Saturday, 29 November 2014

Article: Fiscal Ineptitude



By Jaye Gaskia

'You save during expansion and spend during contraction. But when you look at Nigeria's history; we [that is the incompetent ruling class] spend during [economic] expansion [growth], and cut spending [drastically] during contraction [economic downturn/crisis]. That is [simply put] Fiscal ineptitude.'

The above statement is credited to Dr. Ayo Terriba [how many of us who schooled in the 80s still remember those economic text books written by Terriba?], who is CEO of Economic Associates.

Well, let us take a look at the economic actions of our current government in recent times. Ofcourse we should not forget the backdrop of the famous quote from a former military head of state in the early 70s, Rtd Gen Gowon, to the effect that 'the problem his regime had was how to spend money, not how to get the money' since the country was with petrol dollars!
 

That regime went on to embark on such an aggressive spending spree that those who succeeded it had to introduce austerity measures!

Anyway let us get back to the present: In the last 6 years, at no time ever was the benchmark for the annual budget with respect to sale price of crude ever above $80 per barrel [pb]. Equally at no time during that period until about July 2014 was the actual price of crude ever less than $100pb. The implication of these is that over those six years we ought to have made and put in the excess crude account [ECA] at least $20pb on each barrel of crude oil that we have sold cumulatively over the 6 year period. Economists and mathematicians among us can do the calculations, using an average daily crude oil sales of 2 million barrels [after discounting for all the fluctuations over the period].

Now this is where the story gets even more interesting. As at November 2013, long before the present oil price crisis; the balance in the ECA and External Reserves respectively was $10bn and $48bn. And in just 1ore the announcement of the Austerity measures, the ECA had been depleted to $4bn and the External reserves to $34bn respectively!

We need to put this in proper context. What this means is that rather than put in any funds to increase both the ECA and external reserves, government depleted the accounts. In reality therefore more than double $6bn [probably close to $15bn, given savings that ought to have been made] was withdrawn and spent from the ECA in 10 months, and without appropriation. Similarly, it also means that more than double $14bn [that is the $14bn plus accrued savings, making a rough total of more than $30bn] have been equally withdrawn and spent from the External Reserves, again without appropriation; and long before the crisis.
 

So just as was observed above by we were spending during expansion, when we out to be saving, and now during a contraction when we were actually supposed to be spending from the savings, we are now cutting spending because foolishly the ruling class have stolen all our savings and expected savings.

Add to this Greed Driven Incompetence the fact that over the same period, external debt grew from just above $4bn to just about $10bn now excluding the recently approved request to borrow additional $1bn to fight insurgency!

As part of proposed spending cuts, so-called fuel subsidy is being proposed to be cut by half in 2015.

I can recall vividly during the January Uprising of 2012, government had argued that landing cost of refined fuel was getting higher because of higher oil prices. The reason for this is simple. If crude oil prices is high or rising it will impact on the cost of fuel refined from the crude. So we ought also to expect that crude oil prices fall, this should reflect in lower price for refined products.

What is most significant for us to note is how our ruling elites in PDP as well as APC had collaborated to deplete our savings and colluded in the process that is now making us pay for their greed and impunity. Bear in mind that no money can be withdrawn from the ECA without the consent of governors, and that whatever is withdrawn is shared, even though no appropriation by the legislature is required. This is the basis of the greed that drives this impunity and oils the 'Stomach Infrastructures' of this treasury looting light fingered ruling class.

Our task is to organize and mobilise ourselves to challenge this Vagabonds In Power [VIPs] for power as a necessary step towards Taking Back Nigeria.

In the short term as they try to make us focus on irrelevancies during the election campaigns, it is our duty to ask them serious questions about their profligacy and the rapacious looting of our collective wealth. It is our duty to punish the culprits at the polls, while organizing and readying ourselves to challenge them for power.

It is Our Country, Damn it; Let us Reclaim it from the gluttonous hands of these 'Banditocrats'. Our Destiny Is In Our Hands! Take Back Nigeria Now! 

(JayeGaskia is National Coordinator of Protest To Power Movement & Co-convener of Say No Campaign)

No comments:

Post a Comment

Please restrict your comment to the subject matter.