Yar'Adua Signs N2.748 Trillion Budget 2008

After several months of disagreement between the executive and the legislative arms of government on the 2008 Appropriation Bill, President Umaru Yar'Adua, yesterday, signed the Bill into law with a charge to all government agencies to implement it with "the highest sense of responsibility and with total deference to due process."

The total amount budgeted for the 2008 fiscal year is N2.748 trillion, comprising N860 billion for capital and N1.888 trillion for recurrent.

Although the signing ceremony was billed for 10 o'clock in the morning, it was not until 3:00 p.m that it finally took place following what a source described as the state of the president's health. Reporters were not allowed to witness the event as has been the tradition.

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The compromise that was offered last week was signed into action, so this is just confirmation of what was expected to happen. It is good that Nigeria is attempting to build capital, but it is hard to tell how much will actually buy the capital. The banning of reporters during the event shows the strong presence of tradition in Nigeria.

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President and Assembly agree on budget

After the protracted bickering over the delay in the passage of the 2008 Appropriation Bill, the Presidency and the National Assembly have reached an agreement on how to address the points of disagreement in the budget.

According to [Ayogu Eze], the President would compile his reservations on the budget and send them to the National Assembly in form of an amended bill to the budget with the Assembly pledging to give them positive consideration.

Adeniyi said in Abuja yesterday that "it was an amicable meeting. It was very cordial. And an agreement was reached. And under it, the President will assent to the budget. He will then send an amendment bill to the National Assembly on the areas there were consensus on review.

"Both parties resolved their differences on the budget and decided to reach a compromise. The budget document will be signed the way it is now but an amendment would be sent to the NASS in another two weeks."

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As posted earlier, the budget delay has been very detrimental to Nigeria's economy. It's a good thing that the disagreement is getting closer to being resolved. Contrary to the somewhat misleading news headline, however, the budget is not yet finalized or written.

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Budget Delay Cripples Economy

Experts have expressed their views on the possible effects the delay in the passage of the 2008 Appropriation Bill into law may have on the economy and its constituent sectors, agreeing that such effects are undesirable.

Despite expectations late last year that the budget would be passed early following the cordial relationship between the executive and legislative arms of government, the passage of the Appropriation Bill into law has experienced an impasse between the two arms of government in recent times.

Commenting on the issue, the spokesman of the Central Bank of Nigeria (CBN), Festus Odoko, in a telephone interview on Sunday, said that an early passage of the budget would normally make things work out smoothly.

He pointed out that in the event of a delay in passing the Appropriation Bill into law like it is now, a provision existed that permitted the President to spend up to a certain proportion of the previous year’s budgetary allocation.

He added that though the fact that the President could continue spending to a certain limit to meet essential expenditures might reduce the undesirable effects of the delay, some contractors might resort to borrowing heavily from banks to meet their obligations, thus causing the various banks to be increasingly exposed in terms of credit given.

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The tax appropriation bill for this year has been yet again postponed. Economic experts agreed that postponing the tax appropriation bill is harmful for Nigeria's already fragile economy. The current law in place allows the president to spend up to a certain percentage of last year's budget, but that may not be enough to cover the necessary expenses. One of the projected outcomes of the postponement is that, as a result of the government not having money to pay contractors, the contractors will have to borrow exorbitant amounts of money from banks. The banks would then be subject to the terms of credit that they agreed upon with their borrowers.

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