2019 Budget: FG proposes 2.3m BPD oil production, $60pb oil benchmark
Exchange rate at N305 to dollar
The Federal Government on Tuesday rolled out its fiscal projection for the 2019 budget just as it pegged the exchange rate at N350 to a dollar
Speaking at the public hearing on the Medium Term Expenditure Framework (MTEF) organised by the House of Representatives Joint Committee on Finance, Appropriation, Aids, Loans and Debt Management chaired by Hon. Babangida Ibrahim, the Director General of the Budget Office at the office of Accountant General of the federation, Mr Ben Akabueze said having emerged from recession in the second quarter of 2017, Nigeria is expected to continue to experience growth from 0.8 per cent in 2017 to 2.1 per cent in 2018 and 3.01 per cent in 2019.
He revealed that Federal Government key assumptions and micro-framework of the 2019 budget were based on a projection of 2.3mbpd oil production, oil price benchmark of $60pb, exchange rate of N305 to a dollar, 9.98 inflation rate, 119,28 trillion nominal consumption, 139.65 trillion nominal GDP and 3.01 per cent GDP growth rate.
He added that the Economic Recovery Growth Plan (ERGP) projection for oil production was put at 2.4mbpd, oil price benchmark of $50pb, exchange rate of N305 to a dollar, 13.39 inflation rate, 106, 03 trillion nominal consumption, 126, 36 trillion nominal GDP and 4.5 per cent GDP growth rate.
While giving the summary of the 2018 performance, Akabueze said, “as at the end of 2018, federal government aggregate revenue was N3.96 trillion, which is 55 per cent of the budget and which is higher than the 2017 revenue.”
The breakdown according to him was: oil revenue (N2.32 trillion – 77 percent of budget and 64 percent higher than 2017); Company Income Tax (CIT) of N637, 25 billion (80 percent of budget and 1.7 percent higher than 2017) and Customs Collection of N303, 91billion (94 percent of budget and 16 percent higher than 2017.
According to him: “Notwithstanding the softening in the international oil prices in late 2018, the considered opinion view of most reputable oil industry analysts is that the downward trend is not necessarily reflective of the outlook for 2019. Currently, the average Brent oil price projection for 2019 by 32 different institutions with relevant expertise is still about $69/b.”
The DG, however, assured Nigerians that the government would continue its fiscal strategy of directing resources to most productive and growth-enhancing sectors while efforts would also be intensified to increase revenue
In addition, he said that the government would equally leverage private capital to supplement capital allocation from the budget.
According to him, “we will closely monitor the situation and will respond to any sustained changes in the international oil price outlook for 2019. Mr President has directed the Nigerian National Petroleum Corporation (NNPC) to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day
“The budget proposal seeks to continue the reflationary and consolidation policies of the 2017 and 2018 budgets respectively, which helped put the economy back on the path of growth
In his own presentation on the projected tax revenue for the period and the baseline assumptions, the Executive Chairmen, Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, said the tax office was optimistic of performing better than 2018
According to him, “for the year 2018, the federal government gave the FIRS a collection target of N6, 747 trillion.
“Analysis of actual collection figures for the year ended December 2018 shows that we collected a total of N5. 320 trillion, which represents 78.86 per cent of the target.
“The FIRS 2019 – 2021 revenue framework is based on the 2019 – 2021 Medium Term Expenditure (MTEF) and Fiscal Strategy Paper (FSP). While the collection figure for 2018 were significantly higher than ever before, the FIRS is not resting on it oars and is continuing with the implementation of various measures to ensure that tax revenue collection significantly improves further in 2019.”
Some of such measures according to him, are through; Strategic Revenue Growth Initiative (SRGI), tax audit, use of technology (such as VAT Auto Collect, State Offices of Accountant-General Platform), integration with GIFMIS for federal MDAs, eService and Mobile Payment Options, sustained enforcement activities, voluntary assets and Income Declaration Scheme and amendment of tax laws to improve collection.
Also in his presentation, the Comptroller General, Nigerian Customs, Col Ibrahim Ali (rtd) said strategies were on ground to actualise the 2019 budget target.
According to him, “every opportunity that will help in attaining the target shall be employed.
“The proposed automation of all forms of manual payment in every Customs formation is geared towards enhanced revenue and budget performance, this approach will certainly culture the integrity and sanity of the service operations.
“There shall be a holistic assessment and monitoring of all revenues collected on behalf of the service by the various designated commercial banks.
“This will create an avenue for genuine reconciliation of all accrued revenues against claimed remittances to the various designated government accounts.”
He said this would also guide against diversion of any collectable revenue.
In her own presentation, the Minister of Finance, Mrs Zainab Ahmed assured that the federal government had come up with a new revenue strategic growth agenda developed by her ministry to ensure a sustainable revenue flow system.
According to her, “we have identified new revenue streams and we’re working to tap into them, especially the identification of new taxes for which we are working with the FIRS to bring that to fruition, of course with an amendment to relevant tax laws.
“We are working now to implement the TSA to cover foreign accounts operated by government agencies in order to broaden the net and minimise leakages.”
Also, the Accountant-General of the Federation, Mr Ahmed Idris noted that June 30, 2019 date had been set for the closure of 2019 budget and also stated that Nigeria will not renege on its obligations to foreign and local creditors.