As President Goodluck Jonathan prepares to address the joint session of the National Assembly today on the 2011 Budget, indications are that the Federal Government may have proposed a peg of $65 per barrel as crude oil price benchmark for the year.
Benchmark price is the lowest estimated level to which the Federal Government expects the price of crude oil to fall at the international market to guarantee the stability of the budget.
The oil price benchmark for the outgoing year, which was initially set at $67 per barrel, had to be revised to $60 in the wake of the steep decline of crude oil prices to about $40 early this year as well as the negative impact of the global financial crisis on the country’s economy.
However, even with the consistent climb of crude oil prices in recent times, with Organization of Petroleum Exporting Countries (OPEC) daily basket price at $87.65 per barrel at the weekend, chairman, House of Representatives committee on finance, John Enoh, said in Abuja that the lawmakers and other agencies involved in the budgeting process had already agreed with the federal ministry of finance that the benchmark price be left at $65 per barrel.
“We need to be cautious, because the issue of having to look at the oil price benchmark for our budget continues to be under severe attack. That is why we resolved to tread cautiously by allowing the benchmark within a realistic threshold. We have agreed with the ministry of finance that oil price benchmark for 2011 budget should be $65 per barrel,” Mr. Enoh said.
Timing of budget
Meanwhile, this is coming against the background of criticisms by analysts against the poor timing of the country’s budget over the years, a development that necessitated a proposal for an alternative budget cycle that would allow sufficient time for the proper handling of the fiscal issues.
Ideally, normal timing of budget process begins in June, with call circular to ministries, departments and agencies (MDAs) for spending proposals; through October, when a draft Bill prepared by the federal ministry of finance is sent to the National Assembly by the president; to December end, when the Bill is passed by the lawmakers and signed into law in January of the following year.
However, the timing of the budget process over the years is hardly observed in practice, resulting in long delays in budget approvals.
Executive director, Centre for the Study of the Economies of Africa (CSEA), Menachem Katz, who criticised the current budget calendar, as it provides little time for in-depth discussion of government fiscal strategy and policy priorities, proposed a new budget process that would commence in February-March for the 2012-2014 budget proposal.
“The new budget process could start in February-March with the formulation and issuance of the fiscal strategy paper no later than mid-April, and submitted to the joint finance committee of the National Assembly for approval by May, ending before the budget office of the federation issues a budget circular to MDAs for their spending proposals.
“By end-June, MDAs submit their budgets as well as open bilateral budget discussions in July, while the budget office submits the updated fiscal proposal to both the ministry of finance and the National Assembly joint finance committee for formal resolution in late August, for the president to submit the budget estimates containing overall and sector ceilings for three outer years to the lawmakers for final approval,” Mr. Katz said.
Programme-based budgeting system
Similarly, he proposed a programme-based budgeting system, acknowledging it as a powerful tool to improve the quality of government expenditure by facilitating better prioritisation and increase pressure on the MDAs to deliver value to the people.
To deliver these values, Mr. Katz said the programme-based budgeting process would help in defining the outputs and outcomes in terms of the services delivered to the community as well as the types of impact those services are intended to have.
“Programme-based budgeting relies on systematic use of performance information to improve the quality of government expenditure and facilitates better prioritisation within a medium term fiscal framework and medium term expenditure framework by fully costing programmes, activities and projects, while at the same time increasing pressure on government agencies to perform,” he said.
Source:http://234next.com/
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