 |
| Kemi Adeosun Nigeria's Finance Minister |
Emmanuel Ado is host of Let's talk - Budget Transparency
Nigeria
is very notorious for coming up with fantastic and grandiose plans. We
have had the era of Fixed Term Planning, Rolling Plan, Fixed Medium Term
Plan, the National Economic Empowerment & Development Strategy
(NEEDS), Vision 2020.
They all fizzled out and have gathered dust in
archives- the money wasted and the beautiful ideas touted as our
guaranteed part to greatness jettisoned. Always moving, but motion
without movement.
If
officials of the Federal Ministry of Budget&Planning and the
Budget Office, have their way, the International Public Sector
Accounting Standards (IPSAS ) project,would suffer same abrupt
abortion,like the other policies before it.This is the only explanation
for the refusal or failure of the Budget Office to present the 2016
budget in the six(6) Segments of the National Chart of Accounts and
Templates of IPSAS Compliant Budget Format.
And thank God, the Senate has
woken up to its responsibility. And has severally given the government, not just the Minister of Budget and Planning a bloody nose.
On
28th July, 2010 the Federal Executive Council approved the adoption of
the provisions of the International Financial Reporting Standards (IFRS)
and International Public Sector Accounting Standards (IPSAS) for the
Private and Public Sectors respectively.
Consequently a Standardised
National Chart of Account to be used by Federal, States and Local
Governments designed in line with the provisions of the Government
Financial Statistics (GFS) of the International Monetary Fund (IMF), was
adopted.
The objectives of IPSAS include improving accountability and
transparency, greater disclosures,that would provide information for
better decision-making and value for money, especially in areas of
capital expenditure- loans, asset purchase, nationalisation and non
exchange transactions. These after all is the purpose of government.
The
decision of the Goodluck Jonathan administration is backed by several
laws, including the Finance (Control& Management) Act of 1958, and the
Fiscal Responsibility Act of 2007. By that decision, IPSAS Compliant
Budget Format became the approved basis for budget preparation and
implementation in Nigeria. And the Buhari administration has signed
off, by implementing Treasury Single Account (TSA), a key component of
IPSAS. IPSAS is a package.
The
six main segments of IPSAS are: Administrative Classifications- it
depicts organisations receiving budgetary resources, Economic
Classifications- detailed breakdown of budget revenues, borrowing and
expenditures, Functional Classification- it shows the revenue and
expenditure by functions of government, such as Pubic Order and Safety
Matters.
Programme Classification- planned budgetary allocation to
specific programmes, such as poverty alleviation. And 21
programmes were identified for implementation by the federal, states and
the local governments.
Fund Classification- denotes funds under which
public funds are authorised (Consolidated Revenue Fund, Capital
Development Fund etc).
Geo-Location Classification - location of
projects or government institutions undertaking transactions. The
National Chart of Accounts (NCOA), is key in ensuring that budget data is
captured in greater detail, including source and reason for every
transaction, which is currently missing, because the Budget Office
presented the 2016 Budget expenditure in Administrative and Economic
segment, as opposed to programmes.
Programme is the preferred option, due
to the inadequacies of the Administrative and Economic option in
analysing impact of government expenditure on health, education etc.
The
world today is a global village, so standardisation of governments
financial reporting has become imperative. IPSAS is an international
framework for government financial reporting. It has set rules on how
the accounting system measures, records and processes economic
transactions, including presentation and disclosure requirements.
IPSAS
provides complete and accurate view of public sector financial
statements. There is also greater credibility being the same accounting
standards used by most governments of the World and better planning and
management, as a result of more precise estimates of income and
expenditure. Emphasis- precise estimates of income and expenditure.
Federal, State
and Local Governments budgets must be prepared based on the six segments of the National Chart of Accounts and Templates of IPSAS
Compliant Budget Format. The difference between IPSAS and the former
budget system based on administrative and economic classification, is
that it doesn't offer much.
It is not surprising that the 2016 budget
suffered and has continued to suffer "internal bleeding". For
instance,the medium term projections of aggregate revenue,expenditure
and financing by economic and programme and actual of the two preceding
years was missing, so Nigerians were denied a comprehensive overview of
the fiscal policies.
It also lacked summary and detail revenue from the
federation accounts, summary and detail independent revenue of the
federal government by sub-organisations (MDA's) summary and detail
capital receipts - internal and external borrowings, Aids & Grants by sub-organisations ring fenced to capital projects. These are projections
the sleeping Senate is now asking for.
The
consequence of preparing the budget based on economic and
administrative is that 83% of the total capital expenditure of the 2016
budget would be spent in the Federal Capital Territory. And the balance
13% in the other 36states of the federation. It is a scandal of
gigantic magnitude that a president that made reconstruction of the
North East, a cardinal programme would be spending only 2,145,411,867
billion naira in Yobe State and 7,439,000,272 billion naira.
In Borno
state devastated by the Boko Haram insurgency. But if the 2016 budget
was prepared based on the 6 segments - Geo-Location and economic etc, the
president would have seen at a glance the spread of capital
expenditure projects and the nature of the assets that would be acquired
to advance economic development, not just in the 36 states and Abuja, but
in the 744 local government areas. This is the power of IPSAS.
For
instance the Medium Term Projections of Aggregate Revenue, Expenditure
and Financing by Economic and Programme and Actual of the two preceding
years was not included in the 2016 Budget. It's inclusion would have
provided a comprehensive overview of fiscal prospects to all
stakeholders. Again, the Senate is right in asking for these
projections.
The
media has consistently tagged the demands of the Senate, as signs of
brewing crisis between the Senate and the executive. There is definitely
no crisis. The Senate only finally woke up to its responsibility. Why
has the Minister of Finance who issued the Fiscal Sustainability
Plan (FSP) that was approved at the 67th meeting of the National
Economic Council(NEC) on the 19th May 2016, hasn't by November provided
the performance implementation to date of the 2016 budget, and they are
busy preparing for 2017?
And are still seeking to borrow to fund the
2016. God save Nigeria.
The
major problem with with the 2016 budget was that the approved format
was deliberately ignored by the executive.And the legislature,which due
to high turn over of members "didn't" know and never bothered to find
out,approved the trash that was presented to it.
The Fiscal
Responsibility Act is the roadmap for the appropriation process,the
Senate must insist on it. In accordance with the FRA, the process
should commence with the Medium Term Expenditure Framework and its
underlying Medium Term Sector Strategies. And they must be
conservative.
The Fiscal Responsibility Act is like lawyers would say is
unequivocal that the MTEF is the basis for the preparation and
implementation of budget. It is heart warming that the senate is
insisting on doing the right thing. Will presenting the budget in the
appropriate format equal development? Yes. The National Assembly owe it
as a duty to Nigeria and themselves to save the 2017 Budget.
