The Federal Government has identified the expected sources of revenue to fund the N11.86 trillion budget proposed for the 2021 fiscal year, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said.
The minister who spoke during the presentation of the draft 2021–2023 medium-term expenditure framework (MTEF) and fiscal strategy paper (FSP), also spoke on the performance of the 2020 Budget between January and May.
In a presentation on Friday in Abuja during a virtual consultative session with civil society organisations, organised private sector and the general public, the Minister said part of the funding for the budget would come from the export of 1.86 million barrels per day oil output at about $40 per barrel.
The minister said out of a net accrual to the Federation Account of N6.67 trillion (after 0.5% transfer to Police Trust Fund), total oil revenue, after all costs, deductions and derivations would come to about N4.09 trillion.
The Federal Government said it expects to realise about N5.46billion as net solid minerals revenue after payment of derivation; N1.41trillion as net corporate tax; N1.05trillion as Nigeria Customs revenue, and N124.8billion as revenues from special levies.
Also, unspecified revenues would be expected from the dividend payment by the Nigeria LNG on the federal government equity holding in the multi-billion dollar investment.
Besides, the federal government expects to earn about N3.52trillion as its share of the monthly allocation from the Federation Account (52.68%), in addition to about N244.5billion from its share of the value-added tax (VAT) Pool Account for the year.
To keep the total fiscal deficit of about N5.15trillion within the proposed 3% ceiling over the medium term, the Minister said the government was committed to finding new revenue sources, while taking steps to ensure a reduction in the cost of governance.
“In furtherance of our (government’s) objective of greater comprehensiveness and transparency in the budget process, the FGN 2021 Budget will reflect the revenues and expenditures of all significant government-owned enterprises (GOEs) (excluding the Nigeria National Petroleum Corporation), not just as in the 2020 budget”, the Minister said.
On the revenue performance in the revised 2020 Budget, Mrs Ahmed said on a pro-rata basis out of about N5.4trillion recorded as retained revenues in the approve appropriation, which was revised to N2.6trillion for the period between January and May, only N1.48trillion was actually realised.
The realised revenue, the Minister noted, was below the revised target by about N1.14 trillion, or 44%.
In terms of oil revenue, about N1.014 was approved in the 2020 Appropriation, which was revised to about N422.4billion, as a result of the impact of the coronavirus pandemic on the global market, which resulted in the crash of crude oil prices at the international oil market.
The benchmark crude oil price in the 2020 Budget was about $57 per barrel. But, following the sharp decline in the world market crude oil prices, Bonny Light crude oil price dropped from a peak of $72.2 per barrel on January 7, 2020 to below $20 per barrel in April, 2020.
The government was compelled to revise the crude oil price benchmark in the budget, initially to $30 per barrel; later to $25 per barrel, and finally to $28 per barrel.
Despite the revision, actual earnings as oil revenues between January and May increased by N278.2billion, or 66%, to N701.6billion.
Although about N80.38billion was expected to be earned as the federal government’s share of dividend from the Nigeria LNG, the amount was revised to N33.49 billion. But, the revenue is yet to be realized.
About N1.9billion expected as minerals and mining revenue during the year was revised to about N790million. But the actual revenue realized from the sector was about N50million, an increase of about N60million, or 7%.
Total non-oil revenue, including company income tax (CIT), value-added tax (VAT), Nigeria Customs revenue and Federation Accounts levies, which was expected to be N1.6trillion, was revised to about N677.06billion.
However, the actual revenue realized fell below the target by about 35%, or N237.7billion, to only N439.32billion.
About N932.4billion that was expected to come from Federal independent revenue sources was revised to about N388.68billion for the period between January and May. But. Only 79% of the target (about N80.22billion) was realized, leaving a variance of about N308.47billion.
From about N645billion approve as proposed Federal Government drawdowns from special accounts and levies, the figure was reduced to N26.75billion, out of which N189.3billion, or 30%, was actually realized, a difference of about N79.45billion.
Revenues from signature bonuses, oil license renewals and earlier operational permits renewals were put at about N350.5billion during the year. But, it was reviewed down to N146.05billion, out of which only N60.99billion, or 52%, was realized, a gap of about N76.06billion.
Other revenue sources, which were revised, but are yet to be realized included domestic recoveries, assets and fines, from N237.01billion to N9.76billion; Stamp duty, from N200billion to N83.33billion; grants and donor funding, from N42.7billion to N17.79billion; grants and donations for COVID-19 crisis intervention fund, from N186.37billion to N77.65bilion, and grants and donor funding, from N50billion to N20.83billion.
The Minister said the disruptions in global trade and logistics which negatively impacted Custom duty collections in 2020, resulted in the adjustments to projected Customs duty, Stamp Duty, VAT and CIT revenues.