• Thursday, March 28, 2024
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In six charts, Nigeria’s fiscal performance in 2020

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The federal government budget for 2021 was recently presented with a total of N13.59 trillion, 31 percent higher than the revised 2020 budget of N9.97 trillion.

The year 2020 came with some surprises such as the Covid-19 pandemic and the global oil price crash but Nigeria’s fiscal performance has maintained its reputation of an unsatisfactory performance.

These six charts show Nigeria’s fiscal performance in 2020.

Revenue

Nigeria’s poor revenue generation has continued to widen its budget deficit every year.

Of the projected N5.36 trillion revenue expected in 2020, only N3.47 trillion was realized. This has also been the trend over the years.

The revenue deficit stood at N2.42 trillion, N3.29 trillion and N2.87 trillion in 2017, 2018 and 2019 respectively.

The appropriation bill for 2021 shows an expected revenue of N7.99 trillion and aggregate estimated expenditure of N13.59 trillion. This implies an expected budget deficit of N5.60 trillion.

Oil revenue

 

The Federal government’s share of oil revenue was N1.46 trillion in 2020, 43 percent higher than the revised budgeted revenue of N1.01 trillion.

In 2020, the oil price bench mark was initially set at $57/b but was revised to $28/b when the pandemic sent oil prices crashing. The actual benchmark exceeded the revised figure at $43/b which is responsible for the surge in oil revenue above the projected.

Oil projection which initially stood at 2.18mbpd was revised to 1.18mbpd as Nigeria had to comply with OPEC cut. The actuals fell short at an average 1.79mbpd.

 

The oil revenue performance for 2020 is low compared to the previous years especially in 2018 when N1.96 trillion was realized from oil.

 

Non-oil revenue

Non-oil revenue stood at N1.14 trillion in 2020, this is 29 percent lower than the revised target.

 

For the 2020 fiscal year, the federal government has projected its uptake of non-oil revenue to be in the region ofN1.81trillion but was revised to N1.62 trillion.

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From the data, history shows that actual non-oil revenues by the Federal government over the years has usually failed to meet its forecast, falling short of its expected revenue projections and 2020 was not any different.

For instance, the federal government non-oil revenue fell short of its expected projection by 32 percent and 31 percent in 2018 and 2019 respectively. The trend was halted in 2019 when the actual exceeded the budget but the trend resumed again in 2020.

 

Debt service

Nigeria has maintained a reputation of using a huge part of its revenue for serving debt.

Of the expenditure, N3.10 trillion was for

debt service, 5 percent higher than the revised target of N2.95 trillion.

Debt service to revenue has also been on the increase. It has grown from 32.7 percent in 2017, 60 percent in 2018 and 59 percent in 2020.

Capital expenditure

The federal government spent N1.22 trillion on capital expenditure in 2020, falling short of the revised target of N1.96 trillion. Out of this, up to N118.37 billion was released for COVID-19 capital expenditure

For a developing country like Nigeria, a lot is to be spent on capital projects to improve the citizens’ lives but looking at the trend of capital expenditure actuals compared with debt servicing actuals shows that the FG is spending way more on debt servicing than on capital expenditure.

The highest-spending within this period was witnessed in 2018 when about 31 percent of the total budget was allocated to capital expenditure and N1.16 trillion was spent, a record high.

Nigeria’s investment in capital projects will not only boost its economic growth but will drive job creation and also provide essential services to citizens.

Recurrent Expenditure

The federal government spent N7.19 trillion on recurrent expenditure in 2020, slightly below the N7.58 trillion which was the revised target.

Over the year, recurrent expenditure has continued to rise steadily. Actual recurrent expenditure grew from N5.3 trillion to N6.7 trillion in 2019 and N7.19 trillion in 2020.