By Jeph Ajobaju, Chief Copy Editor
Nigeria borrowed N2.8 trillion from its Central Bank (CBN) in 2020 to support loans racked up because of failure to meet revenue targets derailed by coronavirus.
The loan came in form of Ways and Means in the CBN act which caps monetary financing of fiscal deficits at 5 per cent of previous year’s revenues, Finance Minister Zainab Ahmed, explained in Abuja on Wednesday.
She said the treasury reported a revenue shortfall of 27 per cent in 2020, which led to an increase in loans to the finance budget.
Ahmed made the disclosures during a public presentation of the ‘2021 FGN Approved Budget – Breakdown & Highlights’ done virtually on Zoom.
Nigeria generated an actual revenue of N3.9 trillion last year, compared to its target of N5.36 trillion.
But Ahmed clarified that the numbers are preliminary and would be updated once the reconciliation process is concluded.
Below is a summary of her presentation articulated by Nairametrics
Oil revenue
· Total oil revenue was N1.5 trillion, about 50 per cent higher than its budget of N1 trillion.
· The government received a dividend of N144 billion from its shareholdings in NLNG, up from N80.3 billion in 2019.
· The fall in oil prices in 2020 forced a review of its benchmark price to $28 per barrel (pb) from the $57 pb originally set in the budget.
· Average oil price sold was $43 pb as prices recovered in the second half of the year when coronavirus lockdown eased globally.
· Nigeria produced a total 1.79 million barrels per day (bpd) against the revised projected 1.8 million bpd.
· Oil revenue also increased because of the devaluation of the naira, which rose from a budget of N360/$1 to N379/$1 in the third quarter of 2020.
Non-oil revenue
Non-oil revenue performance did worse, falling 21 per cent to N1.2 trillion. They are mostly taxes, levies, and customs revenues.
· Company Income Tax fell 18 per cent to N673 billion, value added tax (VAT) suffered a 32 per cent drop to generate N196 billion.
· Customs revenue dipped 12 per cent to N396 billion.
· The economy was shut down in April 2020 and operated with several limitations amid requirements for social distancing and avoiding crowded areas.
· This impacted business operations countrywide, affecting their ability to generate revenues that would have been taxed.
· Perhaps the biggest setback in revenue was its earnings in signature bonuses, falling to N78 billion from N350 billion.
Despite revenue shortfall, however, Abuja outspent its expenditure targets, reporting a total N10 trillion compared to the N9.9 trillion appropriated.
Of the expenditure, N3.27 trillion went for debt servicing, and N3.19 trillion for personnel cost, including pensions.
A total N1.80 trillion was released for capital expenditure, about 89 per cent of provision. Up to N118.37 billion of this was released for coronavirus capital expenditure.
Fiscal deficit
Revenue shortfall and increased expenditure was a fiscal deficit of about N6.1 trillion against the N4.6 trillion the government budgeted.
To fund the shortfall, N2 trillion was borrowed from the domestic market and another N12 trillion from foreign markets.
The balance N2.8 trillion was obtained from the CBN.
Abuja plans for a budget deficit of N5.60 trillion in 2021, or 3.93 per cent of gross domestic product (GDP), funded via N2.34 trillion each in domestic and foreign borrowing and another N709 billion from multilateral sources.
About N205 billion from privatisation proceeds is expected to help close the deficit; but the government did not report income from privatisation in 2020 even though it budgeted N126 billion.