By Adewale Sanyaolu and Merit Ibe
Economic experts have sharply criticised the federal government for adopting four different budgetary frameworks for 2024. They describe the decision as disorganised and reckless, predicting that it will lead to an economic crisis marked by hyperinflation and rising unemployment.
Despite the 2024 budget being active, the Senate and House of Representatives, last Thursday, extended the capital components of both the 2023 Appropriation Act and the 2023 supplementary budget.
In the coming weeks, President Bola Tinubu is expected to submit the 2024 supplementary budget to the National Assembly, bringing the total to four national budgets for the 2024 fiscal year.
Analysts speaking to Daily Sun argued that the federal government’s move is a glaring indication of poor planning and highlights the urgent need to streamline the nation’s convoluted fiscal policy. They warned that implementing four budgets will overheat the economy by injecting excessive liquidity within a short period.
Mr. Paul Alaje, Senior Economist and Partner at SPM Professionals, criticised the decision to run four budgets concurrently, asserting that it would result in an excess money supply in the system.
According to Alaje, the country is likely to accumulate significant deficits since many projects are not in budget surplus but rather in deficit.
“The reason for having another year’s budget is to address gaps in the previous year’s budget. However, having multiple budgets simultaneously leads to an excess money supply, which drives inflation. As inflation rises, the Central Bank of Nigeria (CBN) or the Monetary Policy Committee (MPC) may respond by increasing the Monetary Policy Rate (MPR),” Alaje explained.
He warned that such a move would hinder private investment and exacerbate unemployment.
Alaje’s sentiments were echoed by Frank Onyebu, former Chair of the Manufacturers Association of Nigeria (MAN), who labeled the four-budget scenario as counterproductive.
“It’s unfortunate. We should stick to one budget, with supplementary budgets introduced as necessary. Frequent budget changes disrupt economic stability and hinder business planning, especially for manufacturers,” he said.
Onyebu highlighted the adverse effects of frequent budget changes on foreign investment. “The economy needs stability for investors. Constant changes create uncertainty, making it difficult for businesses and manufacturers to plan. This uncertainty discourages both local and foreign investors,” he noted. Onyebu also emphasized that an unstable business environment would exacerbate issues such as unemployment and insecurity.
Daniel Dickson-Okezie, Chairman of the SMEs Group at the Lagos Chamber of Commerce and Industry (LCCI), described the four-budget implementation as an anomaly that contravenes both the 1999 Constitution and the Fiscal Responsibility Act of 2007.
“A national budget is an appropriation act or law meant for one year. Implementing four budgets concurrently leads to confusion and complicates budget monitoring and implementation,” Dickson-Okezie stated.
He warned that the policy would increase systemic corruption, particularly budget padding.
Also speaking to the issue, a civic-tech organisation, BudgIT expressed deep concern over the current budgetary approach of the federal government.
In a statement released at the weekend by BudgIT’s country director, Gabriel Okeowo, the organization highlighted that, globally, budgets are designed to operate over a 12-month period, from January to December. He warned that the simultaneous execution of multiple budgets would result in projects from the 2023 budget and its supplementary counterpart competing for limited resources with essential projects in the 2024 budget.
BudgIT urged the government to address the complexities of this convoluted budgeting system and revert to a disciplined January to December budget calendar.
Okeowo emphasized, “The concurrent implementation of four budgets will severely undermine budget credibility. Revenues projected for 2024 will likely be stretched across four different budgets, which will adversely affect service delivery in critical social sectors and the provision of essential public infrastructure.”
Peter Obi, the 2023 presidential candidate of the Labour Party (LP), at the weekend, took to social media to express his concerns.
In a lengthy tweet, Obi accused the current administration of fiscal irresponsibility and warned that implementing multiple budgets would worsen the plight of Nigerians.
“The government’s action will result in frivolous budget items competing with essential projects for limited resources, exacerbating the suffering of the Nigerian people,” he tweeted.
Obi argued that the government’s approach indicates a disconnect from reality and a lack of competence in managing the nation’s finances.
“This disregard for fiscal responsibility, transparency, and accountability is a recipe for chaos, confusion, and catastrophe,” he concluded.
In summary, experts and stakeholders are united in their condemnation of the federal government’s decision to implement four concurrent budgets. They warn that this policy will lead to economic instability, heightened inflation, increased unemployment, and a more challenging business environment, ultimately harming the nation’s economic prospects.