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2018 Budget Underfunded by N2.1tn – Investigations

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  • 2018 Budget Underfunded by N2.1tn – Investigations

The inability of the Federal Government to generate enough revenue to finance its operations had resulted in a N2.18tn financing gap of the 2018 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 Ministry of Power, Works and Housing had the highest allocation with N715bn for both recurrent and capital expenditure, while Ministries of Interior and Defence were allocated N577bn and N576bn respectively.

The Ministry of Education was allocated N542bn; Health, N356bn; Transportation, N267bn; and Agriculture, N203bn.

Investigations by our correspondent revealed that out of N9.12tn total expenditure approved for the 2018 budget, the sum of N6.94tn was released by the Ministry of Finance to Ministries, Departments and Agencies of government.

This, according to findings, represents about 79 per cent of the budget performance.

It was gathered that debt service and the implementation of non-debt recurrent expenditure such as payment of workers’ salaries and pensions recorded the highest rate of funding, while capital releases commenced after the signing of the budget on June 20, 2018.

For the capital components of the budget, it was learnt that the Ministry of Power, Works and Housing got the highest amount of N347.52bn.

This is about 42.95 per cent of the N809.05bn which was allocated to the ministry in the 2018 budget.

This is followed by defence and security, which got N205.89bn. The amount received by the sector is about 66.85 per cent of its N308bn allocation in 2018.

Also, the sum of N152.5bn was released to the agriculture and water resources sector. The amount is about 51.45 per cent of its N296.39bn allocation

In the same vein, out of the N251.42bn allocated to the transport sector in the 2018 budget, about N127.68bn, which is 50.79 per cent of the sector’s budget, had been released.

For the health and education sector, the sum of N115.43bn had been released out of the N189.39bn allocated to the sector in the 2018 budget.

Further findings showed that N456.5bn, which is 86.07 per cent of the N530.42bn allocated for statutory transfers, had been released by the government.

For capital supplementation, the sum of N254.27bn had been released by the government.

This is about 33.54 per cent of the N758.12bn allocated for the expenditure sub-head in the 2018 budget.

It was gathered that the Federal Government could not achieve its 2018 revenue target as some one-off items listed for implementation in the fiscal year could not be actualised.

Some of the one-off items are the N710bn from Oil Joint Venture Asset Restructuring and N320bn from the revision of the Oil Production Sharing Contract Legislation.

These one-off financing items, according to findings, have already been rolled over to 2019 budget.

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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