FG Loses N797b Projected Revenue In Three Months
The Federal Government has lost about N796.77 billion from its revenue projections in the third quarter of 2018, according to data compiled by a news source (Guardian). The development shows that the revenue generation challenges of the Federal Government and their effect on budget implementation have not abated. It also raises concerns that the 2018 budget financing might suffer huge deficits with attendant borrowing costs and that the country might even remain in deficit until 2023.
An economic report analysis by the Central Bank of Nigeria (CBN) showed that the N2.52 trillion revenue collected in the third quarter of 2018 was lower than the proportionate quarterly budget estimate of N3.32 trillion, being a N796.77 billion shortfall.
While the decline has been attributed to a shortfall in both oil and non-oil revenue components in the review period by the CBN, the realised amount rose above the receipts in the preceding quarter by 8.9 per cent.
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Gross oil receipt, at N1.39 trillion or 55.2 per cent of the total revenue, was below the proportionate quarterly budget estimate by 27.4 per cent, which also fell marginally below the receipts in the second quarter of 2018 by 0.3 per cent.
“Despite the increase in crude oil price, oil revenue declined relative to the proportionate budget, owing to shortfalls in crude oil production and exports, arising from leakages and shut-ins/shut-downs at some terminals of the Nigeria National Petroleum Corporation,” the CBN said.
But the chief executive officer of Cowry Asset Management Limited, Johnson Chukwu, said the implication of the development is a direct ballooning of the debt profile and further pressure on debt-to-revenue ratio and optional implementation of capital expenditure.
According to him, in a shortfall, it is the capital expenditure that takes the negative impact because recurrent expenditures will be considered uppermost on the priority list, going by the Nigerian system.
The head of research at FSDH Merchant Bank Limited, Ayodele Akinwunmi, said the development is a reaffirmation of the ongoing fiscal challenges in the country, stressing the need for real diversification.“Oil is no longer helping. There is a report about production shortage and the quantity produced has no ready-made buyer in the international market. The implication is that government will continue borrowing. Surely, debt profile and service bills will rise,” he said.
Meanwhile, deposit money banks in the country have opted to earn a paltry sum of N1.99 billion for depositing N5.56 trillion with the CBN between July and September, instead of lending the money to the real sector for more returns. Consequently, banks’ credit to the domestic economy (N19.3 trillion) at the end of the review period showed an increase of just one per cent above the level recorded at the end of the second quarter.