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Why FG Couldn’t Achieve 2018 Revenue Target –Udoma

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  • Why FG Couldn’t Achieve 2018 Revenue Target –Udoma

The Minister of Budget and National Planning, Senator Udo Udoma, explained why the Federal Government could not achieve its 2018 revenue target, stating that some one-off items listed for implementation in the fiscal year could not be actualised.

He gave the one-off items to include the N710bn from Oil Joint Venture Asset Restructuring and N320bn from the revision of the Oil Production Sharing Contract Legislation.

The minister said the one-off financing items had already been rolled over to the 2019 budget.

The 2018 budget, signed by President Muhammadu Buhari on June 20 last year, had total spending of N9.1tn.

The capital expenditure was to gulp 31.5 per cent of the total expenditure at N2.87tn, while recurrent non-debt spending was put at N3.51tn in 2018.

There was also a provision of N2.01tn for debt servicing, which is 21 per cent of the total budget while a provision of N177bn to retire maturing bond to local contractors was made by the government.

The N9.1tn budget was expected to be financed from N2.99tn to be generated from oil revenue, N31.25bn from Nigeria Liquefied Natural Gas dividend while N1.17bn was expected to be realised through revenue from minerals and mining.

To fund the budget, the Federal Government had planned to generate N658.55bn from Companies Income Tax and N207.51bn from Value Added Tax and N324.86bn from Customs while N57.87bn was expected to come from federation account levies.

In the same vein, the government was expected to raise N847.95bn through independent revenue from its agencies, while tax amnesty income, signature bonus and unspent balance from previous years were to provide N87.84bn, N114.3bn and N250bn, respectively.

Speaking during a meeting with the House of Representatives Joint Committee on Finance, Appropriation, Planning and Economic Development on the 2019 revenue and expenditure projections as contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper 2019-2021, the minister stated that the Federal Government was determined to improve its revenue generation this year.

Details of the fiscal operations of the Federal Government as contained in the Central Bank of Nigeria’s economic report for the fourth quarter of 2018 showed that the government had not been able to generate adequate revenue to meet its expenditure.

For example, in the first quarter of last year, the Federal Government’s retained revenue was put at N884.88bn while its expenditure was N2.01tn. This resulted in a fiscal deficit of about N1.13tn.

In the second quarter of last year, the Federal Government earned N1.12tn while its expenditure was N1.63tn, resulting in a deficit of N504.8bn.

For the third quarter, the revenue of the Federal Government was put at N1.03tn with the expenditure of N1.89tn, leading to a deficit of N855.09bn.

For the fourth quarter, the fiscal deficit widened to N910.4bn as the government was only able to generate N916.44bn to take care of its total expenditure of N1.82tn

But the minister said the government was already taking a number of steps to shore up revenue to fund the 2019 budget.

Among other initiatives aimed at expanding the fiscal space, the minister stated that the Federal Government would intensify efforts to improve public financial management through the comprehensive implementation of the Treasury Single Account, the Government Integrated Financial Management Information System and the Integrated Payroll and Personnel Information System.

Also, he said the Department of Petroleum Resources had been directed to, within three months, complete the collection of past dues on oil licence and royalty charges, including those due from the Nigerian Petroleum Development Company which it had agreed to pay since 2017.

Udoma also said the Ministry of Finance, working with all the relevant agencies, had been authorised to take action to liquidate all recovered, unencumbered assets within six months.

Among other revenue generating initiatives, he said the President had directed that work should be immediately concluded on the deployment of the National Trade Window and other technologies to enhance customs collections efficiency from the current 64 per cent to up to 90 per cent over the next few years.

He indicated that in spite of the challenges that militated against the realisation of targeted revenues, the revenues generated in 2018 showed a significant improvement over that of 2017.

The minister said he expected further improvement this year with the sustained implementation of the Economic Recovery and Growth Plan.

The minister explained that the ERGP guided allocations in the Federal Government budget because it sets out the key execution priorities of the government for the growth and development of the economy.

The government, he added, was encouraged by the results so far attained after implementing the plan for about two years.

He said the economy had exited recession and was on the path of growth, even though it took time for the impact to be fully felt by a significant number of people.

“It takes time, and will take some more efforts but we will keep working on it so as to fully realise the objectives of the ERGP. The implementation of the ERGP will create growth and jobs and reduce poverty,” he said.

Explaining the basis for some of the assumptions in the MTEF/FSP, the minister said the oil price benchmark was arrived at after extensive consultations with industry experts and consultants.

He expressed optimism that the $60 per barrel crude oil benchmark projected for 2019 was achievable as oil was currently trading at about $67 per barrel.

On the limitation imposed by OPEC production quota, the minister explained that there was no quota set for condensates by OPEC.

Nigeria, he said, could use condensate production to augment its production.

“Mr President has directed the NNPC to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day,” he added.

He explained that in allocating funds in the 2019 budget proposals, priority was given to critical infrastructure projects.

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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