Fiscal Responsibility: The journey so far – Daily Sun
By Eze Onyekpere
Over the years, Nigeria’s economic challenges have been linked inter alia to the poor management of our fiscal resources, especially in relation to the allocation and management of public expenditure. These challenges have led to several reforms in different aspects of public finance and resource management. This discourse reviews the challenge of fiscal responsibility within the parametres of the Fiscal Responsibility Act (FRA), the experience so far and the challenges encountered on the path to fiscal sustainability.
The FRA was made as an Act to provide for prudent management of the nation’s resources, ensure long-term macro-economic stability of the national economy, secure greater accountability and transparency in fiscal operations within a medium term fiscal policy framework, and the establishment of the Fiscal Responsibility Commission to ensure the promotion and enforcement of the nation’s economic objectives; and for related matters.
It has been fourteen years after the enactment of the FRA and this calls for a review, some sort of evaluation to determine whether the clear and unambiguous goals and objectives of the Act have been met or whether sufficient steps have been taken in the process of meeting the goals.
The emerging posers include: Is the economy more stable today that it was fourteen years ago? Is there greater accountability and transparency today compared to the earlier period? Yes, the Fiscal Responsibility Commission (FRC) has been established but where is Nigeria in the promotion and enforcement of the economic objectives detailed in the Fundamental Objectives and Directive Principles of State Policy found in Chapter Two of the Constitution of the Federal Republic of Nigeria 1999 as amended?
The foregoing raises further fundamental questions on the mischief in pre 2007 existing law and policy which the FRA was meant to suppress and the remedies it advanced in suppression of the mischief. Have the remedies been effective? For the proposed remedies to be effective, the oversight and enforcement agency ought to be clothed with adequate powers. Another poser upon existing posers – did the FRA grant the FRC adequate powers? Is the extant structure and funding of the FRC fit and proper for the assignment given to it by law? So many questions and too few answers.
The identified mischief includes opaque fiscal system lacking in transparency and accountability as well as absence of citizens’ participation in fiscal decision making. Citizens were not allowed to challenge fiscal decisions in courts and in administrative procedures. We had a huge unsustainable debt profile which was only resolved by the Obasanjo administration’s debt relief. Budgeting, especially revenue forecasting and estimation of expenditure was not based on empirical evidence but more on the rule of the thumb. Statistics was not relied upon and there were so many discretionary powers not backed by an accountability framework.
The economic objectives of state which are detailed in S.16 of the Constitution directs the state to harness the resources of the nation and promote national prosperity and an efficient, a dynamic and self-reliant economy; and control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity.
It requires the promotion of a planned and balanced economic development; that the material resources of the nation are harnessed and distributed as best as possible to serve the common good; that the economic system is not operated in such a manner as to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or of a group; and that suitable and adequate shelter, suitable and adequate food, reasonable national minimum living wage, old age care and pensions, and unemployment, sick benefits and welfare of the disabled are provided for all citizens.
Again, there is a central poser – are we better off today in the evaluation of these indicators compared to the pre 2007 period, before the enactment of the FRA?
Considering that these questions and posers raised above cannot be answered in the affirmative to wit; that visible progress has been recorded, the Senate of the Federal Republic of Nigeria in its wisdom is considering a bill to repeal the extant law and to re-enact a new FRA. This bill is a product of a systematic evaluation of the challenges, an acknowledgement of the truth, that we have not suppressed the mischief and that the frameworks and procedures established to drive the remedy are too fragile and may not carry the weight of the reforms. Hence the need for strengthen the pillars of the FRA including the FRC, procedural due process, funding and redefinition of certain problematic terms.
This is a welcome development which should be encouraged and supported by all discerning stakeholders in the executive, legislature, civil society including the media. The preponderance of fiscal challenges as currently experienced at federal and state levels where debt service is gulping the bulk of available revenue, salaries being paid with borrowed money and some states practically becoming insolvent, etc., is of no benefit to anyone. Therefore, the enthronement of fiscal responsibility through a new legislation is a task that ought to be supported by all patriotic Nigerians.
Onyekpere writes from Abuja
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