The reality check has come in, the chickens have come home to roost and so it will be a defining year. With the unpleasant results arising out of the reality check, hard decisions are going to have to be made.
Reflecting the new (diminished) circumstances, in the past few weeks, the federating units, the ‘states’ have announced their budgets. Their collective statement of intent indicating the direction of their fiscal thrusts is revealing. Collectively they will spend N9.6 trillion compared to 2014’s N12 trillion. It is important to note a significant drop in spending on capital projects. Out of the total, N5.04 trillion will be spent on recurrent expenditure. In a country with broken down social and physical infrastructure, devoting N4.6 trillion to capital votes is truly alarming and indicative of the mindset of the political establishment.
This confirms that whoever wins the next elections at both federal and state levels will have to make some very painful re-arrangement of priorities. They should all leave no one in doubt that draconian measures will have to be taken. We are sadly back to boom and bust. In addition, some of the projections on which the federal budget was based have already been blown out of water. For example, key assumptions such as the oil benchmark price of $65 per barrel; crude oil production of 2.272 mbpd; exchange rate of N165 to $1 and a GDP growth rate of 5.5per cent already look ludicrously preposterous.
What is to be done now is to turn an adversity into an opportunity for a lasting positive paradigm shift. Fiscal discipline is needed now to re-direct capital from consumption into production. This is the only way to diversify gradually into a knowledge-based economy. There must be draconian cuts in the non-personnel cost of the machinery of government. The ludicrous myriad of political jobbers for a start must look for more productive enterprises to engage in apart from government patronage.
Furthermore, internal resilience through the building up of internally generated revenue must now be the operating mantra. The additional advantage here is that in the process of diversifying away from a mono-crop economy we will also gain by evolving into a democracy sustained by millions of tax-payers which is after all the truest form of democracy.
As a nation, we have come to the end of an illusion. Everyone must now brace up to the hard reality as well as the painful readjustment that must of necessity follow.
