Nigeria already lost over N1trn revenue target

The Federal Government realised just N862.959 billion revenue between January and June 2016, losing about N1.06491 trillion targeted for the period, as soft oil prices, output shortages and a slow down in economic activity weighed significantly on earnings.

The loss represents 55.2 percent of the projected N3.87 trillion total revenues for the year and raises concerns on government’s ability to implement the record N6.06 trillion, with which it intends to spend itself out of recession.

The  country has however done up to N600 billion in borrowing, to augment the revenue shortfall, indicating about 33 percent of the N1.818 billion approved borrowing for the year, Udoma Udo Udoma, minister for Budget and National, Planning said on Monday.

At a stakeholders consultative forum with Civil Society Organisations  (CSOs) and private sector operators, on the 2017-2019 Medium Term Expenditure Framework (MTEF) in Abuja, the minister said this reflects low revenue out turns caused by both global and domestic challenges.

Udoma affirmed that the decline in oil price since mid 2014, as well as the recent production shocks, are increasing domestic and external vulnerabilities.

Nigeria’s GDP growth rate for first the quarter of 2016 recorded negative 0.36 percent, and there are fears the economy had gone into recession since the second quarter of the year.

Oil revenues fell significantly in the second quarter, compared to the first, due to increased oil vandalism and production shut-ins.

Non-oil revenues also declined against budget forecast on account of  the slow-down in economic activity, and the acute shortage of foreign exchange.

The budget and planning minister confirmed that out of N1.0436 trillion revenue targeted to be realised between January and June, just about N646.340 billion came in, leaving a 38 percent or N397.28billion shortfall.

N52.57 billion was generated as Value Added Tax (VAT) out of the N99.12 billion projected for the period, leaving 47 percent of N46.550 billion shortfall.

Giving a further breakdown, the minister disclosed that projected independent revenue for the period was N752.94 billion but only N106.620 billion was realised, indicating a huge N646.320 billion shortfall.

FGN’s balances in special levies accounts was projected at N7.189 billion within the first six months, but nothing was realised, as well as the N25 billion projected as FGN’s unspent balance of previous fiscal year.

The Nigerian National Petroleum Corporation (NNPC) made some N34.970 billion refund, while N14.259 billion was recorded as receipts from the NLNG, the minister also noted, as he put the exchange rate differentials at N8.2 billion.

Udoma told the stakeholders that out of the N6.06 trillion budget, N2.1232 trillion, representing 35 percent has been spent, mostly recurrent spending, which has been largely covered as at June. He put total capital expenditure as at July 18 at N253 billion and cash backed to implementing Ministries, Departments and Agencies (MDAs). But total aggregate Capex, inclusive Capex share in statutory transfers totaled N331.58 billion.

He said N598.63 billion or 44 percent has been spent for debt service, while statutory transfer has gulped about N175.68 billion, including a prorated Capex of N78.58 billion.

Udoma said “Activities in the economy have been adversely  affected by oil production in the Niger Delta region, low oil revenues affecting government investment, FOREX restrictions which affected trade and investments in the first half of the year, as well as non-oil revenues.

“Low power generation caused by feedstock supply disruptions, fuel supply problems in Q1, now resolved, as well as insurgency in parts of the country.”

But he assured that as a response, government had committed to fiscal reforms which center on fiscal discipline and expanding the non oil revenue base.

Udoma also said that the sub-national governments have been encouraged to focus on their potentials for increased independent revenues.

Onyinye Nwachukwu