FG failed to realise N1.13tn from oil asset sale, others
The Federal Government could not effectively realise some of the one-off items listed for implementation of the 2019 budget, investigations have revealed.
The 2019 budget which was signed by the President, Major General Muhammadu Buhari (retd.) had capital expenditure of N2.09tn, recurrent expenditure of N4.05tn, statutory transfers of N502bn, and special intervention of N500bn. The budget also had debt service of N2.25tn.
Out of this figure, N1.7tn was approved for domestic debts, while the sum of N433bn was provided for foreign debts. Similarly, the sum of N110bn was approved for sinking fund to retire maturing debt obligations.
To fund the budget, the Federal Government had planned to generate the sum of N7tn as revenue.
This was made up of N3.69tn from oil sources, while N3.31tn was projected as revenue from non-oil sources. Details of the fiscal operations of the Federal Government as contained in the 2019 consolidated financial statements of the government showed that the projected N1.13tn revenue from these items could be realised.
A breakdown of the items that would fetch the N1.13tn were proceeds from oil assets ownership and restructuring N710bn; domestic recoveries, assets and fines N203.38bn; grants and donor funding N209.91bn and special levies N12.9bn.
In the financial statement which was prepared by the OAGF, the items recorded a negative variance of 100 per cent, showing that they were never realised as part of revenue for the 2019 fiscal period. The inability of the Federal Government to raise the much needed revenue to finance its operation resulted into a deficit of N1.4tn in the first quarter of 2019.
In the second, third and fourth quarter, the government deficits were put at N1.41tn, N675.21bn and N1.13tn respectively. A member of the Monetary Policy Committee of the Central Bank of Nigeria, Obadan Idiah, had described the fiscal deficit of the Federal Government as worrisome.
He said this in his personal statement at the Monetary Policy Committee meeting held on November 25 and 26, 2019 in Abuja. He said the deficit being incurred by the government in its fiscal operations had serious implications for debt accumulation and inflation.
Idiah said while the current efforts of the government to step up domestic revenue mobilisation through increasing the Value Added Tax from five per cent to 7.5 per cent, were in the right direction, it was crucial to restructure recurrent expenditure with a view to achieving some cost savings.
“Growing fiscal deficits not only lead to debt accumulation and crowding out of the private sector in the financial markets, it also undermine monetary policy effectiveness,” he added.
The Lead Director, Centre for Social Justice, Eze Onyekpere said the government must device creative ways of realising revenue.
He said, “Generally, our revenue projections have severally missed the mark over the years. The projections and forecasts suffer from lack of realism. In 2016, revenue projections fell short by 23 per cent; in 2017, it fell short by 47.73 per cent and in 2018 by 45 per cent.
“This indicates that overall, a good part of our revenue projections has not been based on empirical evidence. Furthermore, if projected revenue in 2018 was N7.1tn and we missed the mark by 45 per cent and have also missed the mark by 30 per cent in the half year of 2019, further increase in projected revenue to N8.15tn in 2020 seems to be hanging in the air.”
He said the revenue projections for 2020 should have been greatly influenced by the trend and actuals of 2018 and 2019 except there had been a dramatic change in economic circumstances warranting the new projection.