Kola Ibrahim *<\/p>\n
The Buhari government claimed to have embarked on expansionary budgets,
\ndespite adverse economic conditions, as a way of spurring development
\nand economic growth. Indeed, between 2015 and 2018, the government\u2019s
\nactually-implemented budget size was N23.38 trillion. But these budget
\nsums should be situated within the existing economic situations. At N306
\nto a dollar, the value of the budgets (both the approved and actual) are
\nactually less than presented. For instance, the 2016, 2017 and 2018
\nactually-implemented budgets of N5.36 trillion, N6.46 trillion and N6.8
\ntrillion respectively translate to $17.6 billion, $21.2 billion and
\n$22.3 billion in dollar term, compared to $21 billion (at N197\/$1) spent
\nin 2014. This means that the actual budgetary spending in 2014 in dollar
\nterms was more than what was spent in 2016 and 2017 years of
\n\u2018expansionary\u2019 budgets and almost at par with what was spent in
\n2018. When we even factor inflation \u2013 which grew from 9 percent in May
\n2015 to 17.55 percent in 2016, 15.37 percent in 2017 and 11.35 percent
\nin May 2019 \u2013 into the equation, then it will be glaring that the
\nactual values of Buhari government\u2019s supposed expansionary budgets
\nwere actually lower than those of previous government. This does not
\nimply that the Jonathan government\u2019s budgets actually benefitted
\nmajority of the population; indeed a significant percentage of the funds
\nfound their ways into private pockets of politicians and big business
\npeople with uncompleted budgets littering the country. But this reality
\nput a big question mark on the sincerity of the Buhari government
\ntowards development. This means, for example, that the so-called capital
\nvotes are really less than the 2014 vote.
\nCurrently, in dollar terms, the Buhari government has borrowed $35
\nbillion – N 10.68 trillion (about 65 percent increase since 2015) as at
\nfirst quarter 2019, with the government paying as much as $18.9 billion
\n(N5.806 trillion) for debt servicing between 2015 and 2018, an amount
\nthat is more than the total capital spending, more than 80 percent of
\ntotal deficit, and more than half of what the government borrowed, all
\nwithin the same period. In fact, the total spending on debt servicing is
\nfar more than the combined budgets for education, healthcare and water
\nresources within this period (2015-2019). This means that the federal
\ngovernment is either borrowing to pay interests on debts (service debt)
\nor paying more interests than spending on development. In the 2017
\nfiscal year, the government spent N1.8 trillion to service debts while
\nit spent N1.5 trillion for capital votes i.e. debt servicing was more
\nthan capital votes by over N300 billion. The Buhari government, rather
\nthan stop this drift to the abyss, has rather worsened it with its
\nunparalleled appetite for debts. Currently the debt servicing to total
\nimplemented budget is around 40 percent, which poses problem for the
\ncountry in the short or long term. The government is of course basing
\nits borrowing appetite on a more elusive debt to GDP ratio, which is
\nmore virtual than debt-to-budget or debt servicing-to-budget.
\nIt is true that austerity, as an economic term, involves cutting
\ngovernment\u2019s spending, especially budgets, as a way of reducing or
\neliminating deficits. This is usually carried ot during economic
\ndownturn like recession, or when government\u2019s debts or public debts
\nare unsustainable, and government has to offset the debts, or reduce
\npublic capacity to borrow, or assume private debts and force austere
\nliving on the majority. In any case, austerity will mean attack on the
\nworking people and the poor, who have no buffer or absorber for economic
\nshocks. This is why underfunding of social services (and their
\ncommercialization or privatization), higher taxes for the poor, high
\nunemployment and exploitation of the working people (through salary
\ncuts, attacks on pensions, casualization, etc.) usually accompany
\nausterity policies. On the other hand, the rich and capitalist class (or
\ninvestors), use the opportunity to recoup lost profits through greater
\nexploitation of working class, and exploiting government\u2019s austerity
\nto take more from public till.
\nHowever, that the Buhari government is not implementing a shrinking
\nbudget or austere budget nominally does not mean that instruments of
\nausterity are not being deplored. It does not also mean that the
\nexpansionary budgets have benefited the working people. What we have
\nseen is the government implementing some form of austerity programmes
\nfor the poor as reflected in hike in fuel prices, electricity tariffs,
\nschool fees across the country, currency devaluation, stagnated
\nsalaries, and now through hike in VAT, and other sundry levies and
\ntaxes; not to mention the planned increase in fuel price.
\nWhile it is true that there have been nominal increases in budgets for
\neducation and healthcare, this, as noted above, does not necessarily
\nreflect real increase when devaluation and inflation are factored in.
\nBut a closer look at the implemented budgets shows that there has been
\nlower allocations to education and healthcare between 2016 and 2018,
\nthan pre-Buhari era. For instance, capital vote for education utilized
\nin 2011, 2012, 2013 and 2014 were N28.5 billion (55%), N47.6 billion
\n(86%), N36.2 billion (50%) and N20.7 billion (40%) respectively. On the
\nother hand, the utilized capital votes for 2015, 2016, 2017 and 2018
\nwere N13.1 billion (56%), N20.8 billion (59%), N31.6 billion (55%) and
\nless than 45% respectively. This means that in nominal value, real value
\nand percentile implementation, capital education spending was worse off
\nunder Buhari than previous period. While the recurrent expenditures
\nincreased under Buhari government, this is lower, as percentage of total
\nbudgets and when inflation and devaluation are factored in, than under
\nJonathan\/PDP government. Between 2011 and 2014, the average budget to
\neducation was 10.4 percent, but between 2015 and 2018, under Buhari
\ngovernment, the average was 9.0 percent. And worse still, percentage
\nimplementation, while poor under PDP and APC, was worse under APC.
