By Jeph Ajobaju, Chief Copy Editor
Federal revenue dipped 44.6 per cent January to May, a period Abuja had projected N3.3 trillion receipts from several sources, including Value Added Tax (VAT) on cooking gas whose price has jumped 100 per cent, making life harder for Nigerians.
Total expenditure plan for 2021 rose to N14.8 trillion from initial N13.8 trillion, with a supplementary budget of N982.7 billion. Revenue projection is retained but actual performance is in limbo, showing a widening deficit.
Financial Vanguard gleaned from the January to May 2021 budget implementation report issued by the Finance Ministry that actual revenue was N1.8 trillion prorata against anticipated N3.3 trillion.
Analysts at Afrinvest West Africa, an investment banking institution based in Lagos, said although Abuja had reviewed both revenue and spending projections downward, actual revenue still fell significantly below target.
“At first, the shock occasioned by the emergence of the pandemic compelled a downward revision of the 2020 expenditure plan to N9.9tn from N10.5tn earlier assented to by the President,” Afrinvest noted in its Domestic Macroeconomics Highlights.
“In like manner, revenue projections were also lowered to N 5.4 trillion from N8.4 trillion to reflect the reality of both the Oil and Non-oil segments of the economy.
“In the end, the budget implementation report by the Ministry of Finance, Budget & National Planning revealed that the FG realised 73.4 per cent (or N3.9 trillion) of the revised revenue projection of N5.4 trillion.
“Aggregate revenue was dragged down by underwhelming Non-oil revenue which fell 21.5 per cent to N1.3 trillion, below the revised projection of N1.6 trillion.”
GDP estimates
Afrinvest said its projections that Nigeria’s Gross Domestic Products (GDP) would ride out the recession of 2020 is on track as the country recorded 5.01 per cent growth in half year ended June 30 (H1 2021).
“At the beginning of the year, we projected in our outlook report “A Blurry Path to Recovery” that the Nigerian economy in 2021 would clutch out of the COVID-19-induced recession of 2020, albeit at a modest 2.5 per cent growth rate.
“Our position was hinged on the expectation of improved on-Oil sector activities, to be driven jointly by the full impact of the monetary and fiscal stimuli rolled out in 2020 and the reduction in external shocks.
“We highlighted that the reopening of sub-sectors and land borders should support the recovery of key non-Oil activities – the Manufacturing, Services, and Trade sectors.
“We predicted that the Agriculture sector would benefit from the recovery of supply chain activities and the incentive of a reduction in the import duty on farm tractors (from 35.0 per cent to 5.0 per cent) and trucks (from 35.0 per cent to 10.0 per cent) as stipulated in the Finance Act 2020.
“In all of these projections, we maintained a cautious position on the recovery dynamics, as we emphasised that potential downside risk factors such as a resurgence of the COVID-19 pandemic, further devaluation of the Naira, weak external position, and the continuous cap on oil supply are capable of negating the potential impact of the recovery catalysts earlier highlighted.”
Afrinvest analysts said based on realities that played out in H1 2021, their projections were largely on track, except for oil prices which rebounded stronger than anticipated due to the sharp recovery of economic activities in AEs and some EMDEs led by China.