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October 3, 2007 - December 2, 2007
The Budget: Myths, Illusions, and the Reality
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A PAPER PRESENTED AT THE
TRAINING OF TRAINERS WORKSHOP ON BUDGET MONITORING AND GOOD GOVERNANCE IN
The budget is perhaps the most
important instrument in any modern state apart from the constitution. The focus
on budget has assumed greater prominence in recent years with increasing
democratization, civil society participation and the desire to respond to the
development challenge of poverty. In
2. THE CONCEPT OF BUDGET AND
The word budget originated from
a French word “bougette” which means little bag. In
The budget is a key instrument for macroeconomic management in most economies and its efficacy determines the success of governments in meeting societal goals. The budget is also a tool for the implementation of social, political and economic policies and priorities which impact on the lives of the population…A budget is a plan and we know that plans depend heavily on information, analysis and projections. A successful budget must be a product of a process that is based on sound and quality information, rigorous impact analysis and an effective feedback mechanism to internalize lessons of past budgets. The budget is an integrated output of a dynamic process in which the connections between the various sectors are critical for its ultimate impact and should be looked at in a holistic manner.[vii]
From the above definitions and description, it is clear that budgets serve some purposes. Six main purposes can be delineated for a budget.
1. It is a short-term financial plan.
2. It is a political document couched in figures.
3. It is a management tool used for both planning and control.
4. It is a device for ensuring a continuous monitoring procedure, and reviewing and evaluating performance with reference to previously established standards.
5. It is an agent to enable management to anticipate change and adapt to it.
6. It is an overall method for improving operations.
It is important to note that as soon as a budget is approved by the appropriate authority (usually the legislature), it becomes a legal instrument through which government can incur expenditure and collect revenue.
Budgeting is simply the process of preparing a budget. It refers to the procedures and mechanisms by which the budget is prepared, implemented and monitored.[viii] Budgeting is very crucial for the economic development of any nation. Good budgeting can lead to economic growth and development. But to prepare a good budget requires a responsible leadership, special staff assistance, broad, accurate and reliable information, complete plan, a financial calendar and effective monitoring and control over the execution of the budget plan. The budgeting process traces the budget in one year from conception through to preparation, approval, execution, control, monitoring and evaluation. Scholars have divided the budgeting process into four main stages[ix] viz:
3. MYTHS AND ILLUSIONS ABOUT
There are a lot of myth and illusions about the budget. In this paper, myth refers to something that many people believe but that does not exist or is false while illusion is a false idea or belief.[x] According to Krafchik, in many developing countries, the range of inaccurate and misguided assumptions include:
A critical analysis of the ideas above will reveal that they are mere myths and illusions that are not grounded on facts. While it is true that it is the responsibility of the executive to formally make proposals to the legislature, the process of formulation of budget ought to involve the participation of interest groups and citizens in general. In this way, the debate on the budget process is deepened and new information is brought into the process of making decision on the budget. The argument that openness of the budget making process will upset financial market is an illusion. In fact, budget secrecy will encourage speculation while transparency will make known the policy choices which will make it easier for investors and business people to make more informed decision. The assumption that non-government intervention can destroy the integrity of the budget envelope cannot be sustained because budget by definition is a plan based on certain assumptions whose integrity is not caste in stones. Non-government intervention brings in fresh perspectives that cannot be discountenanced. The view that legislators and civil society will pursue interests opposed to the common good challenges the whole concept of representative democracy and popular participation. The appropriate response cannot be exclusion from the process especially as there is no guarantee that the executive will not pursue a narrower interest.
4. THE REALITY OF BUDGET AND
The reality of budget and
The environment under which the budget process takes place in Nigeria is one in which legal and institutional frameworks impede public access to official records, documents and information…Nigeria continues to retain numerous laws with secrecy clauses which prohibit the disclosure of information, usually under very broad “public interest claims, even when no justification for such prohibition exists. Sometimes, even the courts of law are precluded from compelling the disclosure of such information.[xiii] …Besides, certain categories of government officials are obliged upon taking office to subscribe to an oath of secrecy under which they undertake not to disclose any information, which comes to their knowledge or custody in the course of their duties, unless specifically authorized to do so. The situation has engendered a culture of secrecy in government institutions, which insulates governments and their actions from public scrutiny. This has also resulted in a severe restriction on the ability of members of the public, including the media, to access information about governmental activities, programmes and policies.[xiv]
Another reality with the
budgeting process in
Some scholars have argued that
the myth and illusions about budget is being challenged in several developing
and transitional countries with CSOs and legislators playing more roles in the
budgetary process.[xv] Examples of
such countries include
5. TRANSFORMING THE REALITY OF
BUDGET AND BUDGETING IN
Karl Marx once said that
Philosophers have interpreted the world in different ways, but the point is to
change it. As noted above, the reality of the budgeting process in
The budget is an important instrument of governance in any modern state. It has the potential of aiding planning and contributing to development. But it is shrouded in a lot of myths and illusions, which essentially excludes citizens from participation and promote secrecy, corruption and underdevelopment. There is there fore the need to interrogate the reality of budgeting in Nigeria with a view to transforming it in such a way that it will not only become participatory, transparent and accountable but will also lead to poverty eradication and sustainable development.
[i] For many years,
[ii] UNIFEM (2002),
The Budget Process in
[iii] Bedeian, G. A. (1987), Management. Chicago, CBS Publishing Japan Ltd.
[iv] Adamolekun, L. (1983), Public Administration: A Nigerian and Comparative Perspective. NewYork, Longman Ltd
[v] Ndubuisi, W.
C.(1996), The Practice of Federal Finance: The Nigerian Dimension.
[vi] Balmori, H.
F.(2003a), “A Practical Tool to Advance Towards Equity” in Gender and
[vii] Kwanashie, M.
(2003) “Connections and Disconnects in Budgeting Information: Issues for
Budget Sectoral Analysis in
[viii] Nana, J.
O.(2003), The Role of the Central Bank of
[ix] Nana, J. O. Ibid
[x] Wehmeier, S. (Ed)
A. S. Hornby Oxford Advanced Learners Dictionary.
[xi] krafchik, W.
(2002), “Can Civil Society Add Value to Budget Decision-Making?” in
Gender Budget Initiatives: Strategies, Concepts and Experiences.
[xii] Ezekwesili, O. (2004)
[xiii] Instances of such secrecy clauses are contained in legal provisions such as section 168 of the Evidence Act; Section 2 of the Federal commissions (privileges and Immunities) Act, Cap 130 LFN, 1990; Section 10 (2) of the Public complaints Commission Act; Section 12 (2) of the architects (Registration, etc.) Act; Sections 53 and 55 of the Nigerian Railway Corporation Act; and Section 13 of the Statistics Act, Cap 416, LFN, 1990.
[xiv] Ojo, E. (2004),
Access to Information and budget Transparency in
[xv] Krafchik Op. Cit.
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