The Danger of Running Multiple Budgets Concurrently
Postscript by Waziri Adio
After a slight drama on Thursday, the National Assembly promptly acceded to President Bola Tinubu’s request to extend the lifespans of the capital components of the 2023 main and supplementary budgets from 30th June to 31st December.The Federal Government, as some legislators and others have pointed out, willprobably end up running four budgets concurrently this year: the two extended budgets, the 2024 budget, and the expected 2024 supplementary budget. BudgIT has rightly described this as ‘an anomaly with no precedence.’
Running the budgets for different years—whether three or four—in the same year is tardy and difficult to justify. It will likely create confusion, limit transparency and narrow the execution bandwidth. This development, unwittingly, reveals something about the government: it is still struggling to get to grips with the basics of diligent planning and implementation.
Interestingly, this is not the first time the Tinubu administration is running multiple budgets simultaneously. Toward the end of last year, the administration started implementingthree budgets: the N819 billion of the amended2022 supplementary budget (which Tinubu submitted for amendment on 12th July 2023); the N21.83 trillion budget for 2023 that it inherited; and the N2.17 trillion supplementary budget for 2023 that it proposed on 31st October. Many people might have missed this development, but I pointed out the incongruity on this page seven months ago.
While assessing the 2024 appropriation billwhich was submitted to the National Assembly on 29th November 2023, I wrote: “It is conceivable that we might have three different budgets in operation at the same time. At least some of the capital items in the supplementary budgets for 2022 and 2023 are likely to stretch into the new year. This will be untidy for accounting and tracking purposes. This probability again questions the rationale for including some capital items in the 2023 supplementary budget when they can be accommodated in the 2024 budget.”
Assuming that the amended 2022 supplementary budget terminated before or by the end of 2023, the administration has been implementing three budgets since the beginning of this year—the two budgets from 2023 and the budget for 2024. The lifespan of the capital components of the two budgets of 2023 was first extended to March 31st, then to June 30th. And now to December 31st. The administration was not stopped from or questioned for operating three budgets concurrently late last year and early this year. So, the incongruity was normalised, the administration got emboldened and even decided to raise the ante.
The 2024 supplementary budget is just a matter of when, not if. The Senate spokesperson, Senator Yemi Adaramodu, has announced a date (July) and a figure (N6.6 trillion). Even when the budget preparation is the preserve of the executive, it is plausible that there has been prior consultation between the executive and the legislative arms. It is a known fact that the administration has almost exhausted the approved borrowing plan for the year because of the usual revenue underperformance.
The government will also need to accommodate the new minimum wage in its personnel budget whenever they reach an agreement with labour unions. So, there is a shortfall already, and the government will either resort to ways and means or do a supplementary budget to bridge the gap. If the central bank lives to its promise to keep ways and means within legal limits, a supplementary budget is thus inevitable. It is actually better than unpublicised overdraft from the central bank if only because the country will know what is going on, rather than only get to know after the fact.
When the 2024 supplementary budget finally gets proposed and approved, the Federal Government will be operating four budgets simultaneously. Running the budgets for different years in the same yearis a bad practice that should not be encouraged. The government might have deserved a pass in 2023 when this anomaly first occurred because that was a transition year and the president and his team were still new to running things on the executive side at the federal level. But that excuse is no longer available. The administration has spent more than a year in office.For this to be happening again is either indicative of a desire to operate outside of established tradition or a lack of respect for the discipline that should attend budget implementation or a reflection of serious capacity gaps within the government.
Whichever it is, it is not a good look. No country that wants to be taken seriously will treat budgets with such haphazardness. And no serious administration will put its country in such an unflattering spot.
