…records N1.9tn revenue shortfall in nine months
The Federal Government hopes to raise a
total of N565bn from recovered loot and fines to be paid by MTN Nigeria
to fund the 2017 budget.
The Minister of Budget and National
Planning, Udo Udoma, explained on Monday in Abuja during the public
presentation of the 2017 budget breakdown that the disruptions to oil
production and falling crude prices had made it impossible for the
government to meet majority of its revenue projections.
The event was attended by the ministers
of Health, Prof Isaac Adewole; Finance, Mrs. Kemi Adeosun; Agriculture,
Chief Audu Ogbeh; Information and Culture, Lai Mohammed; and Petroleum
Resources, Ibe Kachikwu, among others.
Providing useful insights into how the
looted funds would be recovered and used, the Director-General, Budget
Office of the Federation, Mr. Ben Akabueze, said that N288.6bn out of
the N565bn would come from recovered looted funds.
He said, “With respect to the looted
funds for the revenue profile in the 2017 budget, it is a total of
N288.6bn. This includes N97.6bn, which is the naira equivalent of $320m
expected from the Swiss (government), which is part of what was
recovered from the Abacha loot.
“It also includes N72bn that has already
been received in cash from cases of recoveries and the balance of N90bn
is from other expected recoveries, which are at an advanced stage and
we feel comfortable and confident that they will come through in 2017
and have to be reflected in the budget.”
The Nigerian Communications Commission
had in October 2015 fined MTN N1.04tn for selling over five million
unregistered SIM cards.
The fine was later reduced to N330bn,
out of which MTN has paid N50bn to the government. The balance of N280bn
will be paid in six tranches over a period of three years.
The persistent attacks on oil
installations by militants in the Niger Delta and the harsh operating
climate resulting in low tax receipts from companies, according to
Udoma, dealt a huge blow on the government’s revenue in the first nine
months of this year.
An analysis of the projected revenue
items in the 2016 budget in relation to the actual receipts showed that
the Federal Government recorded a decline of N1.9tn in nine months.
Udoma said the revenue performance in
the period had been disappointing, noting that the development had made
the government to review downwards some of the revenue parameters in the
2017 fiscal period to a more realistic one.
He explained that although for most part
of the year, crude oil prices exceeded the benchmark price of $38 per
barrel, there had been a significant shortfall in projected revenue
because of disruptions to crude oil production as a result of militant
activities in the Niger Delta.
For instance, the minister said that the
projected oil revenue for the first nine months of 2016 was N2.8tn as
against the N2.2tn realised, while the projected independent revenue was
N1.1tn as against N200bn realised during the period.
He added that the projected revenue from
the Nigeria Customs Service also declined from N300bn to N200bn within
the period, while the projected non-oil tax receipts were N800bn as
against N500bn realised during the period.
Udoma said, “The Federal Government of
Nigeria’s oil revenues decreased sharply in 2015 and 2016 because of oil
production shut-ins and sharp decline in oil price since 2014. The oil
price steadied at an average of $110 per barrel from 2012 to 2014, but
dropped to a record low of $29 per barrel in February 2016, a drop of 70
per cent.
“Although for most part of the year,
crude oil prices exceeded the 2016 benchmark price of $38 per barrel,
there has been a significant shortfall in projected revenue caused by
the disruptions in crude oil production as a result of militant activity
in the Niger Delta.
“In particular, four strategic oil
fields are affected, including Trans-Niger Pipeline and Nembe Creek
Trunkline axis, as well as the Qua Iboe Terminal.”
He said in the 2017 budget, the Federal
Government adopted a more realistic revenue framework from which a
revenue of N4.94tn would be generated.
Udoma said the Federal Government would
make sure that it did all within its powers to take the country out of
recession with the budget through spending in critical areas such as
infrastructure.
He said the government was determined to
bring succour to the people, noting that the only way it could do this
was by taking strong action to change, in a fundamental way, the current
trajectory of the Nigerian economy.
He added that a committee had been set
up by President Muhammadu Buhari to come up with innovative and creative
ways to raise additional revenues from the oil sector and other sectors
to fund the 2017 budget.
The report of this committee, he added,
would be ready soon for the National Assembly to take into account in
considering the budget in the New Year.
Udoma stated, “This is not the time for a
timid and cautious approach. This is a time for bold and focussed
action. To get out of this recession and back on the path of growth, the
government must find the resources to spend on infrastructure, and to
spend to reflate the economy.
“This spending will help to stimulate
and attract private sector capital and private sector spending. This is
what the 2017 budget proposals seek to do. We should not allow ourselves
to be discouraged by those who say we can’t find the money to fund the
spending required to implement this budget. We must, and we can find the
resources.
“We will challenge our revenue
generating agencies, particularly the Federal Inland Revenue Service and
the Customs, to improve their efficiency and broaden their reach so as
to achieve the targets set for them in the 2017 budget.
“They must be tasked to leverage
technology to drive revenue collection. We will be issuing new
guidelines and templates for computing the operating surpluses of the
various government agencies so that we can achieve the targets we have
set for independent revenues.”
In terms of expenditure, the minister
said spending would focus on critical economic sectors that had quick
transformative potential such as infrastructure, agriculture,
manufacturing, solid minerals, services and social development.
For instance, he said, a total of N1.047tn was dedicated to key infrastructural spending in 2017.
Some of them are power, works and
housing, N529bn; transportation, N262bn; special intervention
programmes, N150bn; defence, N140bn; water resources, N85bn; industry,
trade and investment, N81bn; and interior, N63bn.
Others are Education, N50bn; Universal
Basic Education Commission, N92bn;
Health, N51bn; Federal
Capital Territory, N37bn; Niger Delta Ministry, N33bn; Niger Delta
Development Commission, N61bn; and Agriculture, N91bn.
He added that some new initiatives were added in the 2017 budget to support the diversification of the economy.
For instance, Udoma stated that a new
social housing programme of N100bn was added in the budget and the sum
of N50bn was allocated for special economic zone projects to be set up
in each of the geo-political zones to drive manufacturing and exports
The sum of N20bn, according to him, is
voted for the revival of the Export Expansion Grant in the form of tax
credit, while N15bn is allocated for the recapitalisation of Bank of
Industry and Bank of Agriculture for them to support Micro, Small and
Medium-scale Enterprises.
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