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Senate Rejects ‘Padded’ N143bn FIRS Budget

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2016 Budget
  • Senate Rejects ‘Padded’ N143bn FIRS Budget

The Senate on Thursday rejected the report by its Committee on Finance in which the N143.7bn budget of the Federal Inland Revenue Service was approved.

The lawmakers, while debating the recommendation of the committee during the day’s plenary, criticised the report as lacking details.

While some senators said it was fraught with ambiguities, others pointed out duplication of projects in the proposed budget of the FIRS.

Some of the duplicated projects as noted by the lawmakers include the N586m budgeted for refreshment and meals; N350m for “hire of hall, accommodation and events;” N681m for welfare packages; N200m for sporting activities; and N150m for honorarium.

The sum of N683m was budgeted for security services; N250m for security vote; N90m for office furniture and equipment, while another N300m was budgeted for maintenance of office building; N266m for maintenance of office equipment; and N120m for maintenance of computers and IT equipment.

About N170m was budgeted for maintenance of plants and generators; N120m was set aside for “other maintenance services;” N440m was budgeted for office materials and supplies; N68m for library books and periodicals; N530m for computer materials and supplies; N1.9bn for printing of non-security documents; and N100m for other materials and supplies.

A sum of N2.5bn was budgeted for tax audit investigation and monitoring, while another N500bn was appropriated for tax investigation; N170m for maintenance of plants and generators; N750m was set aside for generator fuel; N700m for motor vehicle fuel; and N1.45bn for general fuel and lubricants.

The committee approved both the recurrent and capital expenditures as proposed by the FIRS.

The President of the Senate, Bukola Saraki, who presided over the plenary, asked the committee to work on the grey areas in its report and represent it in one week.

On the FIRS proposed budget, the report presented by the committee read in part, “The Federal Inland Revenue Service projected to collect tax revenues to the tune of N4.082tn in 2016. This comprises N484bn oil and N3.597tn non-oil revenues.

“The projected four per cent cost of collection on non-oil revenue is N143,904,640,000. The total projected available fund for the 2016 budget is N146,165,108,293, comprising four per cent cost of collection and N2,260,468,293 or 20 per cent of the 2015 operating surplus.”

The Chairman of the committee, Senator John Enoh, while presenting the report to the chamber, recalled that the Senate had on July 21 considered the request of President Muhammadu Buhari on the 2016 budget of the FIRS and referred same to the committee for further legislative action.

On the performance of the 2015 budget of the FIRS, the report stated that the National Assembly’s joint Committees on Finance approved a revenue projection of N436tn, comprising N1.74tn oil revenue and N262tn non-oil revenue.

The joint committees also projected the four per cent cost of collection of non-oil revenue by the FIRS to be N104,723,880,000.

The committee stated the summary of the proposed 2016 expenditure of the service as follows: personnel, N64,491,130,526; overhead, N46,363,000,000; and capital, N32,868,300,000, bringing the total expenditure to N143,722,430,526.

The committee further observed, “The total personnel costs are for salaries, wages, allowances, performance bonuses and social contributions. The 8,000 members of staff are proposed to be on the payroll during the 2016 financial year, which accounts for the increase of 19 per cent above the actual staff strength of 6,748. The projection presumes a recruitment of new staff members in 2016.

“The overhead cost is very vital in driving the achievement of the FIRS’ core objectives of tax revenue generation. The provisions in the 2016 budget give more emphasis on availability of office materials, training, consulting and professional services, and publicity.

The committee recommended that a total expenditure of N143,722,430,526 be approved for the FIRS, which the Senate rejected.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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