The proposal is contained in Fiscal Responsibility Act (Amendment) Bill, 2021 which passed second reading at plenary on Tuesday.
Sponsored by Sergius Ogun (PDP, Edo), the bill intends to amend the Principal Act to make provision for specific sanctions within the Act, for failure to comply with the provisions of the law.
The principal Act provides in 41(1) that the framework for debt management during the financial year shall be based on the following rules:
“(a) Government at all tiers shall only borrow for capital expenditure and human development, provided that, such borrowing shall be on concessional terms with low interest rate and with a reasonably long amortization period subject to the approval of the appropriate legislative body where necessary; and
“(b) Government shall ensure that the level of public debt as a proportion of national income is held at a sustainable level as prescribed by the National Assembly from time to time on the advice of the Minister.
“(2) Notwithstanding the provisions of subsection (1) of this section and subject to the approval of the National Assembly, the Federal Government may borrow from the capital market.
“(3) Non-compliance with the provisions of this section shall make the action taken an offence.”
Therefore, the new bill is proposing that the Principal Act be amended to make a provision that :
“Non-compliance with the provisions of this section shall make the action taken an impeachable offence and the offender shall be liable on conviction to a fine of N500,000,000 (five hundred million) or imprisonment for a term of three years or to both such fine and imprisonment”.
In a lead debate on the general principles of the bill, Ogun said the Fiscal Responsibility Act 2007 is a very important legal financial management framework but there are no specific sanctions or penalties within the Act for the offence created in subsection 3 of section 41 of the law.
“The Act provides for prudent management of the nation’s resources, ensure long-term macro-economic stability of the national economy, secure greater accountability and transparency in fiscal operations within the medium-term fiscal policy framework and promote fiscal discipline.
“Some of the issues raised in the Report include, low budget credibility, insufficient disclosure of public finances, lack of autonomy of auditor general, amongst others.
“Whereas section 41 of the Act provides the framework for debt management during every financial year and goes further to provide that non-compliance with the provisions of the section shall make any action taken to be an offence, the Act fails to specifically make provision for the sanctions of the said offence.
“Mr. Speaker and my dear colleagues, this bill when passed into law, would address the lacuna in the Act, obviate impunity and serve as a mechanism for making government officials accountable. I thus appeal to my colleagues to support the passage of this bill,” he prayed.