Lamido Sanusi, the CBN Governor, has since withdrawn his earlier allegation that NNPC did not repatriate the sum of $49.8bn revenue from crude oil sales into the federation account. Subsequently, in contrast to the Finance Minister, Dr. Ngozi Okonjo-Iweala’s figure of $10.8, Sanusi later insisted that $12bn of crude revenues still remain unaccounted for!
However, even if the lower figure is more accurate, the discrepant magnitude of $10.8bn (about N2tn), does not reflect best practice in management of public funds; besides, protracted resolution of such a huge deviation would most certainly have impeded successful capital budget implementation, with inevitable adverse impact on our social welfare!
Nonetheless, the thrust of today’s article is the impact of the fiscal contribution of over N6tn (i.e. $38.6bn) revenue that CBN readily admitted receiving from NNPC and other agencies involved in the oil sector between January and December 2012!
Fortuitously, the receipts of N6tn from oil are in addition to over N4tn also consolidated as internally generated revenue, under the excellent management of Ifueko Omoigui-Okauru, the erstwhile Federal Inland Revenue Service Chairman; furthermore, the Customs Service similarly generated about N400bn, thus bringing total revenue collected from oil related sources, FIRS and Customs Service to a whooping possible total above N10tn in 2012.
Consequently, if over 56 per cent of above consolidated fund goes to the federal government as per constitutional provisions for revenue sharing, then the Federal treasury was a happy beneficiary of over N5tn income, which is surprisingly in excess of total expenditure budget of about N4.7tn in 2012.
Ironically, therefore, in spite of apparent surplus of well over N300bn, the Debt Management Office (DMO) and the CBN still, inexplicably, additionally borrowed over N1tn at excessive cost, primarily from banks, to inappropriately fund a prior contrived budget deficit, as well as to feed CBN’s compulsive borrowing to reduce ‘surplus’ money supply, and stem inflationary threat in 2012!
Consequently, the National Assembly and well-meaning Nigerians should insist on forensic audit to determine the net actual accounts position after consolidating all incomes against actual expenditure in the 2012 budget; it certainly makes no sense whatsoever, to consolidate ‘surplus’ funds, above budget benchmark, and simultaneously also additionally spend over N1tn ($6bn) borrowed at oppressive double digit rates of interest, especially when such risk-free sovereign debts should normally attract lower digit cost of funds.
Surprisingly also, in spite of the legislators’ observation of less than 70 per cent implementation of 2012 capital budget, undiminished debt accumulation in 2013 suggests that last year’s unspent revenue was surprisingly, probably not carried forward to reduce projected deficit in 2013 budget.
Besides, the 2013 budget also exhibits a similar reckless fiscal strategy as, once again; total expenditure projection of about N4.92tn also accommodated a deficit above N800bn triggered by the projected reduced revenue from the application of a conservative and unrealistic oil price benchmark of N74.5/barrel.
In contradiction, however, the table of revenue inflow attached to Sanusi’s letter of September 25, 2013 to President Jonathan, on unremitted $49.8bn, confirms that oil consistently sold above $100/barrel and that over $22bn was received as oil revenue income between January and July 2013; consequently, we may reasonably expect that actual oil revenue accruals should exceed $40bn by December 31, 2013.
Indeed, $40bn translates to a ‘handsome’ naira equivalent of well over N6tn! Additionally, internally generated revenue of about N4tn was also received from the FIRS and the federal customs service which were presumably further consolidated with unspent funds from 2012 budget; thus, actual available revenue should be well in excess of N10tn by December 2013!
However, the federal government’s Constitutional share of over 56 per cent of total revenue would provide well over N5.5tn i.e. over N500bn in excess of the 2013 expenditure budget of N4.92tn. Curiously, however, despite this handsome surplus, the DMO and CBN, as usual, succeeded in borrowing and adding over N1tn to our already oppressive debt burden in 2013!
Regrettably, the 2014 budget and the 2014-16 Medium Term Expenditure Framework are founded on the same obnoxious fiscal model that accommodates borrowing with extreme costs to fund inappropriate deficits in spite of the availability of surplus funds to cover the projected total expenditure budget of about N4.6tn.
It is worrisome that the determination of appropriate crude oil price benchmark has been reduced to political bargaining rather than an inclusive process of determining realistic revenue benchmarks to support progressive and sustainable fiscal planning.
It is surprising that after the controversial Paris Club debt exit in 2006, when our existing debt value of about $36bn was considered to be crisis level, which therefore, necessitated over $18bn payout to exit, our indebtedness has since grown from an external debt of about $3.5bn and N1tn domestic debt respectively, to current oppressive level of about $7bn external and almost N54tn ($90bn) domestic debt.
Incidentally, the appropriation bill is probably the most important enactment of the legislative year, as it determines issues relating to how available government funds can be optimally and judiciously utilized to address infrastructural enhancement and also best improve social welfare of citizens.
Instructively, a constitutional breach is not just a political aberration, as it also carries impeachment as a potential sanction; thus, an Appropriation Act must not be frivolously violated.
It is, undoubtedly however, a constitutional breach when budgets are not fully implemented in spite of surplus funds or even when surplus funds are spent without appropriation, as has been the case with regular cash augmentations from an illegally contrived Excess Crude Account to supplement actual budgeted monthly allocations to the three tiers of government!
Regrettably, official revenue receipts from CBN and other Agencies confirm that appropriated revenue limits were grossly violated in the recent past, and that such violations appear subsisting, since the same obnoxious seeds of fiscal impunity have already been sown into the fabric of the 2014-16 MTEF, with the adoption of $77.5/barrel, a very conservative crude price benchmark which, will inappropriately feed an unconstitutionally consolidated Excess Crude Account, inspite of subsisting deficits and increasing debt between 2014 – 2016! SAVE THE NAIRA, SAVE NIGERIANS!!