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A budget is the monetary translation of the future plans of the government. The concept of budgeting connotes both planning and controlling function. It is the determination for a future period of time of: what is to be done, what is to be accomplished; the manner in which it is to be done; and the cost of doing it. It requires that the broad objectives of the government be broken down into a detailed work plan for each project and for each unit of organization. . Budgets represent flows of funds model of an annual plan of activities with anticipated sources and uses of funds. All policies, programmes and projects and encapsulated in the budget.

In governmental administration, budget is an instrument of resource allocation, income distribution and economic stabilization. In developing countries, budgets are also used to protect domestic industries and economy as it also measures the strengths, weaknesses, opportunities and threats in an economy. Budgets are used to identify investment choices, sectoral priorities, and the three macroeconomic objectives of wealth creation, poverty reduction and employment generation.

Every budget is guided by five main characteristics. A good budget must be cost effective in terms of economic efficiency. Activities in a good budget must be characterized by out-put allocation classified according to broad categories and details by sub-programmes and activities. A budget must take account of the performance of the previous year, and it should be guided by some principles designed to project the performance of the budget in terms of policies, projects and programmes the budget is meant to implement.

The 2013 budget of Bayelsa State presented by Governor Henry Seriake Dickson can be regarded as a performance budget because it is output and objective-oriented with substantial emphasis on resource allocation based on economic analysis. Unlike the traditional organizational structure of budgeting, the budget is based on programmes and projects which take account of the totality of the budget including objectives environment, available resources, the programme and their objectives. The budget also involves a continuous process of developing, comparing and analyzing alternative objectives oriented programs so as to develop the most appropriate package of “programmes” for government. The 2013 appropriation is also based on reporting and controlling programme planning budgeting system based on a sophisticated information system able to monitor progress towards meeting system objectives through implemented programme. Performance evaluation therefore, emphasizes the attainment of desired objective rather than the amount spent which is emphasized in traditional budgeting system.

The fundamental purpose of budgetary innovation and reform is to ensure that the limited available public funds are allocated in the manner that will ensure the attainment of state goals designed to grow the real sectors of the economy. Another aim is the stream-liming of systems and procedures to ensure optimum resources allocation and proper execution of the approved allocations.

Philosophy of the Budget
The 2013 budget is predicated on some fundamental principles and philosophies as well as the strategy for the smooth take off of our restoration agenda. The first and perhaps the most definitive are to ensure that the State lays laid a solid foundation for the programmes and aspirations of the restoration government. A second principle is the issue of transparency and fiscal disciple. Government has been very consistent in giving the good people of the State, month by month transparency briefings in accordance with a legal framework already created for it. The monthly Transparency briefing is first of its kind in Nigeria and the Dickson Administration has consistently implemented it to increase public trust of investors' In the meantime, Bayelsa State is the only State in Nigeria that operates an open government.

This is why for the past 9 months; the Dickson Administration has undertaken some fundamental restructuring, redesigning and re-organization of the entire government structure and philosophy in the state. Accordingly, the 2013 budget has been carefully crafted to ensure speedy implementation of the various programmes and policies. This is one of the advantages of the BOTTOM-TOP budgeting that is based on the Medium Term Expenditure framework (MTEF).

The third principle is the need to reduce the recurrent expenditure and therefore the running cost of government. The biometrics revealed large scale fraud inherited from the immediate past administration. The last administration exposed the State to massive exposure in the form of bonds, frivolous loans and dead weight debt. The Dickson Administration has been wrestling with debt payment even though 10 months into his administration, he has not taken a loan under any guise. On the contrary, the restoration administration has entrenched the culture of saving, prudence and value for money.

Though the unconcluded biometric exercise that wage bill was reduced from N5.7 billion to N3.7billion.Ultimately, the Restoration administration is putting together infrastructure for e-payment to prevent payroll fraud. A reduction of overheads and recurrent expenditure has become imperative because it will free up some resources for financing infrastructure and other real sectors of the economy.

The Restoration administration is poised to pursue a policy of boosting the internally Generated Revenue. This is to change the hitherto low IGR Profile of the State. Bayelsa State has one of the lowest internally generated revenue profiles in Nigeria. Already, Governor Seriake Dickson has already constituted an Internal Revenue Committee to identify the untapped sources of revenue with a view to farming out resources through tax and other sustainable means of improving the IGR profile of the State. Further, government has set up a Tax IGR assessment and Review Committee to coordinate all our IGR generating MDAs and activities. This will be backed by law.

In accordance with the tax laws of the country, civil servants will pay the Personal Income Tax Act (PITA). It is heartwarming also that all multinational companies and all taxable adults and other entities doing legitimate business in our state will be made to pay the correct taxes as and when due to further boost the IGR base of our state. Governor Henry Seriake Dickson is poised to boost the IGR of the State to reduce over dependency on the Federation Account. Already, the IGR profile has started to increase from less than 100 million naira at inception to an IGR monthly of over 500 million naira. This feat is commendable and with some momentum the benefits will quadruple in the months ahead.

The devastating effect of the flood notwithstanding, government performed excellently well in the 2012 budget. Only a paltry 38.715% was earmarked in the entire budget for recurrent expenditure while the sum of 156.315bn or 61.29% was devoted for capital expenditure. This is shows the growth and development potentials of the budget.

