The process for the amendment of the Fiscal Responsibility Act is currently before the National Assembly. It is however imperative that the National Assembly concludes the process and hand over to the President for assent before the advent of a new administration come 2023.
The importance of the Fiscal Responsibility Act cannot be overemphasized. The FRA 2007 serves as the basis for accountability and transparency in the use of public resources. The Act is tailored towards ensuring prudence and fiscal discipline in the allocation of public funds. The law also serves as a guide for the macro-economic planning and actualization of fiscal targets within the medium term.
The FRA made provision for a Medium Term Expenditure Framework, which is a three year rolling plan on the financial estimates and expenditure priority of government. It is on the basis of the MTEF, the MDAs prepare its Medium Term Sector Strategy. The annual budget is also derived from the MTEF.
The FRA is the best piece of legislation available in Nigeria; however it is ironical, that with the existence of such a law, the country’s corruption perception index shows Nigeria is among the highly corrupt nation in the world. As at 2021, Transparency International, CPI scored Nigeria 24/100 in public sector corruption.
The move to amend the Act by the Buhari-led regime could lead to possible improvement in the fight against corruption which forms the hallmark of the current administration. This is also in line with the Open Government Partnership, which seeks to enthrone transparency and public participation in public sector affairs.
Some of the vital sections of the Act that need to be amended include empowering the Fiscal Responsibility Commission to prosecute violators of the Act. The existing version of the Act does not stipulate conducts that can be characterised as offences; it only made offence to appear in general terms and left the decision of prosecution to the discretion of the Attorney-General. The amendment of the Act would accord the FRC, the direct powers to prosecute offenders.
The amended Act would also provide financial autonomy to the Fiscal Responsibility Commission which hitherto depends on just the federal government for its funding. Beyond grants and the government’s budget, the funds of the Commission would be drawn from a five per cent remittances collected from Government Owned Enterprises. This would make the Commission more independent to investigate, summon and prosecute offenders of the law irrespective of the public office or status of such persons involved.
The incessant acts of borrowings by the federal and sub-national governments would be curtailed by the amended Act. The current Act set a debt limit not exceeding three per cent of the GDP, however, despite the limitation set, both layers of government borrow from external and internal sources without recourse to the limit.
In the new amendment, the FRC would be able to verify compliance with the limit set. The Commission shall at the end of each quarter, determine the amount of the consolidated debt of each tier of government. The Commission shall publish, on a quarterly basis, a list of the governments in the federation that have exceeded the limits of consolidated debt, indicating the amount by which the limit was exceeded. Where at the end of any quarter, the consolidated debt of the federal, state or local government exceeds the respective limits; it shall be brought within the limit, not later than the end of the three subsequent quarters with a minimum of 25 per cent reduction in the first quarter.
Violators of the limits specified pursuant to the amended section shall: (a) be prohibited from borrowing from internal or external sources, except for the refinancing of existing debts; and (b) bring the debt within the established limit by restricting funding commitments accordingly. Also, where non-compliance with the limit specified pursuant to the amended section persist after the time limited by law, the affected tier of government shall also be prohibited from receiving grants from any other government in the federation.
On citizens participation in the budgeting process and macro-economic framework development, the amendment of the FRA shall mandate the Minister of Finance to hold public consultation, on the Macro-economic Framework, the Fiscal Strategy Paper, the Revenue and Expenditure Framework, the strategic, economic, social and developmental priorities of government, and such other matters as the minister deems necessary: provided that such consultations shall be open to the public, the press and any citizens or authorised representatives of any organisation, group of citizens, who may attend and be heard on any subject matter properly in view. The previous law made such consultation discretionary.
There are plethora of provisions in the amended section of the Act that would help Nigeria re-position itself economically as well as re-write the mistakes of the past. Finally, to provide for sustainable measure in the economic growth and fight against corruption, the President should use the last lap of his regime to facilitate the swift amendment of the FRA.