What the Fiscal Responsibility Act Requires

What the Fiscal Responsibility Act is

The Fiscal Responsibility Act is a federal law of Nigeria. It sets rules for how public institutions prepare budgets, report spending and manage public debt. The Act names the Minister of Finance, the Accountant-General of the Federation and the Auditor-General for the Federation as the officers who must carry out its provisions. Each state in Nigeria may also pass its own Fiscal Responsibility Law, which sets similar rules for state and local government institutions in that state.

How it works

The Act requires the federal government to prepare a Medium-Term Expenditure Framework. This document sets out the government's spending plans for the next three years. Each ministry, department and agency must prepare its annual budget in line with this three-year plan.

The Act requires each institution to submit its budget estimates to the National Assembly by a set date. After the National Assembly passes the budget, the institution must publish the approved budget within seven days. The institution must then report its actual spending against the budget every three months. These quarterly reports must be published and made available to the public.

The Act sets limits on how much public debt the government can take on. It requires that any new borrowing must be for capital projects and human development. The Act also requires that revenue from any sale of government assets must be paid into the Consolidated Revenue Fund and used only to fund the budget.

What it does not cover

The Fiscal Responsibility Act does not cover state and local government institutions unless the state has passed its own Fiscal Responsibility Law. A state that has not passed such a law is not bound by the federal Act for its state-level spending. The Act also does not set specific rules for how ministries should track spending within their own departments. It requires reporting, but leaves the internal tracking methods to each institution.

Where the records live

The budget documents required by the Act are held by the Budget Office of the Federation. The quarterly implementation reports are published by the Ministry of Finance. The Medium-Term Expenditure Framework is published on the website of the Budget Office. Each state that has a Fiscal Responsibility Law publishes its own budget documents and quarterly reports through its state Ministry of Finance.

What WATAG does with this

The WATAG Budget Monitoring programme trains participants to read the budget documents and quarterly reports the Act requires. Participants learn to check whether a budget follows the three-year plan set out in the Medium-Term Expenditure Framework. They practise reading quarterly implementation reports to see whether spending matches the approved budget.