increase in the 2017 provisions include increase in electricity tariffs, fuel price hike, exchange rate and inflation, all of which have direct effect on increase in MDA’s overhead cost.

On capital costs estimates, the source explained that Government’s determination to achieve inclusive economic growth by stimulating the economy meant an upward trend in spending on key infrastructure such as power, transport, roads, rail, air transport, and housing, as well as in social infrastructure investments.

He added, ‘’Also importantly, the need for security provisions arising from insurgency, militancy and security threats in various parts of the country, as well as effort to achieve food security, largely contributed to the increase in this area.’’