Nigerian President Jonathan Fails to Present 2014 Budget

Federal Republic of Nigeria President Goodluck Jonathan has declared a state of emergency in three northern states in the West African country. Unrest has continued despite a security crackdown., a photo by Pan-African News Wire File Photos on Flickr.

AGAIN, JONATHAN FAILS TO PRESENT 2014 BUDGET

Tuesday, 19 November 2013 22:14
Written by Mohammed Abubakar, Adamu Abuh, Terhemba Daka and Azimazi Momoh Jimoh
Nigerian Guardian

Presidency explains postponement • Opposition expresses fear over oil benchmark

• Alleges PDP plans to use public funds for 2015 polls

FOR the second time in a week, President Goodluck Jonathan again failed Tuesday to present the 2014 budget proposal to a joint session of the National Assembly.

In a letter dated November 19, 2013 and addressed to the House of Representatives’ Speaker, Aminu Waziri Tambuwal, which was read on the floor yesterday, Jonathan sought a deferment of the 2014 budget address.

The letter read: “Please recall that I had written requesting the Honourable House of Representatives to grant me the slot of 12 noon on Tuesday, November 19, 2013 to enable me to address a Joint Session of the National Assembly on the 2014 Budget.

“However, considering the fact that, whereas the Distinguished Senate has approved the Medium Term Expenditure Framework (MTEF) based on a benchmark of $76.5 per barrel, the Honourable House of Representatives has used a benchmark of $79 per barrel, it is infeasible for me to present the budget in the absence of a harmonised position on the MTEF.

“In the circumstance, it has become necessary to defer the presentation of the 2014 Budget to a joint session of the National Assembly until such a time when both respected chambers would have harmonised their positions on the MTEF. It is my hope that this will be in the shortest possible time.

“Please accept, Honourable Speaker, the assurances of my highest consideration and esteem.”

Two key Presidency officials further explained the government’s position. The Special Adviser to the President on Media and Publicity, Dr. Reuben Abati, told State House correspondents at the Presidential Villa, Abuja, that the budget’s document was ready for submission to the National Assembly.

His counterpart on Political Matters, Ahmed Ali Gulak, denied insinuations that the President must have shelved the budget’s presentation to avoid being booed by opposition politicians. He noted that the opposition governors or their representatives could not have caused the President to just shelve the budget presentation, which is of national importance.

Abati said that “previous acrimonies were blamed on failure of inter-governmental relationship.”

He insisted: “The budget has been ready for over a week now, but since the two arms of the National Assembly are yet to harmonise their positions on the crude oil benchmark in the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP), it was wise for the President to wait until this is done.”

He, however, added that the Presidency would “cause the budget to be laid before the National Assembly as soon as the harmonisation is concluded.” According to him, “as far as we are concerned, whenever they are ready, we will go and submit the proposal.”

The Senate had earlier rejected the President’s oil benchmark of $74 per barrel and instead, raised it up to $76.50 per barrel, while the House of Representatives also rejected the $74 per barrel and raised it to $79.

While also speaking with State House correspondents on the issue, Gulak debunked claims that the President was avoiding the National Assembly over alleged plans by members loyal to the aggrieved People’s Democratic Party (PDP) members to embarrass him.

“This is not true. First, the President is not scared of anybody and secondly, the PDP is one strong united party and as such, no one can embarrass the President in the National Assembly.”

The Chairman, House of Representatives Committee on Media and Publicity, Zakari Mohammed, who fielded questions on the matter, said the President’s decision was not out of order since both chambers of the parliament would have to agree on the MTEF before the budget is presented.

Defending the House of Representatives on the issue, he said: “I want to let you know that it is not the fault of the House that the budget was not presented. I must say that if we had to go by quoting our relevant laws, the coming of the MTEF is supposed to be done six months before now based on the provisions of the Fiscal Responsibility Act, 2007, Section 11 (1a, b, c).”

Nevertheless, the House Minority leader, Mr. Femi Gbajabiamila, yesterday offered an insight into why Jonathan failed to present the 2014 budget to the National Assembly.

Gbajabiamila, who is leading members of the All Progressives Congress (APC) in the House, alleged that the budget had been deliberately designed in a manner that would give a huge amount of money to the ruling PDP to prosecute the 2015 polls.

Gbajabiamila, who described the excess crude account as an illegal creation often abused by the PDP-led government, faulted the decision by the Executive to peg the budget benchmark at $74 as against the $79 proposed by the House of Representatives.

Justifying a resolve by the opposition to stall the budget presentation, he said: “Yet, again like previous years, the oil benchmark for the 2014 budget has generated its perennial controversy with experts and politicians weighing in with different reasons why it should be a particular figure. The House of Representatives has maintained that the benchmark should be maintained at last year’s figure of $79 per barrel whilst the Executive agreed to $76.50 with the joint committees of both Houses of the National Assembly even though they (the Executive) had wanted it fixed at $74.

“The Senate has passed a $76.50 benchmark. However, the progressives across party lines in the House insisted on $79 and carried the day on the floor during the debate and consideration of the joint committee report. For the purpose of accountability, those of us in the House with a progressive bent feel it is necessary to explain to Nigerians the reason for the position we have taken.

“The Medium Term Expenditure Framework is a three-year rolling plan and not a yearly plan or guide to the budget. It is conceptualised to be the basis for the budget for the next three years and unless there is a major and compelling reason for a change in assumptions and projections in any given year, there cannot and should not be any material change to the MTEF, especially within its first year. Indeed, Section 16 (2) of the Fiscal Responsibility Act states:

‘Any adjustment to Medium Term Expenditure Framework shall be limited to:

. The correction of manifest error.

