July 05, (THEWILL) – A country’s budget is simply a projection of revenue and expenditure for a period. When expenditures exceed projected revenue, additional funding sources—such as borrowings are indicated; resulting in a deficit budget. Budget estimates should be realistic and achievable within the budget year. A country’s budget reflects the policies and priorities of the government. It is an essential planning tool and should align with the long-term goals and aspirations of the country.
Supplementary budgets are meant to fund expenditure items that may have been omitted from the main budget or spin-off from unforeseen circumstances like war or pandemics, such as COVID-19. The budgeting process should be thorough to avoid omissions that might necessitate requests for supplementary budgets or the need to vary funds from one expenditure category to another. Wars and pandemics are however often unpredictable.
It is public knowledge that the Federal Government has often extended the capital component of its annual budget into subsequent fiscal years, typically until March or May. However, the National Assembly’s approval to extend the capital portion of the 2023 Annual and Supplementary Budgets until December 2024, has raised eyebrows, as it seems somewhat unusual. Complicating matters further, the Federal Government is likely to submit the 2024 Supplementary Appropriation Bill to the National Assembly for approval soon. This implies that, at some point, the country may have four budgets running concurrently. This situation could have been avoided with better budget preparation and implementation. Running multiple budgets simultaneously complicates monitoring and execution.
Only the amount of expenditure likely to be expended within the year should be included in the budget. For example, if constructing a road costs four hundred million naira and takes eighteen months to complete, it would be incorrect to allocate the entire amount to the budget as the project would extend into the next year. Only the portion that can be completed within the current budget period should be budgeted.
Additionally, when preparing the budget for the subsequent year, the portion of capital projects unlikely to be completed in the current year should be rolled over to the next budget. For instance, if one billion naira is allocated for a project in a year and it appears only seven hundred million will be spent by year-end, the remaining three hundred million should be included in the subsequent year’s budget.
A better approach to deal with the current scenario would be to consolidate the uncompleted portion of the Capital component of the 2023 Annual and Supplementary Budgets into the 2024 Supplementary Appropriation Bill. This would prevent having four or potentially five budgets running simultaneously. We are only halfway through the year, yet a supplementary budget request will soon be made. What is the likelihood that another request will not be made before year-end?
The National Budget, as a planning and control tool, should be prepared with utmost diligence. The practice of extending budgets into subsequent years should not be encouraged. While requests for supplementary budgets are often unavoidable, they should be minimised. They should primarily be to take care of unforeseen circumstances rather than omissions. Achieving these goals requires better budget preparation and implementation. Running multiple budgets complicates monitoring and execution even in the future.
*** written by Kenechukwu Aguolu
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