Despite 68 percent revenue performance for the 2020 budget, President Muhammadu Buhari on Thursday, expressed concerns over government revenue generation, in the face of current serious economic challenges.
Speaking at the presentation of the 2021 Appropriation Bill to the National Assembly in Abuja, tagged “Budget of economic recovery and resilience” the President said Nigeria must accelerate its economic recovery process, adding that “Nigerian economy is currently facing serious challenges, with the macroeconomic environment being significantly disrupted by the Coronavirus Pandemic.”
The President also charged the National Assembly to pay attention to the revenue side as they will do to the expenditures side
This is just as the President said he has directed government agencies “to ensure that they obtain all necessary approvals before embarking on any fresh recruitment. Any breach of these directives will be severely sanctioned”
The President said as, in July 2020, the Federal Government’s actual revenue available for the budget was N2.10 trillion.
“This revenue performance was only 68 percent of our pro-rated target in the revised 2020 budget.
He, however, noted that oil revenue performed well above government target at N992.45 billion, while “non-oil tax revenues totaled N692.83 billion, which was 73 percent of the revised target.”
The federal government also revealed that Real Gross Domestic Product (‘GDP’) growth declined by 6.1 percent in the second quarter of 2020, ending the 3-year trend of positive, but modest, real GDP growth recorded since the second quarter of 2017.
To address the cost to revenue challenges, the President said he has directed Supervising Ministers to “ensure closer monitoring of the revenue-generating activities and expenditures of the Government Owned Enterprises, GOEs, under the 2021 budget”
President Buhari said a total of N5.37 trillion had been spent as against the pro-rated expenditure of N5.82 trillion, as of July 2020, this will bring the deficit to N3.27 trillion, or 66% of the revised budgeted deficit for the full year.
“ As of 15th September 2020, a total of about N1.2 trillion had been released for capital projects. Every Federal MDA has received at least 50 percent of its 2020 capital expenditure budget, in line with my earlier directives.
Under the amended 2020 Budget, Nigeria had proposed a benchmark oil price of 28 US Dollars per barrel; oil production of 1.80 million barrels per day; and an exchange rate of N360 to the US Dollar.
The aggregate projected revenue was N5.84 trillion was projected to fund N10.81 trillion in expenditure, making a deficit of N4.98 trillion, or 3.57 percent of GDP, which the government expects to finance mainly through borrowing.
In 2020, average daily oil production was 1.88 mbpd up to June, as against the revised estimate of 1.80 mbpd for the entire year. However, the market price of Bonny Light crude averaged 40.79 US Dollars per barrel, significantly higher than the revised benchmark price of 28 US Dollars.
To improve independent revenue performance, I have directed that the cost profiles of Government Owned Enterprises (‘GOEs’) should be scrutinized.
“Let me emphasise that revenue generation remains our major challenge. Nevertheless, the Government is determined to tackle the persisting problems with domestic resource mobilization, as there is a limit to deficit financing through borrowing.
“The time has come for us to maintain a healthy balance between meeting our growing expenditure commitments and our long-term public financial health”
The President also revealed that “Personnel cost is still our largest single item of expenditure”
“In the seven months to 31st July 2020, it accounted for 34 percent of total Federal Government spending and is projected at 33 percent of 2021 expenditure.
To check the incidence of payments to non-existent personnel and unauthorised allowances, only Federal staff that have been captured on the Integrated Personnel Payroll Information System (‘IPPIS’) platform will receive salaries.
On overhead costs, President Buhari said MDAs and Government Owned Enterprises are projected to rise to N625.50 billion in 2021, mainly due to the inclusion of the overheads of an additional 50 Government-Owned Enterprises.