Even when there is still much work to be done, a lot of effort had been put in, over time, in the attempt to straighten the budgeting process in the country. For instance, the President Muhammadu Buhari administration in 2019 successfully returned the country to the predictability of the January to December budget cycle. Prior to this, budgets were passed way into the new year, sometimes as late as June or after. While recurrent budgets would terminate with their financial year, the capital budget usually extended into the new year but would close immediately a new budget was passed. Effectively, even in those years, two budgets were never in operation together. To be sure, the January to December budget cycle has not been reversed by this administration but what has happened now with multiple budgets running at the same time not only rolls back some of the progress made but amounts to some retrogression. The administrators of a country should constantly be obsessed with raising the bar, not lowering it.
During the initially rowdy session in the House of Representatives on Thursday, the multiple budget issue was narrowly framed as a contest between legality and morality. As Hon. Kingsley Chinda and Hon. Ado Doguwa argued, it may be not be illegal to have the budgets for different financial years running at the same time. But doing so may also not be immoral, contrary to Doguwa’s position. Things are not wrong only when they are illegal or immoral. Running the budgets for different years at the same time is simply untidy. This aberration makes it difficult for citizens, accountability actors and even oversight institutions to track budget implementation. The opacity that ensues from theconfusion may negatively affect budget implementation or even enable sharp practices. Also, it does not make us look like a country that is serious or knows what it is doing.
The government has not publicly explained why it is going into this uncharted and ungainly territory. According to Hon. Tajudeen Abbas, the Speaker of the House of Representatives, the extension was to allow the administration to fully implement the 2023 main and supplementary budgets. Possibly he got that from prior briefing or from the executive communication to the parliament. In fairness, that sounds like a reasonable excuse. But that is what it is: an excuse. Extending the lifespan of the two budgets of 2023 to the end of 2024 (when the 2024 budget itself should be terminating) is not the only option available to the administration.
A neater approach would have been to fold the unimplemented part of the two extended budgets into the expected and inevitable supplementary budget for 2024. It must be said that most capital budgets are actually multi-year in nature and the budget template has a column for indicating whether the proposed projects are new or existing ones. So, carrying one capital activity or project into the budget of another year is standard practice and is a neater option. The fact that there is presumably funding for the 2023 budgets makes it easier to roll them over into the expected supplementary budget.
Instead of always bending over to speedily approve whatever requests come from the executive, the leadership of the National Assembly should strike a balance between supporting the president to deliver on his mandate, providing necessary checks, and preserving the institutional integrity of the parliament. Ultimately, a rubberstamp parliament doesn’t serve the country or both parties. The tides turn so quickly in the National Assembly, and even the most powerful presidents might not be able to protect overly pliant presiding officers, who at the end of the day are justfirsts among equals. For the same reason, it is equally important for the president not to think his goodwill with the National Assembly is inexhaustible. He needs to weigh his options more carefully and not put his allies in difficult or vulnerable positions. Other factors, including geo-political sentiments and alignments, come into the mix of executive-legislative relations in Nigeria. No honeymoon lasts forever.
There are people who believe thismuddled budget state is deliberate. However, I opt to be charitable on this. My sense is that there is an unspoken challenge somewhere. The challenge could be from a law or a process or from the quality and experience of personnel. But I will argue that it is better for the president to address whatever the challenges are than to keep extending the lifespan of budgets. We don’t know what percentage of the 2023 capital budgets is outstanding (with regular and publicly available budget implementation reports, this should not be a mystery). But here is a question: if it happens that some portions of these budgets are still not implemented by 31st December, what will happen? The president will request for another extension and the pliant parliament will promptly grant the request? This hypothetical question illustrates why the current approach is ungainly and wrongheaded.
Budgets, especially the capital components, are a continuum. For sundry reasons—including exuberant revenue projections and attendant funding shortfalls—hardly do we achieve even 80% implementation of our capital budgets.Logically, whatever is outstanding from one budget should thus be rolled into the next one. It is good that the Federal Government wants to take capital budget seriously, including increasing provisioning and achieving 100% implementation. But thislofty goal will not be achieved merely by giving capital budgets unnatural lifespans and confusing everyone. It can only be achieved when the administrationtakesmore seriously the sanctity of the budgeting processand ramps up its own capacity for diligent budget planning, monitoring and implementation.