. Changes in the fiscal indicators, which in the opinion of the President are significant.’

“We must recall that the issue of benchmark perhaps generated the biggest controversy last year and $79 was eventually agreed to by both chambers of the National Assembly. The parameters and assumptions for last year’s $79 have not changed with the price of oil maintained at over $100 per barrel.

“As a matter of fact, the overall oil and non-oil revenue projection was met and surpassed in spite of the crude theft claimed by government. For us therefore to suddenly change the benchmark from $79 to $74 or $76.50 as proposed by the Executive and the Senate respectively seemed whimsical at best.

“What then was the point of a MTEF based on a three-year rolling plan? We may as well scrap the MTEF and just continue with our yearly budgeting proposals or change its name to Yearly or Twelve-Month Expenditure Framework. To accept to drop last year’s benchmark by about four or five dollars when nothing has changed may also suggest that a House that fought and argued passionately for a higher benchmark just a few months ago was unserious, did not understand the issues and lacked the courage of its conviction. It could also suggest underhand dealings as is often the accusation levelled against the National Assembly.

“We felt that though the national interest is what is most important in our decisions; we also represent states in a true federal structure. To this end, we took cognisance of the fact that a lower benchmark necessarily in the way the Federal Government operates our revenue means less money to the states and more money to the Federal Government. How? When you fix a benchmark at for instance $74, it means all oil revenue above $74 is transferred to some phantom excess crude account.

“So, if for instance oil sells at $100 (which it has in the last five years or more), the remainder $26 is transferred to the excess crude account purportedly for savings and to be shared amongst the three tiers of government at a later date.

“It is pertinent to note that for months now, the states as usual have gone cap in hand to the Federal Government to ask for their share of the excess crude oil and across party lines have cried out that the Federal Government has either refused and neglected to pay them or short-changed them somehow. Now, if the Federal Government is unable to pay states from a higher benchmark of $79 last year, how do they intend to do it with a smaller intake at $76.50? Surely, at that point, the states will become comatose. States have continued to complain of difficulty in paying their bills on a regular basis due to this impoundment of their money by the Federal Government.”

He continued: “More alarming is the revelation just recently by the governors that $5 billion has recently disappeared from the excess crude account. The House felt it would amount to negligence and possible malpractice knowing the consequence of a lower benchmark to the states they represent to sit down and short-change the states for the benefit of the Federal Government without any compelling argument to do so. It is important to note that the excess crude account is an illegal and unconstitutional account going by the provisions of Section 162 of the constitution.

“The Federal Government and proponents of a lower benchmark have argued amongst other things about the volatility of oil prices. Unfortunately, each year this argument is made and each year the argument is negated as the oil price continues every year to stay above $100. Let’s assume for the purpose of argument it actually drops.

“Even in a cascading free fall to $85 which is unlikely, we will still be way above our revenue projection of $79. Now, if in the unlikely event that oil price in an unprecedented fashion falls to a ridiculous all time low of say $60, $65, $70 or whatever figure, we have legislative mechanism and process called amendment bill which can be used to adjust to the reality of the time.

“Even without an amendment bill, there are inherent procedures and clauses in such money bills like impoundment and virement that can be triggered by such an event. So, why then should anyone be such a harbinger of bad news and fear-monger to suggest that this nation will collapse should the unthinkable happen and the price of oil drops from say $100 to $60? Surely, if there is a possibility that oil prices could drop so far down, then why fix it at $76.50 instead of $79? Why not $40 or $50? If it can drop to $79, what stops it from dropping to below what the Senate or Federal Government is advocating and what happens in such an event?

“Furthermore, the argument has been made that the continued crude theft is another reason why the benchmark must be set lower. Now, this argument seems to stand logic on its head. It appears on the contrary that having lower production or less oil to sell because of theft is the very reason we must increase our benchmark so as to make up for the loss and meet our revenue projection. Very simple. “However, the Federal Government and Ministry of Finance would have us believe in its fuzzy math and voodoo economics that the theft of crude should mean a lower benchmark. Many of us have always cringed at the thought of having the poor masses pay for the negligence, complicity or failure of the Federal Government. The same reason we opposed the removal of subsidy.

“Let the Federal Government play its role as provided in the constitution (that the welfare of the citizenry shall be the primary purpose of government) and secure our oil and most priced commodity from theft, instead of letting the masses pay for its ineptitude.”

Earlier in the day, The Guardian learnt that members of the Kawu Baraje-led faction of the PDP and some elements in the opposition All Progressives Congress (APC) in the House had planned to boo Jonathan with a view to disrupting the presentation in retaliation for the treatment meted out to their leader, Baraje, when he led a delegation last September to visit the leadership of the House of Representatives.

But the Spokesman of the House, Zakari Mohammed, faulted the rumour of a plan to ridicule the President, noting: “It’s an allegation and I don’t act on speculations. But I want to say that the House is made up of responsible people and we hold the office of the President in high esteem and the office of the President of the Federal Republic of Nigeria is an institution that must be respected and, of course, as members of the National Assembly, particularly in the House of Representatives, we are leaders in our own rights and I don’t think we would condescend that low to do what you are saying.

“What is important is that we as a people, as members of the Legislature, have taken it upon ourselves to do what is right, those things that are enshrined because it is a creation of law. We won’t do anything that is outside the law and, of course, shouting and booing is not in our character.”