FG Records N14.28tn Revenue Shortfall – BOF
The Budget Office of the Federation data has revealed that the Federal Government has recorded a revenue shortfall of N14.28tn under the regime of the President Muhammadu Buhari.
The data was obtained from the budget implementation reports for 2016, 2017, 2018, 2019, 2020, 2021, and 2022 (January to November).
In the period under review, the Federal Government projected N43.05tn as revenue to fund its budget but made only N28.77tn (66.83 per cent of expected revenue).
In 2016, the Federal Government’s projected revenue was N3.86tn, but it realised only N2.95tn. In 2017, revenue projection was N5.08tn while revenue realised was N2.66tn. In 2018, revenue projection was N7.17tn, while the government and realised N3.87tn. In 2019, revenue projection was N6.99tn and realised revenue was N4.12tn.
In 2020, the Federal Government’s projected revenue was N5.84tn, but actual revenue amounted to N4.04tn. In 2021, revenue projection was N6.64tn, actual revenue was N4.64tn. In 2022, projected revenue was N7.48tn, actual revenue amounted N6.49tn.
The revenue shortfalls echoes concerns by the Minister of Finance, Budget, and National Planning, Zainab Ahmed, over the government’s inability to generate adequate revenue. Nigeria relies on oil for the majority of its revenue and in recent times, this revenue source has been impacted by low production and subsidy payment.
From January to July 2022, Nigeria’s oil production slumped by 28 million barrels.
Recently, while speaking about the implementation of 2022 budget, Ahmed said, “The full implementation of the 2022 budget is challenged particularly by oil revenues that are falling target at 27.1 percent as of August.
“Crude oil production challenges and PMS subsidy deductions by the NNPC constitute a significant threat to the achievement of our revenue growth target as seen in the oil and gas performance 2022 as of August.
“Revenue generation remains the major fiscal constraint of the federation. The systemic resource mobilisation problem has been compounded by recent economic recessions we have witnessed, one during the first term of this administration in 2016, and the most recent one in 2020. But effort has mainly focused on improving tax administration and collection.”
Rising shortfall has led to an increase in the nation’s debt profile. The Federal Government has consistently relied on the Central Bank to fund its revenue shortfalls. In 2022, it borrowed N6.31tn from the CBN through Ways and Means Advances increasing its total borrowings from the CBN to N23.77tn as of October 2022.
Raising concerns over this, the World Bank in its December 2022 update, said “Moreover, financing of the fiscal deficit through Ways and Means continues to fuel inflation by increasing liquidity in the money market.
“The CBN’s inflation target of six–nine percent, which has not been achieved since 2016, remains unlikely to be met in the near term.”
Even though the Federal Government has been trying to increase its non-oil revenue, the World Bank expects revenue to decline as a share of GDP for 2022.
It said, “Non-oil revenues remained broadly steady as a share of GDP in 2022 through August. Nominal nonoil revenue growth has been strong, but this has been partly due to inflation and some tax administration and policy measures, such as the operationalisation of the electronic money transfer levy, and the rationalization of some tax expenditures.”
It added, “However, given that oil revenues continue to be the single largest revenue item (31 per cent of total general government revenues in 2021), total general government revenues are expected to decline in 2022 as a share of GDP.”
The Federal Government expects to make N10.49tn to fund its 2023 budget. According to the Washington-based bank, the projections are overoptimistic.
It stated, “These estimates are subject to revision following the discussion by the National Assembly and it should also be noted that government revenue projections are often over-optimistic and outturns usually fall below target, resulting in higher than budgeted fiscal deficits.”