The 2013 budget will prime-up the on-going development momentum. A breakdown of the BUDGET OF CONSOLIDATION FOR RESTORATION shows the following

1.Personnel Cost:……………………N49.142bn
2.Overhead Cost……………………..N28.905bn
3.Consolidated Revenue Fund….N55.188bn
4.Capital Expenditure:……………..N152.695bn
The 2013 budget proposals have been carefully put together using the 2013-2015 Medium Term Expenditure profile as its basic platform. Consequently, the 2013 budget comes with a total proposal of #285.930 bn comprising of N133.235 bn or 46.60% for recurrent expenditure and N152.695 bn or 53.40% for capital expenditure. A budget that is titrated in favour of capital expenditure will create job opportunities; unleash the growth of the real sectors including the improvement of service delivery. The fiscal year 2013 will therefore witness massive physical infrastructure, revolutionary Investment in agriculture, tourism hospitality, security and education. This is also reflected in the sectoral analysis of the budget, with works and infrastructure taking the Lion's share of N38.8 billion, followed by education with N28.4 billion. The health sector attracted N7.7bn due largely to the concessioning policy of government with respect to the 500-bed hospital which previous administrations had used as a cash cow.

It is also fundamental that the Dickson Administration is determined to produce a power master plan for the entire state. The critical role of power in investment promotion cannot be over-emphasized hence the Energy sub-sector attracts the sum of N6.2bn is earmarked for the Energy subsector. Agriculture attracted N2.7bn. The Isampou, Ebedebiri, Angalabiri, Abobiri farms will be operated on PPP basis with foreign partners willing to provide the technical know-how. Trade and Investment Industry attracted N2bn. The Ministry of water Resources attracted N3.4bn while N3.5 has been earmarked for the Ministry of Science, Technology and Manpower Development. The Ministry of Sports Development attracted the sum of N4.5 bn, while N3.2bn was earmarked for Housing and Urban Development.

Arising from the 2013 appropriation are five salient issues. First is the emphasis on Transparency fiscal discipline. Governor Dickson stated “Mr. Speaker, let me say unequivocally that the management of public expenditure in the state will strictly adhere to measures of efficacy, efficiency and effectiveness. This administration is determined to foster transparency and openness in the governance of the state. We will take all necessary measures to forestall the possibilities of waste, inefficiency and corruption in the transaction of government business in the state. We will ensure that all payments to be made in the year 2013 are based on value for money” This is one of the hallmarks of a performance budget.

The second parameter is that the budget is based on SWOT and PEST ANALYSIS. A glance at the sectoral analysis shows that the sectors attracting the highest allocation are sectors of need and strength, which those attracting the lowest allocations are areas of threat, but again government has devised shock absorbing mechanisms to cushion the threats with a view to making the best possible opportunities to leverage in those sectors. These projections are made within the context of the political, Economic, Social and Technological environments.

The third determinant is the voracious desire to grow the IGR profile of the State. Since Bayelsa State was created 16 years ago, the culture has been total dependence on the Federation Account for revenue. This was why sectors like Agriculture, Tourism Development, Hospitality and the development of massive infrastructure suffered acute neglect. The scenario has to change now for the economy to create jobs for our teeming population. Here lies the prospect of growth.

The fourth issue which is very profound is the reduction of the cost of government. Conventional economics postulates that a growth driven economy should not budget more that 35% to 40% to recurrent expenditure. This BUDGET OF CONSOLIDATION FOR RESTORATION budgets 46% for recurrent expenditure. Pleasantly, the aggressive drive for tax and other mechanisms to boost the IGR of the State may provide some stability. More so, most of the gigantic projects in education, Tourism and Infrastructure are based on PPP basis, which automatically reduces the burden of funding. My suggestion is that the recurrent component of the budget should be pegged at 35% to engineer accelerated development. I take solace in the averment of Governor Dickson. He stated unequivocally “All the measures developed to achieve cost reduction; particularly in the area of personnel cost and overhead will be sustained next year. Budget discipline will be our watchword in the 2013 financial year, as we will ensure greater prudence and fiscal discipline in the handling of government transactions. We will also make deliberate efforts in the reduction of overhead and recurrent expenditure to channel our scarce resources for infrastructural development and to other key sectors of the economy”

Finally, the prospect of the robust performance of the 2013 budget should be predicated on curbing corruption in the mainstream civil service, the contract awarding Ministries and those interested in maintaining the patronage network. The role of accountants at the Treasury is critical. True, that the administration has done so much to reduce payroll fraud. Governor Dickson has already declared his intention to wage a relentless war against corruption. This I think should be intensified and must include reported cases of fraud proffered against some key players during the GREAT FLOOD.

Invariably, the BUDGET OF CONSOLIDATION FOR RESTORATION holds massive prospects for quantum leap growth if Government reinforces the concrete walls of budget monitoring, and evaluation throughout the entire gamut of the budget implementation process. Governor Henry Seriake Dickson should also constitute a shadow monitoring group to dispassionately evaluate the performance of the budget. I shall spread my analytical dragnet when the appropriation bill is passed by the Bayelsa State House of Assembly in part 2 of this analysis where detailed macroeconomic indicia will be paraded to indicate the robust prospects that abound in Bayelsa State. The prospects beckon on us and the dividends will not be long in coming.

Idumange John
Is the Senior Special Assistant to the Governor of Bayelsa State on Research & Social Media

Disclaimer: "The views/contents expressed in this article are the sole responsibility of Idumange John and do not necessarily reflect those of The Nigerian Voice. The Nigerian Voice will not be responsible or liable for any inaccurate or incorrect statements contained in this article."

Articles by Idumange John