FG targets N18.6tn revenue in three years


sanusi-okonjo-meetingThe Federal Government hopes to earn and share the sum of N18.61tn among the three tiers of government within the next three years through the Federation Account.

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While N5.929tn is being targeted from the net distributable Federation Account revenue in 2014; N6.247tn and N6.434tn will be received and shared in 2015 and 2016, respectively.

The estimated amount for next year indicates a drop of N726bn or 10.9 per cent from the N6.655tn targeted in 2013.

These details were contained in the 2014-2016 Medium Term Expenditure Framework and Fiscal Strategy Paper of the Federal Government.

The MTEF and the FSP,  copies of which were obtained by our correspondent on Sunday, provide the basis for an annual budget planning and consist of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including the government’s financial obligations in the medium term.

The documents, prepared by the Ministry of Finance, also set out the underlying assumptions for the projections, provide an evaluation and analysis of the previous budget and present an overview of consolidated debt and potential fiscal risks.

They also produce a number of important outcomes, including the macroeconomic outlook and fiscal balance.

The MTEF and FSP fulfil a requirement of Section 11 of the Fiscal Responsibility Act, 2007, which stipulates that the Minister of Finance shall prepare the documents and get them approved by the Federal Executive Council and the National Assembly.

According to the revenue allocation formula, the Federal Government gets 52.68 per cent of the statutory revenue; states, 26.72 per cent; while the local governments receive 20.6 per cent.

The balance is allocated to the oil-producing states based on the 13 per cent derivation principle.

The Federal Government has been grappling with revenue shortfalls since the beginning of this year, surpassing its target of about N702bn just once in the first seven months and earning N651.26bn in January; N571.7bn in February; and N595.71bn in March.

In the months of April, May, June and July, the revenue earned by the country stood at N621.07bn, N590.77bn, N863.02bn and N497.98bn, respectively.

This, it was learnt, had led to the withdrawal of about $5bn from the Excess Crude Account to augment the shortfall in revenue.

According to the MTEF, the conservative projections of the revenue are based on a number of factors.

It stated, “Sequel to extensive consultations with the NNPC and taking the account of the lingering challenges of crude oil theft, illegal bunkering and production shut-ins, which have continued to pose a challenge to government’s finances, but with some expectation that government’s remedial action will bear some fruit, we have projected crude oil production for 2014 at 2.3883mbpd.

“This figure is lower than the 2.526mbpd budgeted in 2013. It is hoped that government’s efforts at tackling the problem will yield further results in the medium term; hence, the production is estimated at 2.5007mbpd and 2.5497mbpd for 2015 and 2016, respectively.”

It stated that the last decade had seen oil prices rise to record levels, peaking in July 2008 at $148 per barrel, but had been trending downwards since 2012 with looser demand-supply balance.

It said the recent discovery and exploitation of shale oil and gas in the United States had raised questions regarding the likely impact on global energy markets and the price of oil.

It noted, “These development suggest that there could be lower demand for Nigeria’s crude oil in the near future, and thus necessitates more prudent management of the limited available resources and the building of fiscal buffers to enable the country to respond effectively to any negative impact that this development may have on the international oil price in the near term.”

The report regretted that the delay in passing the Petroleum Industry Bill could affect the auctioning of new oil acreages with the resultant non-realisation of signature bonuses, which were part of the financing items.




Babatunde Akinsola
Babatunde Akinsolahttps://naija247news.com
Babatunde Akinsola is aNaija247news' Southwest editor. He's based in Lagos and writes on the Yoruba Nation political issues, news and investigative reports

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