The Federal Government’s projection of N8.2 trillion revenue in 2020 is not realistic based on past budget achievements, a report by Afrinvest West Africa, an investment and research firm, has shown.
According to the report, the 2020 revenue target is 17.1 per cent higher than N7 trillion in 2019 and more than twice the actual collection of N4 trillion last year.
The planned spending of the Federal Government at N10.3 trillion for 2020 represents a 13.2 per cent increase from the previous year’s N9.1 trillion. This is aggressive when we consider Federal Government’s recent revenue woes which is likely to persist. In the broader context, the proposed expenditure is neither large enough nor supportive of the country’s growth aspirations at 6.7 per cent of Gross Domestic Product (GDP).
‘’Nigeria’s gross expenditure to GDP which we estimate at 12.2 per cent compares poorly with peer economies, such as South Africa (33.6 per cent), Egypt (29.9 per cent), Kenya (25.4 per cent) and Ghana (23.6 per cent).
It said oil revenue projection was lowered by 29.7 per cent to N2.6 trillion as against N3.7 trillion in the year, reflecting prudent adjustments in the wake of lower for longer oil prices and weak oil production due to the slow pace of oil and gas reforms.
Afrinvest said: “Specifically, crude oil price and production assumptions were revised downward to $57 per barrel and 2.18 million barrel per day. Oil revenue would be higher if the exchange rate assumption of N305/$1 is adjusted to the market rate of $365/$1. On the other hand, non-oil revenue projections (customs & excise duties, Value Added Tax and Company Income Tax) increased by 28.6 per cent to N1.8 trillion as against N1.4 trillion in 2019 while we observed a marked 94.7 per cent surge in independent and other revenues budgeted at N3.7 trillion as against N1.9 trillion in 2019.”
It disclosed that although the recent trend in core non-oil revenue has been positive, the projected increase is steep and unlikely to be achieved. ‘’We await the full breakdown of non-oil revenue for further analysis,’’ the report added.