The Fiscal Responsibility Act is undoubtedly, one of the most significant fiscal legislation that has the capacity to lead Nigeria on the path of economic growth and stability. If properly implemented, it can also be a legal instrument for the practice of good governance in Nigeria. In light of the above, the FRA (2007) is an Act that provides for prudent management of the Nations Resources and guarantees its long term macro-economic stability. Unfortunately since the enactment of the FRA (2007), it has been flawed by the level of implementation. Some of the gaps observed in the implementation of the FRA (2007) are highlighted in this article. The ongoing repeal and amendment of the FRA (2007) provides an opportunity to close some of these gaps. A brief summary of the provisions for necessary amendments are as follows;
The Act provides for the Medium Term Expenditure Framework MTEF, the MTEF is the framework, upon which the financial projection of the country for the next three years is predicated upon. It is on this basis that the annual budget is also prepared. In preparation of the MTEF, S.13 provides that the Minister of Finance may hold public consultation with input from some select public bodies and professional bodies. The caliber of persons or group to be consulted according to the Act includes, (1) National Panning Commission (2) Joint Planning Board (3) National Commission on Development Planning (4) National Economic Commission (5) National Assembly (6) Central Bank of Nigeria (7) National Bureau of Statistics (8) Revenue Mobilization Allocation and Fiscal Commission and any other relevant statutory body as the Minister may determine. Subsection (c) and shall consider and reflect as may be deemed appropriate the input of the bodies and persons referred to in subsection (a) and (b). The use of the word “May” makes public consultation discretionary. It implies that the Minister may either choose to consult the listed bodies or choose not to consult them. It also implies that their input may be either reflected in the MTEF or not. Knowing full well that economic plans and decisions must be a reflection of the popular will of the citizens, these categories of person should be mainstreamed in the MTEF preparatrion. The Act should be amended to make public consultation mandatory. It is also of note that, no mention of input from Civil Society and Fiscal Responsibility Commission was contained in the list of those to be consulted. This categories of people should also be reflected in the amendment of the Act.
The Act also provides for an aggregate expenditure ceiling which must not be more than the estimated aggregate revenue plus a deficit not exceeding three percent of the estimated gross domestic product or any sustainable percentage as may be determined by the National Assembly for each financial year. Although this provision has been grossly violated in the funding of national budget, Nigeria has consistently funded its budget above the deficit threshold of three percent GDP. The act should provide penalties for future violations.
On the remittance of operating surplus, the Act provides in S.22 for corporations to establish general reserve funds and allocate one fifth of its operating surplus at the end of each financial year, which shall be paid into the Consolidated Revenue Fund of the Federal Government not later than one month, following the statutory deadline for publishing each corporations account. The Act did not prescribe punishment for GOEs who fail to remit their operating surplus. Suitable sanctions should be prescribed in the on-ongoing amendment
On debt sustainability, The Fiscal Responsibility Act set the framework for debt management with a debt limit for Federal, State and Local Government;it mandates the National and Subnational government to present a debt analysis, which must accompany their request for debt but this has also been grossly violated by the FG and the subnational governments. The Act must as well prescribe sanctions for defaulters.
On the fund of the Fiscal Responsibility Commission, the Act provides that the FRC would be funded through budgetary allocation from the federal government and grants from other sources. The budget of the FRC has been abysmal low and has made the commission less effective. Therefore the act should be amended to consider setting aside 5% of recovered operating surplus for the FRC.
The FRC lacks the powers to prosecute; the Act provides in S.2, that if the Commission is satisfied that a person has committed any punishable offence under the Act, or has violated any provision of the Act, the Commission shall forward a report to the Attorney General of the Federation for possible prosecution. The lack of direct prosecutory power to the FRC creates window for the Act to be grossly violated by those the FRC is deem to oversight. This places the FRC as a toothless bulldog, to correct this anomaly, the ongoing amendment should grant the FRC the direct power to prosecute offenders of the Act.
Good Governance/Public Affairs Analyst