As Nigeria’s President and Commander-in-Chief of the Armed Forces, His Excellency President Bola Ahmed Tinubu, GCFR, is set to present read more Promoting fiscal discipline through effective budget and budgetary processes
Promoting fiscal discipline through effective budget and budgetary processes - Businessday NG
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Home> Opinion> Promoting fiscal discipline through effective budget and budgetary processes
Promoting fiscal discipline through effective budget and budgetary processes
Share As Nigeria’s President and Commander-in-Chief of the Armed Forces, His Excellency President Bola Ahmed Tinubu, GCFR, is set to present the 2025 Appropriation Bill amounting to ₦47.9 trillion to the joint session of the National Assembly on Wednesday, December 18, 2024.
The nation’s expectation is that this budget, alongside those of the 36 states, will serve as a powerful tool for promoting fiscal discipline.
Earlier in the week, President Tinubu submitted the 2024–2026 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), which proposed a ₦26.1 trillion expenditure for 2025.
Key projections in the framework include a $75 per barrel oil price benchmark, daily oil production of 2.06 million barrels, an exchange rate of ₦1,400 to $1, and a GDP growth target of 6.4 percent.
The framework also outlines a borrowing plan of ₦9.22 trillion, comprising both domestic and foreign loans.
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One critical aspect is that fiscal discipline and budgetary processes are deeply interwoven.
These two elements are inseparable—adherence to budgetary provisions directly fosters fiscal discipline and vice versa.
Fiscal discipline examined Fiscal discipline entails a holistic, well-articulated, and prudent management of funds, whether by a government, agency, or organization.
It involves implementing policies, procedures, and practices that promote transparency and accountability.
Key elements of fiscal discipline include efficient revenue collection, expenditure monitoring, debt management strategies, and strict adherence to budgetary provisions.
“When properly executed, budgets can play a pivotal role in coordinating the activities of various government MDAs, fostering unity, and ensuring alignment with national objectives.” No meaningful economy can achieve fiscal discipline without calculated strategies that include, but are not limited to:
Transparency and accountability models
Internal control and audit exercises
Comprehensive budget and budgetary provisions
Understanding budgets
The Chartered Institute of Management Accountants (CIMA) in the UK defines a budget as a financial or quantitative statement prepared and approved prior to a defined period, showing planned income and expenditure aimed at achieving a specific objective.
(2012) describes a budget as a future plan of action formulated by management for an organisation or a specific section, expressed in monetary terms.
As President Bola Ahmed Tinubu presents the 2025 budget, tagged “A Budget of Restoration: Securing Peace and Building Prosperity,” it is imperative that federal and state governments, along with their agencies, ensure strict adherence to its provisions.
Read also: ₦16trn debt burden outstrips security, infrastructure, education budgets
The importance of budget implementation A well-implemented budgetary provision delivers numerous benefits, including:
Effective planning: It provides a framework for planning government activities and serves as a tool for performance evaluation.
Coordination of activities: Budgets streamline activities across ministries, departments, and agencies (MDAs), ensuring efficiency and alignment of goals.
Motivation for citizens: For the general populace, budgets can inspire confidence and spur action by outlining clear goals and resource allocation.
Identification of efficiencies: Budgets help identify inefficiencies within the system and offer solutions to improve overall performance.
Cost control: Budgets act as a control mechanism, enabling the government to minimise costs and achieve social welfare objectives.
Enhanced communication: Budgets serve as a communication tool between the government and its agencies, ensuring transparency and clarity in goals and expectations.
When properly executed, budgets can play a pivotal role in coordinating the activities of various government MDAs, fostering unity, and ensuring alignment with national objectives.
A budget is a means to an end, not an end in itself.
As a tool for budgetary control, it emphasises comparing actual results against planned targets, identifying variances, and implementing corrective measures.
Governmental budgeting, when effectively applied, serves as a powerful instrument to authorise actions, achieve goals promptly, and promote fiscal discipline.
Kingsley Ndubueze Ayozie, KJW, FCTI, FCA, a Public Affairs Analyst and Chartered Accountant, writes from Lagos.
