FG, states record N352b shortfall in revenue target as fiscal crisis persists
• Borrowing, debt-to-revenue ratio to worsen
The Federal Government and the state of the federation missed their respective revenue targets gain for the month of October, widening the 2019 budget deficits. At N894.09 billion, the estimated federally-collected revenue (gross) in October 2019, fell below both the monthly budget estimate of N1.246 trillion.
The shortfall represents 28.2 percent of the monthly budget estimate and 0.9 percent of the preceding month’s receipt, a development that has been attributed to shortfall in both oil and non-oil revenue. The development, which shows that the country’s fiscal challenges still remain at large, raised more worries as discordant tones were said to be trailing the new Finance bill currently at the National Assembly.
There were allegations that members of the finance committee of the House of Representatives were at loggerheads with their counterparts at the Senate for being left out of decisions, leading to boycott of hearings. An economist, Ucha Wagbo, said the unsteady revenue stream of the government and sustained dependence on oil income, after huge debts without sustainable projects, will only have one outcome, which is bad for the economy.
“The country will continue to borrow and the worsening debt service-to-revenue ratio will persist. Nigerian leaders are too relaxed for my liking, especially in development projects. Once they pay themselves, they are contented leaving the economy in shambles,” he said.
According to the Central Bank of Nigeria (CBN), in its October 2019 Economic Report, oil receipts, at N577.30 billion or 64.6 percent of total revenue, was below the monthly budget estimate of N798.83 billion by 27.7 percent. However, it exceeded the receipt of N467.58 billion in the preceding month by 23.5 percent, while the decrease in oil revenue has been associated with shut-ins and shut-downs at some terminals of the Nigerian National Petroleum Corporation, due to pipeline leakages and maintenance activities.
Specifically, at N316.91 billion, the estimated Federal Government retained revenue for the month of October 2019, was below the monthly budget estimate of N705.44 billion, which is 55.1 percent shortfall. A breakdown of the fiscal report showed that Federation Account pooled 88.4 percent of the total retained revenue, while Value Added Tax (VAT), Independent Revenue and Exchange Gain amounted to 4.2 percent, 7.3 percent, and 0.1 percent, respectively.
Similarly, at N316.79 billion or 35.4 percent of total revenue, non-oil receipt was below the monthly budget estimate of N447.24 billion and the preceding month’s earning of N434.52 billion by 29.2 percent and 27.1 percent, respectively.
The drop in collection, relative to the monthly budget estimate, was due to the decline in revenue from corporate tax, VAT, education tax and Federal Government Independent Revenue.Of the total, N697.5 billion was retained in the Federation Account. The sums of N89.16 billion, N23.11 billion, and N2.33 billion were transferred to the VAT Pool Account, Federal Government Independent revenue, and “Others”, respectively, leaving a net balance of N582.90 billion for distribution to the three (3) tiers of government.
The Federal Government received N279.98 billion, while the state and local governments received N142.01 billion and N109.49 billion, respectively. The balance of N51.42 billion was shared among the oil-producing states as 13 percent Derivation Fund. Also, from the N89.16 billion transferred to the VAT Pool Account, the Federal Government received N13.37 billion, while the state and local governments received N44.58 billion and N31.21 billion, respectively.
Additionally, N950 million was distributed in the month as Exchange Gain, with the federal, state and local governments receiving N440 million, N220 million and N170 million, respectively.Overall, total allocation to the three tiers of government in October 2019 amounted to N673.01 billion, which was below the preceding month’s budget estimate of N1.091 trillion and monthly allocation of N676.9 billion.
However, the Federal Government spent N695.89 billion in the period, although it was still below the monthly budget estimate of N865.31 billion by 19.6 percent.It was also below the N949.56 billion recorded in the preceding month by 26.7 percent.A further breakdown of the fiscal transactions showed that recurrent and capital expenditure constituted 57 percent and 37.3 percent of the total expenditure, respectively, while transfers gulped 5.7 percent.Of the recurrent expenditure, non-debt obligation was 76.8 percent, while debt service payments accounted for 23.2 percent of the total.
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