Nigeria: Legislators approve 2015 ‘s Appropriation Bill

A week after the House of Representatives passed the 2015 Budget, the Upper Chamber fulfilled its part of the Appropriation process by passing a N4.5tn budget. This is N134.4bn in excess of the N4.4tn submitted by the Executive arm late 2014. Meanwhile, recurrent expenditure was reduced slightly by N0.5bn to N2.6tn while capital expenditure was scaled down by additional N85.9bn to N557.0bn from N642.8bn proposed by the Executive arm. Effectively, this implies that recurrent expenditure is approximately five times the capital expenditure. Drafted on the assumption of US$53.0 oil benchmark, exchange rate of N190.00/US$1.00, 2.3m barrel per day crude oil production, 5.5% GDP growth rate and 1.1% Deficit to GDP  ratio, we think the 2015 appropriation bill as passed by the National assembly seemed disconnected with present realities in the economy in a number ways.

The most telling amongst the shortcomings of the budget includes the outright exclusion of fuel subsidy payment by both the Upper and Lower Chambers. Fuel scarcity appears to have remained a recurring subject across major cities of the Federation in recent time. The oil marketers have blamed events in the currency market and most recently non-inclusion of subsidy payment in the 2015 budget as passed by the House of Representatives as reasons for cutting supply. Nevertheless, we noted that the Minister of Finance has already made it clear that approximately N156.0bn will be paid to oil marketers today (April 30, 2015) to avert the crisis in the sector. On that note, we wonder how government intends to reconcile the exclusion of subsidy payment in the budget with the N156.0bn subsidy payment to be made to oil marketers.

That said, Recurrent Expenditure (N2.6tn) is also expected to be about five times the capital expenditure (N557.0bn) in the 2015 appropriation bill. Juxtaposing this with programmes and plans of the Buhari led in-coming administration which appears broadly expansionary, we wonder how appropriate the 2015 appropriation bill would be for the next government. Ultimately, we think the realities on ground portray the 2015 budget as a “paper-tiger” that would be promptly reviewed by the next administration to become effectual.