Report: FG’s Non-oil Revenue Projection Unrealistic
The federal government’s non-oil revenue projections in the 2017 budget are unrealistic, when viewed in the context of past budgets, a report by the Time Economics, a researchfocused firm has stated.
The Time Economics stated this in its Mid-Year Report obtained on Monday.
It pointed out that the bulk of non-oil revenue in this year’s budget was expected to come from Value Added Tax (VAT), Companies Income Tax (CIT) and Customs and Excise Duties, revenue sources which underperformed by an average of 26 per cent between 2011 and 2015.
The 2017 Appropriation Bill was signed into law on June 12th, 2017 a month after it was passed by the National Assembly, and over six months after the budget was presented to lawmakers by the President Muhammadu Buhari. The budgeted expenditure in the final version of the bill differed from that in the proposed budget by N143 billion, an increased from N7.298 trillion to N7.441 trillion.
The budget was based on a benchmark crude oil price of $44.5 per barrel, oil production of 2.2 mbpd and an average exchange rate of N305/USD. Revenue is expected to be N5.08 trillion of which N1.999 trillion will come from oil, N1.373 trillion from CIT, VAT, Customs and Excise Duties and Federation Account Levies, N807.57 billion from Independent Revenues, N565.1 billion from Recoveries and N210.9 billion from other revenue sources such as mining.
But the report stressed that in the past, the government’s revenue projections had been quite optimistic; actual federal government revenues were an average of 17 per cent below projected revenue between 2011 and 2015.
“In 2016, total half year revenues from these sources were 54 per cent below projections. Although the government reduced its expected revenue from these sources from N1.392 trillion to N1.373 trillion, its projection is still quite unrealistic.
“These revenue sources are dependent on the performance of the economy, which is projected to grow by only one per cent from its 2016 level. Therefore, it is extremely unlikely that any increase in the actual revenues realised in 2017 – even after accounting for the growth in the economy and a higher level of tax compliance – will be enough to prevent substantial underperformance in non-oil revenue.”
At the end of 2015, GDP per capita was approximately $1900, using an exchange rate of N197/ USD and a population of 182.2 million (World Bank). Full year GDP growth for 2016 was -1.58 per cent, and if assumed that Nigeria’s population grew by
In a bid to maximise supports of international bodies and foreign governments in ensuring sustainable growth in the mining and mineral sector, the federal government has inaugurated the Development Partner and Donor Agencies Coordination Group on Mining.
Minister of Mines and Steel Development, Dr. Kayode Fayemi, while inaugurating the group in Abuja, hinted that the forum would serve as a platform where development partners and donor agencies meet to review, coordinate and synergise their programmes with the aim of increasing the efficiency and effectiveness of assistance provided to the mining sector.
Fayemi stated that the government was doing a lot to restore the country’s lost glory in the minerals and mining sector, adding it means more than simply re-enacting the past.
According to him, “It involves improving governance, transparency and accountability, building an investor-friendly regulatory environment, making the sector more inclusive for artisanal miners and women, and so much more.” He noted: “The launching of the group will chart ways towards accelerating implementation of the roadmap and invariably the needed impact of mining on the socio-economic development of Nigeria.
“This should be a forum where partners and agencies meet to review, coordinate and synergise their programs with the aim of increasing the efficiency and effectiveness of assistance provided to the sector.” The minister stated that the government was driving a public sector-enabled and private sectorled mineral sector transformation and look forward to the support of the development community in achieving the set goals.
“The Mining Roadmap was both consultative and inclusive in order to meet the mandate and secure the greatest benefits of Nigeria and its citizens. The document, he pointed out is aimed at tackling inherent challenges in the sector and repositioning the country for a self-sustained inclusive growth.
“This is with the goal of raising mining’s overall direct contribution to GDP from 0.34 per cent in 2015 to over 3 per cent in the next ten years. Attaining this goal is in line with the Nigerian government’s vision to develop a well-diversified economy and reduce the over-reliance on crude oil through agriculture and mining.
“I should emphasise that we have domesticated the provisions of the African Mining Vision (AMV) adopted in February 2009 during the African Union Summit in the roadmap” he added.
Fayemi highlighted the ongoing policy reforms and achievements as well as the efforts made so far towards implementing the roadmap.
He disclosed that as the number of partners and agencies willing to support the Ministry of Mines and Steel Development continues to increase, there was need for a Development Partners and Donor Agencies Coordination Group on Mining, saying the establishment of the body was not new in the country or in development community.
Continuing: he said: “Aside the international bodies, the Minister disclosed that the ministry was also working in collaboration with some sister ministries notably Ministry of Budget and Planning,