We’re against needless budget extensions

The National Assembly recently approved the extension of the period for the implementation of the capital component of the 2024 budget to the end of this year. The Senate explained that the extension was needed to enable the federal government to complete projects included in the budget. The Senate also argued that the extension was […]

The National Assembly recently approved the extension of the period for the implementation of the capital component of the 2024 budget to the end of this year. The Senate explained that the extension was needed to enable the federal government to complete projects included in the budget. The Senate also argued that the extension was due to the lack of funds for the execution of the affected projects.

This latest extension is unfortunate but by no means surprising. This is the second extension to be given to the implementation of last year’s budget. Right from the beginning of this year, it was clear that Nigeria’s fiscal space would be chaotic, with different budgets queued in for implementation in the first half of this year. These included part of the 2023 budget, the supplementary budget that the Tinubu administration inherited from President Muhammadu Buhari, and the 2024 budget. The latter, which has been extended by six months, was expected to be implemented up until the end of the first half of 2025, when the implementation of the current year’s budget would commence.

Now, with the second extension of last year’s budget implementation, it is evident that enough resources have not been allocated to it. This could be explained in two ways: it is either that the government genuinely has not had enough funds to finance the projects, or that it is no longer committed to them as of the time of the budget preparation. 

Ideally, the revenue generated in 2024 by the government was supposed to be used to execute projects included in that year’s budget. However, now that the budget for that year is being stretched across the current year, what happens to this year’s budget and the corresponding revenue streams for the year? How much of this year’s budget will be implemented in the next six months?

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This system of discordant budget implementation that has gradually crept into the nation’s fiscal mechanism must be checked. It is symptomatic of a dysfunctional and disconnected fiscal system. Further, it smacks of poor or lack of planning and coordination within the ministries, departments, and agencies of the government involved.  This defeats the purpose of early presentation of budgets by the President, as early as October preceding the budget year. The purpose of this, according to the proponents, is to give enough time for implementation.

The essence of budgeting is to match projects against available financial resources, both internally generated and borrowed funds, for the execution of such projects. Their implementation must also be within a specified time frame. Even so, the government’s claim now that these extensions are due to insufficient funds is unacceptable. There is never a time when governments have all the money they need at any point in time. This is even more reason planning is critical in managing the economy. As such, each administration should desist from insisting on initiating their projects in areas where there are ongoing projects.

 The government has unwittingly reduced the act of budgeting to a mere routine, annual process without due consideration being given to the roles that budgets play in an economy. As fiscal instruments, budgets are designed to help governments channel their resources in chosen directions for the economy to perform better. Such activities are also expected to be taken or based on given time frames within which their effectiveness is guaranteed. Now, with the delays in the implementation of the projects agreed on several months earlier, what is the assurance that the measures will still produce their intended effects on the economy?

This is more so given the depreciating value of the naira. With the prolonged implementation of budgets, it is obvious that the various sums voted for such projects would have become insignificant for some of the projects at the time they are being implemented. This demeans such activities as far as national economic planning is concerned.

Daily Trust believes that this practice must be discarded forthwith, and the country returned to a predictable budgeting process. Granted that under the Medium-Term Expenditure Framework, which the country is currently running, projects can be extended beyond the years in which they are listed in a budget, this does not in any way imply an uncoordinated or discordant implementation of projects listed under a budget.

We are against this extension because it creates transparency issues. There is no complete certainty in economic and social issues, so occasional extension of project implementation is not out of place. But the institutionalisation of budget extensions is unacceptable because it defeats the very essence of budgeting.