Commission Wants Nigerian States to Enact Fiscal Responsibility Laws, To Foster Financial Discipline Commission Wants Nigerian States to Enact Fiscal Responsibility Laws, To Foster Financial Discipline
From: Diana Okon-Effiong, Calabar States in Nigeria’s federating unit have been told to establish their respective FIs cal Responsibility commissions and enact laws that... Commission Wants Nigerian States to Enact Fiscal Responsibility Laws, To Foster Financial Discipline
From: Diana Okon-Effiong, Calabar

Mordi

Mordi

States in Nigeria’s federating unit have been told to establish their respective FIs cal Responsibility commissions and enact laws that foster financial discipline.

 The call was made Tuesday by Dr Sylvanus Mordi, Commissioner Policy and Standards in the Fiscal Responsibility Commission (FRC) in an interview with in Calabar.
Mordi was in Calabar to represent the FRC Chairman, Alhaji Aliyu Yelwa, at a two-day retreat on “Awareness of the provisions of the Fiscal Responsibility Act (FRA), 2007’’.
He also  said that there was need for what he called co-operative federalism; where the centre and sub-national government are partners in development rather than states behaving as if there had no need for fiscal responsibility. According to him, Nigeria had witnessed reasonable achievements in macroeconomic stability of the national economy after the inauguration of the Fiscal Responsibility Act 2007.
According to him the operating surplus from corporations into the Federal Government’s Consolidated Revenue Fund rose from zero level in 2008 to N86.77 billion in 2012 after promptings from the FRC.
“After four and a half years of enforcement and monitoring of the FRA, 2007 at the federal government level, there has been reasonable achievements in macroeconomic stability of the national economy, prudent management of the nation’s resources, fiscal discipline and transparency.
“Before the Fiscal Responsibility Commission came into being, the corporations were not obliged to pay operating surplus into the federal government consolidated revenue fund. From inception to 2012 the FRC nudged the corporations to increase their contributions from nothing in 2008 to.N17.09 billion in 2009 and progressively thereafter to N86.77 billion in 2012,’’ he said.
According to him the budget process has been substantially formalised and legalised after the establishment of the FRC.
Mordi said that the Calabar retreat discussed the FRA, 2007and possible amendments to the act as well as the medium term expenditure framework to improve the national budget.
“We discussed two aspects. The first one was an overview of the Fiscal Responsibility Act (FRA), 2007 – a law enacted on fiscal responsibility in Nigeria. And the second one is the medium term expenditure framework; which is a study carried out before you make a budget for the nation. It is also a feasibility to see what kind of budget, what size, what revenue is coming in; what expenditure is coming in; what liabilities are contingent; how do we tackle them.
“Our revenue projections, are they realistic; our basic assumptions, are they realistic, will they work, will they lead us; did you take into consideration international economic outlook , our oil market, international market. Did we look at the past performances so that when we make the budget it will be realistic and  we will be able to achieve at least 90 per cent of it?,’’ he said.
Mordi said deliberations at the retreat also cntred on the amendment of existing fiscal responsibility Act: “ But we are going piece meal and in the overall aspect, found a lacuna in the Act. For example, sanctions.
The law provides for offences but does not provide matching punishments. It empowers the Fiscal Responsibility Commission to detect contraventions; investigate it but forward its report to the Attorney-General of the Federation for possible prosecution.
“The FRC feels that this aspect of the law is not strong enough. Punishment for offences should be defined. The Nigerian constitution says that nobody should be punished for any offence or given any punishment that is not written, defined. So we are saying it should be amended and we also saying that the FRC should be given the powers to go to court and enforce the law. The states that have not adopted fiscal responsibility should do so in the interest of the economy. Nigerian economy is both fiscal federalism and political federalism.
“Fiscal federalism has to do with financial arrangement whereby the central government collects about 80 per cent of the money and the money is shared between the states and the federal government. The states and local governments take 48 per cent of the money and then federal government takes about 52 per cent of the money. We feel hat in fiscal federalism we should not be too politically minded because if there is no economy there will be no politics. Let the economy be strong and then you can play politics. Take the case of America for instance,’’ he said.
He also explained that there was, sadly, no legislation in Nigeria that compelled the states to embrace fiscal responsibility.
“We cannot say punish the states for not embracing fiscal responsibility. This is because the constitution allows them to carry out proper economic management of their states. So we should go by persuasion, agreement and understanding. The states should also understand that whatever happens to one state will affect the rest.
“And if you say that only the federal government should be applying fiscal responsibility, you are wrong because federal government controls only 50 per cent of the resources and the other states will behalf as they like. So we should behalf like one entity. We want co-operative federalism; where the centre and sub-national government are partners in development,” he said.

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