10 reasons Yar

No Comments » April 7th, 2008 posted by // Categories: Nigeriawatch



 

THE NATION

 

10 reasons Yar’Adua won’t sign budget    7/4/2008

From Yomi Odunuga,

Abuja Bureau Chief

The Federal Government yesterday explained why President Umaru Musa Yar’Adua has refused to sign the 2008 harmonised budget passed by the National Assembly last month.

Yar’Adua, The Nation gathered, plans to meet with the leadership of the National Assembly this week to state his reservations on some contentious issues in the budget.

Government sources said in Abuja that the President was insisting on the removal of some clauses which the lawmakers “unilaterally injected” into the budget as they do not “fall in line with the government’s overall national plan, macroeconomic stability and sector strategies.”

Specifically, the executive accused the lawmakers of deliberately inflating the votes of some ministries in addition to hijacking a function which is the exclusive preserve of the executive by “initiating projects and appropriating money for such projects without consultations with the executive.”

The President is said to have wondered why the lawmakers introduced new projects by some ministries into the budget when his priority remains the completion of ongoing ones.

A source told our correspondent that Yar’Adua is wary of being blackmailed into implementing such projects, should he buckle to pressure to sign the 2008 appropriation bill as passed.

The source said: “You know Yar’Adua cannot choose what to implement like former President Olusegun Obasanjo. That is why it is very difficult for him to sign the budget and he will not sign it. What we are having on our hands is legislative lawlessness. They cannot tell us how to run the government or execute our programmes. We foresee a situation where they want to blackmail the President into signing but it will not happen.

“In short, the President is unhappy and he will express his opinion when he meets with the National Assembly leadership this week.”

According to documents obtained by our correspondent, the government insists that the 2008 appropriation bill, as currently passed, is “defective in no fewer than ten areas.”

The document indicated the defective areas as, among others, new projects awarded without consultations, the raising of the revenue benchmark, the increase in capital allocations, the introduction of new vote heads and the increase in personnel cost allocations.

Other areas are the increase in overheard cost allocations and three contentious clauses which seek to subsume the power of finance agencies in the executive arm to the legislature.

Describing the votes by the National Assembly as “guestimates”, a source in the Ministry of Finance said: “The issue is whether the legislature can unilaterally initiate projects and provide money for such projects in the budget without consultation with the executive given that the design, costing, due process certification, execution and supervision of such projects are vested in the executive.”

The government is also accusing the National Assembly of distorting the budget “by encouraging ministries and government departments to submit to them sundry projects for which they (legislators) allocated money, thus usurping the functions of the executive whose duty it is to initiate budget.”

On the issue of revenue benchmark, the government said the increase in oil price from $53.83 per barrel to $59 per barrel was agreed with officials of the Ministry of Finance based on the understanding that the extra revenue would be used to reduce the fiscal deficit in the original Executive proposal.

It thus faulted the lawmakers for unilaterally devoting “much of the extra revenue to increase total expenditure, resulting in an increase in the deficit from N468 billion under the Executive budget proposal to N554 billion.”

Sources in the Budget Office alleged that the $53.83 per barrel benchmark was based on a macro-economic framework designed to ensure stability in the system, bearing in mind the need to keep liquidity at a manageable level. This is intended to keep inflation in check and provide an environment for interest rates to adjust downward, which the present increases would jeopardise.

The government contends that the National Assembly appears to be working against the realisation of this objective through its action.

It is also faulting the National Assembly for a unilateral increase in capital allocations to several ministries including the Ministry of Transportation (N61 billion, of which N36 billion is for new projects); Agriculture and Water Resources (N20.4 billion); Defence (N17 billion); Interior (N15 billion); FCT (N12.9 billion); Science & Technology (N6.3 billion).

Sources told our correspondent that the Budget office “contends that while some of these projects could probably benefit from increased allocations, the lawmakers didn’t factor in the implementation capacity of the various ministries since they were not consulted; meaning that if the money comes into the system, it is likely to be wasted.”

The lawmakers are also accused of inserting new vote heads totaling N2.1 billion into the budget.

The document said these include: “(a) Federal polytechnics (Bali, Ekowe and Ugbokolo). Both Bali and Ekowe were established in 2005 as federal institutions, but were not provided for at that time because they had not taken off. For this reason they were also not budgeted for in the 2008 Executive budget. Provision was also made for Ugbokolo, a state government owned institution in the federal budget. (b) Several professional council registration boards that never used to be in the budget (Architecture, Quantity Surveyors, Societies of Engineers, Estate Surveyors, Builders and Town Planners as well as Advertising Practitioners of Nigeria etc.) were allocated money. The total amount budgeted under these new vote heads is N2.1 billion.”

Besides, the lawmakers are faulted for unilaterally increasing personnel cost allocations to a number of ministries and agencies.

The document read in part: “The personnel costs granted to a number of ministries and agencies were jacked up without making provision for the social costs like pension and NHIS, which would have been calculated automatically if it had been based on the Budget Office’s template had there been consultation with the executive.

“A few of the cases of personnel cost increases include the Ministries of Agriculture (N227.3 million); Interior (N520 million); Transportation (N635.8 million); Energy (N526 million); Commerce and Industry (N382 million); Culture and Tourism (N116 million); etc. The increases were not based on any known shortfall reported by these ministries, and officials of the ministries confirmed that they had no shortfalls. So where will these monies go? Assuming there would be increases, should there not be consultation with the executive on how it would be spent?”

Pertaining to overhead costs, the government said the lawmakers went beyond the bounds of their constitutional responsibility by ratifying “unsolicited increases” in the allocation to some ministries including Education (by N1.65 billion); SGF (by N2.1 billion); Youth Development (by N377 million); and Presidency (by N900 million).”

The government also disagreed with the lawmakers on the injection of three contentious clauses in the budget. It highlighted the clauses in a tabular form, saying it would be tantamount to undue interference if they were allowed in the budget.

In spite of all these, sources told The Nation that Yar’Adua would not be confrontational with the leadership of the National Assembly at the proposed meeting as he would want the good relationship between the two arms of government to continue.

It was not clear when the meeting would be held, but sources said Tuesday has been tentatively fixed.

 

 

•The National Assembly unilaterally provided money for new projects, thereby infringing on the functions of the executive.

•It raised the revenues benchmark, thereby leading to an increase in deficit from N468 billion under the executive budget proposal to N554 billion.

•Increase in capital allocations running into billions of naira to ministries for new projects which would amount to waste as the priorities of the executive are different.

•New vote heads totalling N2.1 billion. This is in addition to the allocation of votes to several professional bodies that were never used in previous budgets.

•Unilateral increase in personnel costs to some ministries and agencies. Costs jacked up without provision for social costs.

•Unsolicited overhead costs running into billions of naira to key government ministries.

•The Presidency considers it undue interference with executive functions for the lawmakers to inject a clause that requests the Accountant-General of the Federation and Governor of the Central Bank of Nigeria to furnish the National Assembly with monthly reports on budget performance (as retained in Clause 7 (1)).

•The Presidency considers it undue interference with executive functions for the lawmakers to inject a clause that requests the accounting officers in the ministries to present quarterly reports on budget performance to the National Assembly (as retained in Clause 7 (2)).

•The Presidency considers it undue interference with executive functions for the lawmakers to inject a clause that requests the Accountant-General of the Federation to disclose details of funds released to the National Assembly (as retained in Clause 7 (3)).

•The National Assembly, in initiating and allocating funds for new projects that are not sponsored by the executive, fail to align the budget with the President’s overall national plan, macroeconomic stability and sector strategies.

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