1. EXECUTIVE’S ROLE IN CHALLENGING THE BUDGET: THE NIGERIAN EXPERIENCE
Presentation by Mr. C.D. Gali,
Director Expenditure,
Budget Office of the Federation, Nigeria
29 November 2006
BOF 29 NOVEMBER 2006

2. OUTLINE The problem stated
Challenge framework and tools adopted by the Executive in Nigeria
Fiscal Rules and Limits
Establish Linkages
Value for Money
Reporting, Monitoring and Evaluation
Transparency
Impact of framework and tools on the budget
BOF 29 NOVEMBER 2006

3. THE PROBLEM STATED Unsustainable spending
Large government deficits financed by monetary growth
Large recurrent spending and debt service costs
Poorly conceived projects and programs
Spending not properly linked to developmental priorities
Low implementation of the capital budget
Weak monitoring, auditing and reporting
BOF 29 NOVEMBER 2006

4. THE PROBLEM STATED
In Nigeria the Executive has developed a framework to guide, challenge & align budget proposals of spending agencies & provide information, with which budgets may be monitored & evaluated.
The framework adopted in Nigeria is presented here in the slides that follow.
BOF 29 NOVEMBER 2006

5. FISCAL RULES & LIMITS
USE OF FISCAL RULES & LIMITS TO MANAGE GOVERNMENT SPENDING
Oil price based fiscal rule
Deficit/GDP limit
Aggregate expenditure limit
Limits by major expenditure heads
MDA limits (Envelopes)
BOF 29 NOVEMBER 2006

6. FISCAL RULES AND LIMITS
MEDIUM-TERM REVENUE FRAMEWORK
Agree -
Key assumptions and targets
Revenue framework
MEDIUM-TERM EXPENDITURE FRAMEWORK
Aggregate expenditure limit
Level of deficit and financing of deficit
Limits by major expenditure heads (that is, Statutory Transfers, Debt Service & MDA Expenditure)
BOF 29 NOVEMBER 2006

7. ESTABLISH LINKAGES
BOF 29 NOVEMBER 2006

8. ESTABLISH LINKAGES
LINKING ANNUAL BUDGETS TO LONG TERM STRATEGIES AND MEDIUM TERM SECTOR STRATEGIES
MEDIUM TERM OUTLOOK TO PLANNING
Medium-Term Revenue Framework
Medium-Term Expenditure Framework
Fiscal Strategy Paper
Medium Term Sector Strategies
Annual budgets with projects and programmes linked to medium term plans
BOF 29 NOVEMBER 2006

9. ESTABLISH LINKAGES FISCAL STRATEGY PAPER
Prepare Fiscal Strategy Paper which documents/sets out -
Medium-Term Revenue Framework
Medium-Term Expenditure Framework
Medium-Term Sector Strategies (summarized)
Governments fiscal policy direction
MDA Expenditure Envelopes
BOF 29 NOVEMBER 2006

10. ESTABLISH LINKAGES MEDIUM-TERM SECTOR STRATEGIES Agree MTSS with MDAs
This entails assisting MDAs to align their goals, objectives and strategic initiatives to:
National Economic Empowerment and Development Strategies (NEEDS)
Millennium Development Goals (MDGs)
Long-Term Sector Strategy
Other strategic policy direction of Federal Government
BOF 29 NOVEMBER 2006

11. ESTABLISH LINKAGES MEDIUM-TERM SECTOR STRATEGIES Assist MDAs to:
Understand how NEEDS, MDGs and other high-level policy goals of the Federal Government should impact their goals and objectives
Set medium-term goals and objectives that are properly aligned with NEEDS, MDGs, etc.
Identify key initiatives (programs and projects) that they need to embark upon to achieve their goals and objectives as aligned with NEEDS and the MDGs.
BOF 29 NOVEMBER 2006

12. ESTABLISH LINKAGES MEDIUM-TERM SECTOR STRATEGIES Assist MDAs to:
Cost each initiative and phase them over the medium-term bearing in mind the indicative expenditure envelope of the MDA for the same period set out in the Fiscal Strategy Paper.
Define outcomes and outputs to be delivered to Nigerians in clear measurable terms
Agree how performance will be monitored & reported to Nigerians
Document all these in a MTSS Document.
BOF 29 NOVEMBER 2006

13. ESTABLISH LINKAGES MEDIUM-TERM SECTOR STRATEGY
This was done using a four stage process, namely –
Preparatory
Strategy Sessions
Documentation
Review and “Defence”
BOF 29 NOVEMBER 2006

14. ESTABLISH LINKAGES MEDIUM-TERM SECTOR STRATEGIES
This was done working with –
Sector Staff led by Minister and/or Permanent Secretary
Civil Society
Representatives of the Organised Private Sector
Consultants
Sector Experts
Relevant Committees of National Assembly
“MTSS Team” - BOF/FMF, OSSAP MDG, NPC, BPMIU, Women Affairs Ministry
Development Partners (UNDP, World Bank, DFID)
BOF 29 NOVEMBER 2006

15. ESTABLISH LINKAGES MEDIUM-TERM SECTOR STRATEGIES This was done for –
Agriculture
Education
Health
Police
Power
Water Resources
Works
FCT
Transport
Youth Development
Science and Technology
Environment
Aviation
Internal Affairs
Foreign Affairs
Defence
Solid Minerals
Housing & Urban Development
Information
BOF 29 NOVEMBER 2006

16. ESTABLISH LINKAGES PREPARE ANNUAL BUDGET Issue Call Circular
Support MDAs to prepare their budget proposals
Receive budget submissions from MDAs
Review budget submissions to ensure that they are–
Within allotted expenditure envelopes
Consistent with the MTSS (for MDAs with MTSS)
In accordance with the Call Circular
Collate submissions and put in form suitable for submission to NASS
BOF 29 NOVEMBER 2006

17. VALUE FOR MONEY Better control of payroll and overheads
Nominal roll with detailed information on each employee (names, grade level/step, etc)
Detailed breakdown of overheads cost components and units costs
Automation of budget data capture and computation templates
Integrated Payroll System (present being procured)
BOF 29 NOVEMBER 2006

18. REPORTING, AUDITING, MONITORING & EVALUATION
Aggregate
Expenditure
Sector Envelopes
MTSS Initiatives
Chart of Accounts
BUDGET
Performance
Measures
EXPENDITURE
Mandate
Warrant/AIE
Evaluation
Monitoring
Audit
Revenue
Deficit
Reporting
Due Process
Detailed Payroll
and O/H
Cost Estimates
MTEF
FINANCIAL
MANAGEMENT
SYSTEM
ANNUAL

19. REPORTING, AUDITING MONITORING & EVALUATION
Publication of budget performance reports
OPEN initiative led by OSSAP MDGs
Engagement of Civil Society in budget monitoring and evaluation.
Timely monthly returns to OAGF by MDA
Monitoring and Evaluation fed back into planning process
BOF 29 NOVEMBER 2006

20. TRANSPARENCY WIDE PUBLICATION OF FISCAL AFFAIRS Publication of –
Capital Warrants
Recurrent Warrants
2007 Fiscal Strategy Paper
Guide to Understanding the Federal Budget
Medium-Term Sector Strategies
Annual Budgets
BOF 29 NOVEMBER 2006

21. IMPACT Sustainable spending
Alignment of government spending with NEEDS and MDGs
Greater budget discipline
More participatory and transparent process
Improved budget implementation
Value for money
BOF 29 NOVEMBER 2006