The Buhari government has since coming into office in 2015 spent more than it has budgeted for every year. The skew of the budgets have not favoured sectors that boost domestic productivity ― going instead to servicing debts and paying salaries. Not surprisingly, the assumptions of these budgets have been consequently heroic. Thin this regard, the 2022 budget is no exception.
In other areas too, federal budgets had begun to precipitously run ahead of themselves, especially by the mid-1980s. The oil price on which these spending plans were laid was the biggest sign that our budgets and the processes by which they were arrived at had become footloose. That is aside the other inconvenience of the details of most budget packages being finally agreed well past their delivery dates.
…the Obasanjo administration recognised that a huge sovereign debt burden was a limitation to the private sector’s flexible supply responses. But by far the administration’s biggest contribution to sanitising the fiscal planning space was its introduction of an oil price fiscal rule for the budget. This allowed us to fix a price for our major export earner in the budget, and to parlay earnings above that price into a rainy-day fund . One could not put a price on the predictability that this brought to the domestic planning chain. That is until the commodity supercycle broke in 2014. Plummeting oil prices then rendered subnational governments’ reluctance to play by the oil price fiscal rule moot.
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