When budget performance is positive
Coupled with the right tick of the economy by Minister of Finance, Mrs. Zainab S. Ahmed, no question, the Nigerian budget performance data looks good. Her viewpoint at the quarterly world press conference held in Abuja recently, had me impressed: “Our expenditure performance cannot be taken in isolation of revenues, our expenditure performance has been […]
Coupled with the right tick of the economy by Minister of Finance, Mrs. Zainab S. Ahmed, no question, the Nigerian budget performance data looks good. Her viewpoint at the quarterly world press conference held in Abuja recently, had me impressed: “Our expenditure performance cannot be taken in isolation of revenues, our expenditure performance has been reasonably good. In 2018 our budgeted revenue was N7.2 trillion this is against the realised figure of N3.96 trillion, signifying a negative variance of 45%. Despite this shortfall we have been able to fully pay salaries and service 100% of our debt. We have also released seven months overhead for 2018, two months for 2019, and N2.079 trillion capital expenditure as at 14th May 2019.”
This is interesting, as government adopted a prudent debt management strategy which ensures that it invests what it borrows in capital projects. Although our debt by international standards, at 19.09% Nigeria’s debt to GDP ratio, is a reasonable ratio. But this is well below the average threshold of 56% for countries similar to Nigeria. The government is addressing the issue of the high debt service burden by a combination of substitution strategies which include refinancing our shorter term, higher cost debts to longer term lower cost debt.
The emphasis on increasing and diversifying non-oil revenues from taxes, import duties is, in her view, already yielding results; the Ministry of Finance, in close collaboration with the Debt Management Office (DMO), is working on moving from high cost short term borrowings to long-term low-cost borrowings.
Then, speaking about revenue performance, the minister opined: “It is not lost on us that our 2018 revenue performance has a negative variance of 45% of the year’s budget target. Consequently, all efforts of all the agencies under the Ministry of Finance, as well as other key government agencies, are geared towards increasing our revenue performance. Consequently, we are working towards establishing a credible baseline. Thereafter, we will proactively manage the realization of budgeted revenues under the umbrella of the Presidential Revenue Monitoring and Reconciliation Committee (PRMRC) that is headed by the Director-General (DG) of the Budget Office of the Federation (BOF), and also under the Steering Committee of the Strategic Revenue Growth Initiatives (SRGI), which is chaired by me.”
The SRGI Steering Committee has started reporting to the Economic Management Team (EMT) on a monthly basis, and the EMT will be reporting revenue performance on a quarterly basis to the Federal Executive Council. Ahmed made it public that the Department of Petroleum Resources (DPR) is currently concluding a collection exercise of past due oil license and royalty charges, and that they have reported to the SRGI Steering Committee the collection improvement that they have been able to achieve.
Regarding public financial management (PFM), the minister in her intimation made known that government has implemented several initiatives that ensure predictable and reliable budget outturns, efficient financial management, increased transparency and accountability and value for money.
In her disclosure, worthy of note is the outcome of the Presidential Initiative on Continuous Audit (PICA). The initiative, according to Ahmed, has saved the Federation N603.78 billion from its inception in 2016 to date. Among this figure is the savings of N8.30 billion during Q1 2019. As part of this administration’s zero tolerance on corruption, PICA’s findings on ghost workers has been acted on by convicting some civil servants. At the moment also, there are some that are undergoing trial in court, while others are undergoing investigation by the Economic and Financial Crimes Commission (EFCC).
In support of healthcare, a project to automate payment across all Federal Tertiary Health Institutions known as HealthPay, was launched in 2017. An initial operational model of the project which is meant to provide visibility across the healthcare value chain was piloted in 2018 from which a steep learning curve has been established. Of that curve, she said “We saw the need to go back to the drawing board and come up with a more effective sustainability framework that will cater for all aspects of the ecosystem, allowing multifaceted plugins; ranging from Micro Insurance (National Health Insurance Scheme (NHIS) and Health Management Organisations (HMOs), etc.), as well as considering working with Pharmaceutical Companies, Hospital equipment manufacturers etc.” And at that positive note, I leave you.
Hameed wrote in from Abuja.