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FG Records N3.1bn Revenue Shortfall in 2015

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FIRS
  • FG Records N3.1bn Revenue Shortfall in 2015

The Fiscal Responsibility Commission says the Federal Government recorded a revenue shortfall of N3.1bn at 33.34 per cent of its gross federally-collected revenue in 2015.

This was contained in the 2015 Annual Report and Audited Accounts of the commission released on Tuesday in Abuja.

It said that N9bn was anticipated as federally-collected revenue in 2015, but only N6.1bn was actually collected.

He said, “In relation to the previous year, the 2015 budget was 90.04 per cent of the N10bn budgeted for 2014.

“The 2015 actual revenue performance of N6.1bn was below the performance of N9.3bn or 93.0 per cent, achieved in 2014.”

It, however, said that the oil slump and shortfall in oil production, due to oil theft and pipelines vandalism, accounted for the sharp revenue decline.

Giving a detailed analysis, the report said that for oil revenue, the performance averaged 69.11 per cent in 2015 against 93.98 per cent in 2014, a shortfall of 44.26 per cent.

The total oil revenue (gross) received for 2015 was N3.75bn, while that of 2014 was N6.73bn.

The non-oil revenue received for 2015 was also much lower than what was received in 2014.

Detailed analysis of non-oil revenue (gross) revealed that all its components performed below the budget and equally lower than 2014 receipts.

It said that the Value Added Tax receipts was N778.7bn in 2015 against N794bn in 2014, while Company Income Tax receipts was N1bn in 2015 against N1.2bn in 2014.

Customs and excise duties generated N514bn in 2015 against N566bn in 2014.

The report said that the low non-oil revenue performance suggested the ineffectiveness of the measures geared toward revenue increase as a result of the revenue diversification being pursued.

“These measures have to be re-invigorated in subsequent years to block revenue leakages and evasion of taxes and customs duties,’’ it said.

The report said that oil and non-oil contribution of net distributable funds were 52.95 per cent and 47.05 per cent, respectively, adding that there was no contribution from solid minerals as budgeted.

For the Excess Crude Account (ECA) created to serve as a stabilisation and savings fund, to augment budgets, the report showed that only N48.9bn was transferred into it in 2015 compared with N796.7bn in 2014.

It also said that N458.1bn was withdrawn from the ECA in 2015, while N927.3bn was withdrawn from it in 2014.

“Other than the distribution of N98.1bn shared among the three tiers of government, the withdrawal of N359.3bn for the payment of petroleum products subsidy, was in violation of Section 35 of Fiscal Responsibility Act (FRA) 2007.

“Such payment was clearly outside the scope of the ECA.’’

Giving an analysis of returns from Ministries, Departments and Agencies (MDAs) the report showed that N4.9bn independent revenue was remitted to the treasury by 25 MDAs in 2015 against N7.7bn remitted by 20 MDAs in 2014.

It said that only 15 MDAs submitted their Internally Generated Revenue returns for the four quarters of 2015, while eight made submissions for three quarters, and over half did not make any submissions at all.

The commission blamed non-compliance with the FRA as a major setback in collecting what was due to the treasury from the MDAs.

The FRA 2007 was enacted to promote prudent management of the nation’s resources, ensure long-term macro-economic stability and transparency in fiscal operations of the nation’s economy.

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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