\nIn fact, in real value, education and health budgets have shrunk as
\nnoted earlier. Moreover, most of the capital spending have not resulted
\nin any significant improvement in facilities across educational
\ninstitutions. According to Punch newspaper editorial (3\/5\/2019), between
\n2016 and 2019, a meagre N475.3 billion was allocated to the 21 federal
\nteaching hospitals, an average of N22.6 billion for each hospital for
\nthe three years (or N7.5 billion per year for each hospital). According
\nto the editorial, only N8 million is allocated to the OAUTH as monthly
\nstatutory running cost, while the teaching hospital spends N13 million
\non monthly electricity bill and N5 million to buy diesel. UNNTH, which
\nwas allocated N5.5 million monthly allocation, spends N18 million on
\nelectricity. This means that health services will have to be
\ncommercialized the more in these health institutions, or quality of
\nhealth service delivery will fall. This is already happening, as health
\nservice fees have increased in these institutions while two children
\nwards on OAUTH have been closed down.
\nWhile government claimed to wanting to build or rebuild 10, 000 primary
\nhealth institutions, which ordinarily should lead to massive employment
\nof medical doctors and health workers, the former health minister, Isaac
\nAdewole was recently quoted to have asked medical graduates to go into
\nfarming, while labour minister public stated that Nigeria had adequate
\nnumber of doctors, even when doctor to citizens ratio is around 1:6400
\nas against WHO recommended 1:600. This is one of the signs that the
\ngovernment is paying lip service to many of its programmes and budget
\nitems, especially the capital aspect.
\nConsequently, the cost of running educational and health institutions
\nhave increased as a result of inflation and devaluation. There has not
\nbeen any rise in income of workers, neither has there been massive
\nemployment drive in the social service sector, which would have been a
\npointer to any real increase in spending. When all this is placed
\nalongside introduction of various belt-tightening policies (fuel price
\nincrease, electricity tariff hike, etc.), it will be clear that
\nausterity policies have been introduced in the social service sector,
\neven when nominal government spending seemed to have increased.
\nWhile it is true that low revenue made many aspects of the budgets
\ndifficult to implement, the fact that the proposed capital items in the
\nbudgets and the aspects of the budgets implemented did not reflect in
\nany improvement shows that the so-called spending are aimed at nominally
\nincreasing GDP as a way of showing fake growth and exit from recession.
\nThe latest employment report from NBS showing consistently growing
\nunemployment, four quarters after officially exiting recession
\n(unemployment is expected to have eased out or gone back to
\npre-recession period at this stage) is a pointer to the fakeness of the
\nso-called expansionary budget. Therefore, we must dig deeper than the
\ntextbook definitions.
\nThe main areas where the huge budgets have gone to are debt servicing
\nand capital expenditure especially on government bureaucracy (office
\nbuildings, furniture, military hardware, etc.), roads and rails. Aside
\nthe fact that many of these projects are funded through loans, the
\neffects of these projects on the economy in terms of spending is
\nminimal. According to government\u2019s chest-beating data, more than 1,262
\nkm of roads have either been constructed or rehabilitation in the three
\nand half years of Buhari government. Also, more than N3 trillion has
\nreportedly been spent on capital projects, with about half of this going
\nto roads. Yet, according to government, this only generated less than
\n79, 000 jobs (mostly part-term or casual jobs associated with
\nconstruction industry), while most of the roads projects, especially the
\ncrucial ones are not completed or half completed.
\nThe effects of this \u2018huge\u2019 spending on roads and rails on other
\nsectors of the economy has been minimal or infinitesimal. The banking
\nsector is still not strong enough (even though the bank investors rake
\nin billions in profits), government\u2019s independent revenue and tax
\ncollection has not improved reflecting the poor performance of private
\nbusinesses, employment generation remain anemic, etc. It is therefore
\nnot out of place to state that the huge capital outlay on roads and
\nrails, aside being funded through loans (and many of the projects
\nhandled by foreign companies) are aimed at enriching the few in
\ncorridors of power and big business, under the guise of developing the
\ncountry or stimulating the economy. Given the Buhari government\u2019s
\nfa\u00e7ade on fighting corruption, the rotten capitalist political and
\nbusiness classes, have surely found a new means of massive looting of
\npublic resources.
\nThe summary of all this is that the Buhari government, with the hike in
\nfuel prices, devaluation of naira,\u00a0 hike in electricity tariffs,
\ngovernment-instigated inflation, huge debt overhang and debt servicing,
\nand actually shrinking budgets (masked as expansionary budgets), has
\nintroduced austerity measures\/policies through the backdoor. This is
\nbound to worsen in the coming period as the government try to wriggle
\nout of the problems it created in the first instance: create the
\nillusions of expansionary budgets, funded mostly through huge borrowing,
\nbut introduce anti-poor policies that undermine purchasing power, while
\nenriching the rich few in the corridors of power and big business. The
\ngovernment has already announced plans to increase Value Added Tax
\n(VAT), while there is the possibility of another hike in fuel price,
\neven as government, through its agents (minister, NNPC officials, etc.)
\ndoublespeak on this. The specter of this is reflected in the fact that
\ninterest payment on existing debt is now around 60 percent of revenue;
\nwhile in 2019, projected budget deficit is put at N3.8 trillion, but as
\ngovernment revenue continue to shrink, this deficit may be higher.
\nGovernment, according to 2019 budget, is projected to borrow N1.4
\ntrillion to cover recurrent expenditure (debt and non-debt) alone. In
\nthis scenario, government will be making effort to unleash more
\nausterity measures on the poor people.
\nLabour movement and other social forces must be prepared to resist these
\nausterity policies which will be heightened in the coming period.<\/p>\n