Finally, there is hope that the 2026 Federal Government budget will be presented to the National Assembly this week or before the year runs out. Many states have presented their budgets to the respective state assemblies to meet constitutional requirements. But, how far with the implementation of the 2025 budget, which, up to the middle of November, was kept in abeyance for the implementation of the 2024 budget to be completed.
The state budgets presented so far reflect the significant increase in revenue, either from federal allocations or internally generated revenues, or are they just big budgets for competition? Experience has shown that those budgets are mere paper tigers, conjectures, or fake documents. That is why implementation rarely reflects on the well-being of the citizens or the fortune of the state’s growth.
There are various types of budgeting methods, ranging from the easiest or commonest and generally adopted incremental budgeting, to zero-based budgeting, which former Vice-President Yemi Osinbajo promised would be adopted by the President Muhammadu Buhari government but never adopted, possibly due to the technical involvement that the staff of the Ministry of Budget and Planning could not grasp. I think the budget title or content just caught the fancy of Prof. Osinbajo; he did not know that the manpower to prepare such a budget required some training.
I have noticed that every year’s budget and for every ministry has a provision for staff training. I hope the training does take place. I cannot understand why most ministries use consultants to carry out tasks that they employ staff to do. There are staff in the federal and State inland revenue service units, yet we see governments employing consultants to collect taxes and levies. If staff require special training on tax collection or any other aspects of the job they are employed for, it is better to train them than give the task to consultants, which invariably involves another unbudgeted expenditure and staff redundancy. Let us return to the subject matter.
There is also a programme or activity budget, performance-based budgeting, rolling or continuous budgeting and many others for public and private sectors and even for individuals. Nigeria, like many other countries around the world, adopted incremental budgeting, which allows the use of the outgoing or past budget as a base for formulating a new budget. In this connection, the policymakers just add or subtract a percentage to the existing figures for the new budget. Though it perpetuates inefficiencies, the budgeting method is very easy to build and complete for execution. If that is the adopted method by Nigeria, we need to ask the Ministry of Budget and Economic Planning, which budget formed the base for the proposed 2026 budget when the 2025 budget is yet to be implemented? And, when will the implementation of the 2026 budget commence? These are questions the National Assembly should ask the executive arm of government.
The National Assembly cannot continue to rubber-stamp executive requests. The kind of budgeting system we run allows NASS to tinker with the budget. In this case, NASS has the power to direct the executive to merge the budget 2025 and the budget 2026 and run the two as the 2026 budget. The country cannot continue to generate revenue in 2026 to run the 2025 budget. Such an abnormal situation should not be allowed to continue in 2026.
Now, let us look at some features for further discussion, ignoring that there is no desirable base document for the budget. The underlying assumptions of the budget include an oil benchmark price of US$64.85 per barrel with an expected daily production target of 2.06 million barrels from the oil industry, but a benchmark for the budget is conservatively fixed at 1.8 million barrels, taking care of unexpected production disruptions, and an exchange rate of N1,512 per US$1.
The federally collected revenue estimate is put at N34.3tn, though the projected total revenue is N50.74tn while the budget expenditure is N54.43tn, with a debt service provision of N15.91tn.
My concern has to do firstly with the exchange rate of N1,500 to US$1. It is indicative that the economic improvement reported in 2025 is a ruse. If we are running a flexible or floating exchange rate regime, as the central bank makes us believe, the currency ought to have appreciated towards N1,000 to US$1 mark. With the improved GDP and growing external reserves, the currency should appreciate. Retaining the exchange rate at N1,500 to US$1 portrays a weakened naira with negative effects on the cost of production in an import-dependent economy.
The expected growth rate of GDP is 4.68 per cent. Will the growth rate be attached to the budget 2026 from when it starts being implemented? To convince the Federal Executive Council that lots of hard work have gone into the preparation of the draft budget, the Minister of Budget and Economic Planning explained that the budget had inputs from many stakeholders, including private sector operators, civil societies, and development partners. Comments from different quarters since the information on the budget came out last week indicate that such wide consultation did not take place.
Hopefully, the National Assembly will do a thorough job of making sure the budget is implemented in 2026 so that whatever good things are in the budget will materialise. The budget should move towards improved allocation to capital expenditure and a reduction in recurrent expenditure, which will propel economic growth. With debt servicing taking about 20 per cent of the budget and clearly above spending on education and health, it is clear that the economy will still be under stress. Thus, the need for the National Assembly is not to jerk up the budget deficit but actually reduce it and thus reduce the need for committing more debts. Debt is dragging economic growth and development down, and NASS should not wait for public protest to do the needful on this matter of concern.
By Sheriffdeen Tella
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