It may be another tight year for Nigerians in 2021 as the Federal Government has admitted that it had no clear-cut plans of pushing back inflation to a single digit.
Inflation increased from 14.23 percent in October to 14.89 percent in November 2020, an increase of 0.66 percent.
Amidst the biting hunger and poverty in the land, the National Bureau of Statistics (NBS) last year said food inflation rose in October to 17.38 percent, compared to 16.66 percent in September 2020.
Speaking during a virtual presentation of the 2021 approved budget on Tuesday, Zainab Ahmed, the Minister of Finance, Budget and National Planning, said inflation was expected to remain above single digit in 2021, given the structural issues impacting cost of doing business in the country, including high food distribution cost.
Ahmed, however, indicated that the nominal Gross Domestic Product (GDP) was expected to rise from N139,517.5 billion in 2020 to N142,694.4 billion in 2021, and then up to N151,464.4 billion in 2023.
The minister explained that consumption expenditure was projected to rise from N117.91 trillion in 2020 to N118.89 trillion in 2021, thus reflecting gradual economic recovery.
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She pointed out that the aggregate revenue to fund the 2021 budget was projected at N7.99 trillion, which is 36.9 percent higher than the 2020 projection of N5.84 trillion, adding that in aggregate, 30 percent of projected revenues was to come from oil-related sources while 70 percent was expected to come from non-oil sources.
While noting that the size of the budget had been constrained by its relatively low revenues, Ahmed emphasized that to promote fiscal transparency, accountability and comprehensiveness, the budgets of 60 Government Owned Enterprises (GOEs) had been integrated in the Federal Government’s 2021 budget proposal.
The minister clarified that the provision to retire maturing bonds to local contractors/suppliers of N200 billion was 1.68 percent of total expenditure, adding that the gesture reflects the government’s commitment to offset accumulated arrears of contractual obligations dating back over 10 years.
On the top 10 recurrent allocations in the 2021 budget, Ahmed said allocations underscore their commitment to increase investment in national security and human capital development.
She revealed that some of the key reforms introduced in the Finance Act 2020 include compensation for loss of office up to N10 million was expired from Capital Gains Tax; exemption of all low income earners of minimum wage or less from Personal Income Tax; exemption of all micro and small companies N25 million or less as annual turnover from Tertiary Education Tax and for companies operating in the Free Trade Zone, exemption from taxes is subject to compliance with tax filing and returns obligation to the FIRS under section 55 (1) of the Companies and Income Tax Act.
Also speaking on the 2020 budget parameters performance, the minister disclosed that the Federal Government’s retained revenue was N3.94 trillion, which amounts to 73 percent of its target.
She noted that the Federal Government’s share of oil revenues was N1.52 trillion while non-oil tax revenues totalled N1.28 trillion.
She further stated that Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N673.22 billion and N192.66 billion, representing 82 percent and 68 percent, respectively, of the pro rata revised targets for the period.
