Federal Government has borrowed over N473 billion to close up deficit arising from the 50 per cent revenue loss from global oil crisis, the Coordinating Minister of the Economy and Minister of Finance and Minister of Finance, Dr. Ngozi Okonjo-Iweala, disclosed Tuesday, underscoring the severity of revenue shortfall in the economy.
Okonjo-Iweala also refuted reports that the petroleum subsidy has been removed from the budget by the National Assembly.
She said that a provision of N145.2 billion for oil subsidy (N100 billion provisions for PMS and N45.2 billion for kerosene subsidy) was made.
She spoke during the budget breakdown in Abuja.
The minister said that although the sum of N882 billion was earmarked as the borrowing limit in the budget, part of the borrowing needs were for salaries and overheads, pointing out that the first part of the year witnessed low revenue inflows because tax receipts come in from the middle of the year.
According to her, the development compounded the challenges caused by the steep drop in revenues due to the oil price fall.
She said, “As you know, I have been honest with you since the current economic problems started. I would like to repeat: we have serious challenges. Things have been tough since the beginning of the year and they are likely to remain so till the end of the year. We have serious challenges but we also have strengths and if we do the right things we can keep a steady course and emerge out of the current situation,” she said
The minister explained that as a result of the 50 per cent decline in oil revenues, the country has faced a difficult cash crunch and the Federal Government has focused on keeping the economy stable and the government running through a series of measures.
“We have front-loaded the borrowing programme to manage the cash crunch in the economy.
“Out of the N882 billon budgetary provision for borrowing, the government has borrowed N473 billion to meet recurrent expenditure, including salaries and overheads.
“Traditionally, the first part of the year witnesses low revenue because tax receipts come in from the middle of the year. This has compounded the challenges caused by the steep drop in revenues due to the oil price fall.
“As a consequence of the revenue challenges, there has been no capital budget release so far this year.”
She said that despite the gruelling economic challenges the government managed to keep the economy stable to the point that Nigerian economy which is projected to grow by 4.8 per cent this year is, according to most analysts, doing much better than many other oil-producing countries.
“One positive feature despite the clear challenges is the fact that food prices, though inching up are still quite stable. Also, inflation is still in single digits. This has helped to reduce some of the pressure that Nigerians are going through.
“We also have the advantage that we are an asset-rich country and that is a definite strength. It is a challenging time and requires daily, weekly and monthly management to keep the country going and that’s what we have been doing,” the CME noted.
The Minister recalled that the Federal Government sent in a budget with a benchmark of $51 a per barrel while the National Assembly passed the budget with a benchmark of $52 per barrel. That is $1 higher than the budget proposal. This generated an extra revenue of $54 billion for the Federal Government.
“The National Assembly retained the production volume of 2.2 million barrels a day and the exchange rate of N190 to the dollar that was proposed and this is because the inter-bank rate now is about 197; we explained it before.
“I want to clarify that there has been some misinformation going on around in the media about the fact that the National Assembly passed the budget without the fuel subsidy. This is not true. It is important to note that the National Assembly approved the N100 billion provisions for PMS and N45.2 billion provision for kerosene subsidy. They approved that. So it is not true that they approved the budget without the subsidy. They retained various elements of the first line charges we put in. But let me say that they were based on the above parameters. The gross federally collectable revenue for the federation increased by N169.845 billion. From N9.64 trillion to N9.78 trillion as a result of raising the benchmark price by a dollar.
“On the part of the Federal Government; now, Federal Government budget revenue went up from N3.52 trillion from a position of N3.358 trillion so when we sent in the budget, Federal Government revenue was N3.358 trillion. They returned it with a slight difference of N3.452 trillion. On the expenditure side, the aggregate expenditure part was higher than what we went in with. The Federal Government went in with a proposed aggregate expenditure of N4.42 trillion and the National Assembly cast expenditure of N4.49 trillion, which was N67.43 billion higher than the proposed expenditure. Debt service was left unchanged at N943.62 billion. The National Assembly increased statutory transfers; you know, these are transfers that go to the MDGs like the National Assembly itself, NDDC, UBEC, Human Rights Commission and others. I will not read of these but just know that the National Assembly increased NDDC.
She stated that, “the fiscal deficit was decreased slightly from N1.067 trillion to N1. 04 trillion but the essential thing to note is that the fiscal deficit decreased from 11 per cent to 1. 09 per cent so this is a difficult budget but a responsible one.
“About the cash flows we have, everybody knows we suffered a 50 per cent cut in the major source of our revenue and the revenue of Nigeria is following a pattern that is like a curve. At the beginning of the year, the revenues were quite low from the non-oil sources. It was in the middle of the year that the co-operate taxes came in. We hard a very low income in the first half and a higher middle and at the end of the year, it was low again. So the first half of the year was very challenging this year because of the traditional low receipts. We have 50 per cent cut in oil revenue.”
