In the beginning, God commanded, ‘’Let there be light’’ — and there was light. Mimicking God in her 2014 budget presentation, Ngozi Okonjo-Iweala commanded, ‘’Let the 2014 budget create jobs.’’
But unlike God’s command, lacking the supreme power, Okonjo-Iweala’s command on job creation is a false command. That hers is an empty command is based on the fact that it lacks proven facts and figures.
Maybe coming this far of playing God is because her pronouncements that government created 1.6 million jobs in 2013 were never challenged in a way that compelled her to prove that with facts, she now decided to go as far as falsely including high jobs in her 2014 budget presentation. In other words, having gotten away with her baseless 1.6 million jobs created by government in 2013, she believes that nothing can stop her from announcing that the 2014 budget is a pro-job budget.
Unfortunately, Okonjo-Iweala should tell Nigeria what is in the 2014 budget that makes it a pro-job budget. I am sure she will have some difficulties getting away with that, especially since the House Committee on Finance has since handed her 50 question bothering on the state of the economy, including providing facts and figures to back up her so-called high economic growth, which rather than destroying old jobs is creating new ones.
Unless she is forced to full explain, we should be ready to hear by November this year that government has created over 3.2 million jobs in 2014. One of her reasons to inevitably say that is not only because having gotten away with announcing that government created 1.6 million jobs she now needs to double the number. It is because entering elections in 2015 government needs some fabricated economic growth figures to ensure that voters line up to reelect the government for another term.
Or how else, will those in government, like any democratic government in the world that needs people’s vote, justify wining the people’s mandate for another term in office than make unsupported claims about millions of job created is an important electioneering campaigns tool to sway uninformed electorate?
To see that facts in the 2014 budget proposal cannot support her claiming that the budget is a pro-job budget, we should now take a close look at the items in the 2014 budget estimate. Doing so will reveal to Nigerians that 2014, having more pro-austerity items in capital spending than the 2013 budget, shouldn’t be less anti-investment, anti-growth, and as a result, anti-jobs than previous year.
What makes the facts to not lie — starting with our understanding that the capital items in 2014 — there is nothing in 2014 budget to show such eagerness on the part of government to promote stimulus policies which in line with Keynesian expansionary monetary and fiscal policies are growth and job oriented.
If 2013 budget’s N1.7tn capital spending was far from being a pro-job budget, what magic will make 2014 budget, which setting aside N1.178tn as capital spending, with N608 billion less than 2013 to not be called the most anti-growth and anti-jobs since the return of democracy in 1999? Or isn’t there a direct correlation between job creation and capital spending?
Put differently, if the 2013 with more capital spending was rightly called a budget of consolidation, which is an austerity budget, how on earth should a budget that is more anti-investment and anti-growth be called a pro-job budget? Can it be called pro-jobs, a budget that is projected to gulp as high as 73.78 percent in recurrent — that is, a budget for big government than the previous year?
This brings us to honestly pose this real world question and in doing so let for a minute ignore economics. If in real world, a young family just finding itself in the need to train young children in school, to buy the first family car (possibly two), to build and furnish its family house, etc. shouldn’t that young family be spending more money that it takes in, especially doing so in recognition of the fact that meeting these needs are decision that are made for the economic stability of the family and for its great future?
If that is the right thing to do, what is wrong with developing countries like ours in urgent need to expand and modernize their critical physical and social infrastructure — with the goal of joining the competitive economies of the world — not spend beyond their present purses? In other words, engaging in deficit spending than the money they bring in, if doing so will address infrastructure gap between them and developed countries, should that be called to be spending above their means as IMF seems to make managers of developing economies and their people believe?
