This is a state that can hardly raise N1Billion per month as its Internally Generated Revenue (IGR), in addition to the backlog of a huge debts profile mostly being serviced at source. Gov Ayade's measure of expanded budget becomes more ridiculous and nauseating when considered from the perspective that most of the State's bank loans are tied to Irrevocable Standing Payment Orders (ISPOs) duly registered with the Office of the Accountant General of the Federation (OAGF) with regards to direct deductions from the state's monthly allocation from the Federation Account. These sums up to the fact that Cross River State has a highly depleted monthly revenue allocation from the Federation Account. Besides, in running a deficit budget there is a standard threshold of not more than 3% of GDP that should be applied according to the Fiscal Responsibility Act. Ostensibly, this Act has not been domesticated at the Cross River State level but it could serve as a guiding light in the state's budgetary process.
I've read a few narratives from some of the governor's aides that were capitalized in staunch endorsement of his “audacious” N1.3Trillion 2018 budget of kinetic crystallization. What I find entirely strange in these narratives is the strenuous attempt to extrapolate that Senator Benedict Ayade is simply reinventing the wheels in our entire budgetary process and he is set to bring it up to speed with conventional budgeting system. This sounds laughable and constitutes a brazen display of crass ignorance of the principles of budgeting and public finance. A budget estimate of N1.3trillion is an indication that Cross River State is proposing to run about 98% deficit budget in 2018 fiscal year with an increase of over 300% from the last budget estimates. This should not be. It is amusing that such a “landmark” budget would be proposed in a pre-election year with all the distractions in governance that will ensue as a build up to the 2019 general elections. Obviously the Governor will be desperately angling for what many consider as an undeserved second term bid.
I've read some extracts from the governor's budget speech on the reasons for the expansive budget proposal where he alluded to expected inflows from foreign investors on his “signature projects”. This is a grave error and extremely hollow disposition of a man who should know better. Since when did investors fund become part of a state budget? This argument is not only speculative but also against the well known principles and practice of budgeting. Investors' fund does not in any way constitute part of a state budget. This is alien to budgeting and public financial management.
At best, what should have been done was to capture the State's counterpart funding in the projects in the event of a Public-Private Partnership (PPP) as the model of investment. The expected tax receipts from the investors and would-be employees' taxes could be captured in the budget NOT the investors fund as proposed by the governor. In any case, the idea of making provision for tax receipts from an investment outlay with an unpredictable maturation period as a line item in a budget with a one year life span amounts to a mere academic exercise which is not practicable. Again, for a budget that is constraint by a time lag of one year for its implementation, the financial contribution of the state to a project as a cost center in the proposed estimate should be restricted to one year and not the entire gestation period of the project which could be more than a year.
A key rule in budget presentation is a report on the performance and percentage implementation of the previous budget. How far has Gov Benedict Ayade implemented the last budget of N305 billion? The answer could serve as a prelude to his commitment or otherwise to the bogus budget of N1.3trillion for the 2018 fiscal year. Drawing from the experience of the last two years, it appears Gov Ayade's budget performance indicators are always shrouded in absolute secrecy. In the practice of public sector budgeting, openness is the norm. Government is a social contract and power is held in thrust for the people. To that extent, Gov Benedict Ayade is under obligation to tell Cross Riverians the source of the funds to execute the proposed unprecedented deficit budget; the tenor, terms and conditions of these funds should be in the public domain. Unfortunately, these fundamental principles in the practice of public sector budgeting are completely missing in the Cross River State budget template under the current administration.
Suffice it to say that the framework of a public sector budget is built on some fundamental assumptions and key benchmarks drawn from carefully articulated fiscal/financial policies of government, capital improvement plan and reasonable forecast. To that end, there is no gainsaying the fact that Gov Benedict Ayade's budget template from inception has always defied all known parameters, principles and simple logic of public finance. The template is not only flawed and churning out absolutely unrealistic budget estimates, but it is also mysterious to budgeting, to say the least. Until a radical change is urgently effected in the current budget template, Cross River State will continue to buckle under the increasing weight of lackluster budgetary performance with a concomitant toll on the local economy.