FG blames CBN forex restriction for negative growth

•Projects N7.4trn revenue for 2017

The Federal Government has listed foreign exchange restrictions by Central Bank of Nigeria (CBN) in the first half of 2016 as one of the activities that adversely affected the economy.

This is as consultations for 2017 to 2019 medium term expenditure framework and fiscal strategy 2017 to 2019 upon which those year’s budget would be based commenced in Abuja on Monday, the Federal Government has projected a modest revenue projection of N7,418,631,892,072 as distributable revenues in the 2017 fiscal year.

Minister of Budget and National Planning, Udoma Udo Udoma who gave the figures at the stakeholders’ consultative forum on the 2017- 2019 medium term expenditure framework held at the Banquet Hall of the State House also enumerated such activities as oil production disruptions in the Niger Delta, low oil revenues, low power generation, fuel supply problems in the first quarter (which has been resolved) and insurgency in parts of the country.

As a result, he said inflation hit 16.5 percent in June; unemployment increased to 12.1 percent in March from 10.6 percent in December 2015 and creating challenges for some state government in paying salaries in addition to Federal Government granting bail out to states.

Giving a breakdown of 2016 budget performance so far, Udoma said of the projected revenue of N1.043 trillion from statutory revenue for the first half of the year, only N646.340 trillion was realised while N52.570 billion was realised from a projection of N99.120 for the same period for value added tax (VAT).

He however, disclosed that 35 percent or N2.123 trillion of the N6.060 trillion 2016 budget has already been spent so far.

Debt service according to him, gulped N598.63 billion; statutory transfer- N175.68 billion (including prorated capital expenditure of N78.58; overhead- N125.4 billion; Pension and gratuity- NN79.18 billion and personnel cost- N891.31 billion.

As at July 18, Udoma stated that N253 billion had been released as capital expenditure (capex) adding “this has largely been released for MDA’s utilisation on investment in critical infrastructure projects.

“Total aggregate capex, inclusive capex share in statutory transfers is N331.58 billion as at July 18, 2016.”

The revenue projection for 2017 is made up of N5.402 trillion net accruals from mineral sources, customs and excise and taxes (statutory revenue) as well as N2.016 trillion from value added tax (VAT).

He added that N7, 858,105,163,246 and N10,162,111,175,201 are the revenue projections for 2018 and 2019 respectively.

Existing revenue formula stipulates that in sharing statutory revenue, federal government takes 52.68 percent; states 26.72 percent and; local government 20.16 percent. For VAT however, federal government collects 15 percent, states 50 percent and local governments 35 percent.

Government is considering a conservative oil price benchmark of $42.5 per barrel of crude in 2017, $45 per barrel for 2018 and $50 per barrel in 2019.

Udoma said although the projected distributable revenue is higher over the medium term, it will not be sufficient to address the current fiscal challenges at the national and sub national level without substantial private sector investment.

He gave the assurance however, the “federal government will intensify its efforts at pursuing non-oil revenue driven economy”, adding “we need some game changers.”

The minister also disclosed that sub national governments have been encouraged to consider strengthening their internally generated revenues by focusing on areas of comparative advantage; sustaining the implementation of fiscal sustainability plan; and focusing spending on priorities that will increase productivity and job creation.