For instance, if in 2012, the fiscal deficits in OECD countries were as large as 8.5 percent of GDP for countries like US and 8.1 percent of GDP for Ireland; and as projected in 2014 for OECD countries like the UK to incur 6 percent deficit, Spain 5.9 percent, and Greece 4.6 percent to that they can return to growth and job creation; and if in the way most fast developing countries like Brazil and China have maintained since 2012 and projected to remain at about 2 percent of GDP; or India in 2012 having as large as 8.4 percent budget shortfalls, which and projected not to be below 7.6 percent in 2014; South Africa with 5.0 percent in 2012 and 4.7 percent in 2013; Ghana with as high as 6.7 percent deficit in 2012 which continued growing; why on earth are the managers of our economy forcing own fiscal deficits to hover between 1.85 percent in 2013 and 1.9 percent in 2014?
Yes, the finance minister could claim that the low deficit spending was imposed on the economy by the Fiscal Responsibility Act of 2007, with Section 12(1) setting 3.0 percent as the spending limits. As true as it sounds, shouldn’t a pro-stimulus finance minister persuade lawmakers to amend Section 12(1) by increasing the spending limits from 3.0 percent to as high as 6.0 percent?
If as most economists — with the exception of neoliberal economists — agree that governments should run large deficits if they want to grow their economies out of recession and if they want to create jobs, which means they should peruse a Keynesian pro-growth stimulus economic model; and should only pursue low deficits and possibly balance budgets, if and only if the economy is overheated, why is it that managers of our economy insist on the country following the anti-stimulus neoliberal road, especially given how ours is in urgent need of the Keynesian push?
In other words, how come, in promoting stimulus package most developed and fast developing countries since the financial meltdown in 2008 have continued with budget deficits to the extent that in such a short term not only they have been able to stay out of potential economic crisis, including possible great recession, but also have begun to witness real growth with jobs?
Since low deficits in budget spending are historically austerity in nature, shouldn’t a close look at the 2014 budget proposal also tell how consistent this pro-austerity can’t be at the same time pro-investment, pro-growth, or pro-jobs?
Taking a close look at national debts of the world’s 20 largest economies, shows that most as pro-growth governments, they have consistently borrowed to invest in their productive sectors of the economy. That is why US national debt in 2013 was about 106 percent, Brazil with 66 percent, China having 24 percent, India with 68 percent, and South Africa with 41 percent. Here, we are talking about countries with already first class infrastructure and industrially on top of competition.
Whereas in our own case, with unheard-off as high as about $300 billion infrastructure deficit, which keeps us highly uncompetitive, and with Nigeria having one of the world’s worst infrastructure that has, we are sticking to and celebrating having one of the world’s lowest national debts, which the minister of information recently celebrated at a world press conference to be as low as 19 percent. Without borrowing to invest in closing such a huge gap, how else should we be able to lower the current high cost of business that has continued to strangulate local businesses, while keeping foreign real sector investor continuously out?
Given that externally borrowing is far cheaper without longer life-span, and as a result hardly crowds out real sector firm from domestic money market, shouldn’t a pro-investment, pro-growth, and pro-jobs government be borrowing more externally than domestically as we currently do with N712 billion to be spent in 2014 in servicing debt that is over 90 percent domestic borrowed at as high as 17 percent, whereas had our debt policy been geared toward external borrowing based on competitive international rates like the London Interbank Offer Rates or the US Treasury Bonds rates, which should have drastically reduced the current cost of servicing to as low as N200 billion?
What about the current waiver policy gulping as high as N600 billion, which rampantly granted political cronies in 2013, has continued to distort the level-playing field in such way to undermine the very competitive environment which is needed in order to grow the country’s real sector economy and create jobs? Where are government’s efforts in 2014 to stop the waiver policy?
What about taking steps like amending Section 22 (1) of the Fiscal Responsibility Act, which, allowing revenue generating agencies of government to only pay into the Consolidated Account as low as 20 percent of their operational surplus, has equally allowed them to drive their operating surplus to close to zero so that the managers of these agencies divert huge revenues of government to private purse? Should such tax leakage be allowed to continue by a finance minister that is pro-growth and pro-jobs?
In conclusion, why should the finance minister loudly announce that the 2014 budget is a budget for job creation, when she has not done anything to either exit the World Trade Organization or to impose high tariff walls, enough force foreign dumpers to either relocate their factories to Nigeria or lose such huge market of 170 million consumers?
Source:
Punch
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