When appropriation is mistaken for expenditure

By Tanimu Yakubu

The constitutional error

Senator Mohammed Tahir Monguno has argued that the Executive’s failure to spend the budget as appropriated amounts to a breach of law sufficiently grave to justify impeachment.

The concern is understandable. Citizens expect budgets to produce roads, hospitals, schools, security and other public services. Whenever appropriated funds appear not to translate into visible public benefits, suspicion naturally follows.

In every democracy, Parliament is entitled to ask why money voted by the representatives of the people has not produced the results that those representatives intended.

The concern rests on an incorrect assumption. The argument proceeds as though an Appropriation Act creates not merely the authority to spend but a legal obligation to spend every sum appropriated. Once that assumption is accepted, every departure from complete implementation appears to be evidence of executive disobedience. The Constitution, however, does not establish such a system. It never has.

An appropriation is one stage in the management of public finance.

     What an appropriation really is

Much of the present controversy arises because the word appropriation has gradually acquired a meaning that the Constitution does not give it. In ordinary conversation, people often speak as though Parliament, by appropriating money, has already caused that money to be spent. The law recognises no such equivalence. An appropriation is neither expenditure nor payment. It is the legal authority to incur expenditure if, and only if, every other constitutional and statutory condition governing the use of public funds has also been satisfied.

This allocation of responsibilities is deliberate and is not peculiar to Nigeria. It is one of the oldest principles of public finance. Legislatures determine the purposes for which public money may lawfully be used. They do not administer the Treasury, negotiate contracts, verify claims or release cash. Those responsibilities belong to other institutions established for precisely that purpose. The arrangement is deliberate: it protects both the public purse and the constitutional balance among the institutions of government.

It does not answer the equally important questions that follow. Until those questions are answered, the authority created by appropriation remains only that – authority. It does not become expenditure merely because Parliament has spoken.

To argue otherwise is to suggest that the Executive performs nothing more than a clerical function after the passage of the budget. Yet the Constitution assigns it a far more demanding responsibility. It must reconcile legislative intention with fiscal reality. It must decide not whether Parliament acted lawfully in making an appropriation, but whether every condition required for lawful expenditure has been fulfilled.

     Why the constitution separates the power to appropriate from the power to spend

The answer lies in the nature of public power itself. Every constitutional system proceeds upon the assumption that public money is most secure when no single institution possesses both the authority to approve expenditure and the power to execute it. The Legislature determines what may lawfully be financed. The Executive determines whether the legal and administrative conditions for expenditure have been fulfilled. The Treasury manages the availability of cash. Procurement authorities safeguard the integrity of contracting. Auditors examine whether public funds were ultimately applied in accordance with law. None of these institutions duplicates the work of another. Each performs a separate constitutional duty, and together they form a continuous chain of accountability extending from appropriation to audit.

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This arrangement does not exist merely for administrative convenience. It reflects a principle that has guided durable systems of government for centuries. In the Muqaddimah, Ibn Khaldun observed that the strength of a state depends not merely upon the authority it possesses but upon the institutions through which that authority is exercised. Governments decline when they confuse power with capacity, or when they assume that a command is sufficient to produce its own execution. Enduring states recognise that authority must always be supported by organisation, discipline, competent administration and the resources necessary to sustain public obligations.

 The budget is not one thing but four

Public discussion often proceeds as though a national budget were a single account capable of being measured by a single percentage of implementation. It is not. A national budget is a collection of distinct legal obligations, each serving a different constitutional purpose, each governed by different rules of execution and each responding differently to changes in revenue and liquidity. To speak of the budget as though it were one homogeneous programme is to overlook the very structure upon which public finance is organised.

Every Appropriation Act consists, in substance, of four principal components: personnel expenditure, debt service, overhead expenditure and capital expenditure. Although they appear together within the same statute, they are not of equal legal character. They neither arise from the same obligations nor compete on equal terms for public resources. Their execution follows different legal imperatives because they exist to satisfy different public responsibilities.

Personnel expenditure represents the continuing obligation of government to those lawfully employed in its service. Salaries, pensions and other approved emoluments are not discretionary payments to be made when circumstances permit. They sustain the machinery through which government performs its constitutional functions and preserve rights already accrued under law. A government that persistently fails to meet those obligations does not merely inconvenience its employees; it impairs the capacity of the state itself.

Debt service occupies a comparable priority. It is not simply another item within the budget. It is the fulfilment of obligations previously undertaken in the name of the Republic. Every sovereign depends, to some degree, upon the confidence of those who lend to it. That confidence rests not upon political assurances but upon the certainty that obligations lawfully incurred will be honoured when they mature. Where liquidity becomes constrained, debt service assumes a priority that extends beyond the immediate payment itself. Failure to discharge those obligations punctually weakens sovereign creditworthiness, raises the premium demanded by future lenders, increases the cost of borrowing across the economy and ultimately diminishes the fiscal capacity available for development. The obligation therefore protects not only today’s creditors but tomorrow’s taxpayers.

     When implementation exists before payment

The misunderstanding becomes most apparent when attention turns to capital projects. Public discussion frequently assumes that implementation begins when money leaves the Treasury and ends when payment has been completed. The practice of project management recognises a very different sequence. Payment is not the beginning of implementation. More often, it is one of its concluding stages.

A public project follows a disciplined progression long before the first naira is disbursed to a contractor. The need for the project must first be identified. Technical studies are undertaken, engineering designs prepared and costs estimated. Budgetary provision is then made, procurement commenced and a contractor selected in accordance with law. Only after these preliminary stages have been completed can physical execution begin. Even then, expenditure does not immediately follow. Work must first be performed, inspected, measured and certified before the Treasury becomes liable to make payment.

This is well understood wherever projects are professionally managed. Physical progress and financial progress are related, but they are not identical. A project may advance substantially while cash payments lag behind. Equally, money may be released without corresponding physical progress, in which case expenditure has occurred but implementation has failed. The prudent observer therefore examines both dimensions before reaching any conclusion about performance.

    Revenue, cash and fiscal reality

Every budget begins as an estimate. It is not a prediction of certainty but an informed judgement about the resources likely to become available during the financial year. Parliament appropriates upon the basis of those estimates because government cannot postpone its plans until every naira has already been collected. Yet the Constitution has never assumed that estimates and reality will always coincide. Between the expectations contained in the budget and the obligations ultimately discharged by the Treasury stands the uncertain course of the economy itself.

Revenue may exceed expectation, in which case government acquires greater fiscal room than it anticipated when the budget was enacted. Revenue may equally fall below expectation because oil prices decline, production falls, independent revenues underperform, economic activity weakens or external financing becomes more difficult to secure. None of these developments alters the validity of the Appropriation Act. What changes is the government’s capacity to implement every element of that Act within the period originally contemplated.

•Yakubu, is the Director General,

Budget Office