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FG to Fund 2019 Budget Deficit With New Taxes, Concessions

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NEITI
  • FG to Fund 2019 Budget Deficit With New Taxes, Concessions

The Federal Government plans to finance Nigeria’s N1.859tn budget deficit in 2019 by introducing new taxes and adopting a concessionary financing system under its privatisation programme.

The government also stated that the projected deficit, at 1.33 per cent of the Gross Domestic Products, was still within the threshold stipulated in the Fiscal Responsibility Act 2007.

This was contained in the presentation by the Minister of Finance, Zainab Ahmed, before the House of Representatives Joint Committee on the 2019-2021 Medium Term Expenditure Framework and Fiscal Strategy Paper in Abuja on Tuesday.

The panel is made up of the Committees on Finance; Appropriations; and Aid, Loans and Debt Management.

Ahmed said the government had designed a new strategy for revenue growth to ensure a sustainable revenue flow system.

She added that the ministry was in talks with the Federal Inland Revenue Service to identify new taxes, while the Treasury Single Account policy implementation would be extended to foreign accounts operated by government agencies.

The minister said, “We have identified new revenue streams and we are working to tap into them, especially the identification of new taxes for which we are working with the FIRS to bring that to fruition, of course with an amendment to relevant tax laws.

“We are working now to implement the TSA to cover foreign accounts operated by government agencies in order to broaden the net and minimise leakages.”

According to the document presented by the minister to the committee, the budget deficit is to be financed mainly by privatisation proceeds of N210bn and N1.649tn borrowings, with “a shift away from commercial to concessionary financing.”

Half of the borrowings, N824.82bn, would be sourced from domestic sources, with the other half from foreign sources.

Also, the Director-General, Budget Office of the Federation, Mr Ben Akabueze, said Nigeria was expected to continue to experience growth from 0.8 per cent in 2017 to 2.1 per cent in 2018 and 3.01 per cent in 2019, after emerging from recession in the second quarter of 2017.

Akabueze said, “As of the end of 2018, Federal Government aggregate revenue was N3.96tn, which is 55 per cent of the budget and which is higher than the 2017 revenue.”

He gave the breakdown as oil revenue of N2.32tn, which is 77 per cent of budget and 64 per cent higher than 2017; Company Income Tax of N637.25bn, which is 80 per cent of budget and 1.7 per cent higher than 2017; and Customs Collection of N303.91bn, which is 94 per cent of budget and 16 per cent higher than 2017.

He said, “Notwithstanding the softening in the international oil prices in late 2018, the considered opinion or view of most reputable oil industry analysts is that the downward trend is not necessarily reflective of the outlook for 2019. Currently, the average Brent oil price projection for 2019, by 32 different institutions with relevant expertise, is still about $69 per barrel.”

Akabueze assured Nigerians that the government would continue with its fiscal strategy of directing resources to most productive and growth-enhancing sectors, while efforts would be intensified to increase revenue. He added that the government would equally leverage private capital to supplement capital allocation from the budget.

He stressed, “We will closely monitor the situation and will respond to any sustained changes in the international oil price outlook for 2019. Mr President has directed the Nigerian National Petroleum Corporation to take all possible measures to achieve the targeted oil production of 2.3 million barrels per day.

“The budget proposal seeks to continue the reflationary and consolidation policies of the 2017 and 2018 budgets, respectively, which helped put the economy back on the path of growth.”

In his presentation, the Executive Chairman, FIRS, Mr Babatunde Fowler, stated that the tax office was optimistic about performing better than 2018

He said, “For the year 2018, the Federal Government gave the FIRS a collection target of N6.747tn. Analysis of actual collection figures for the year ended December 2018 shows that we collected a total of N5.320tn, which represents 78.86 per cent of the target.

“The FIRS 2019 – 2021 Revenue Framework is based on the 2019 – 2021 MTEF and FSP. While the collection figure for 2018 was significantly higher than ever before, the FIRS is not resting on it oars and is continuing with the implementation of various measures to ensure that tax revenue collection significantly improves further in 2019.”

Such measures, according to Fowler, include Strategic Revenue Growth Initiative, tax audit, use of technology such as VAT Auto Collect, State Offices of Accountant-General Platform, integration with GIFMIS for Federal Government MDAs, e-Service and mobile payment options.

Others, he said, were sustained enforcement activities, Voluntary Assets and Income Declaration Scheme and amendment to tax laws to improve collection.

On his part, the Comptroller-General, Nigeria Customs Service, Col. Hameed Ali (retd.), said there were strategies to actualise the 2019 budget target, stating that, “Every opportunity that will help in attaining the target shall be employed.”

Ali said, “The proposed automation of all forms of manual payment in every Customs formation is geared towards enhanced revenue and budget performance. This approach will certainly culture the integrity and sanity of service operations.”

“There shall be a holistic assessment and monitoring of all revenues collected on behalf of the service by the various designated commercial banks. This will create an avenue for genuine reconciliation of all accrued revenues against claimed remittances to the various designated government accounts.”

The Customs boss also noted that the strategy would also guide against diversion of any collectable revenue.

Also, the Accountant-General of the Federation, Mr Ahmed Idris, noted that June 30, 2019, date had been set for the closure of the 2018 budget, stating that Nigeria would not renege on its obligations to foreign and local creditors.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

FG Plans to Build 10 New Airports in Anambra, Benue, Others – Aviation Minister

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Buhari in Port Harcourt

Aviation Minister Says FG Working on Building 10 New Airports

The Minister of Aviation, Hadi Sirika, on Tuesday, said the Federal Government plans to build 10 airports across the country to improve civil aviation.

The minister made the statement while defending his ministry’s 2021 budget proposals.

Sirika said President Muhammadu Buhari has done justice to the aviation ministry through the ongoing framework and implementation.

He said the administration would construct new airports in Anambra, Benue, Ekiti, Nasarawa, Ebonyi and Gombe States.

He further stated that airports in Kebbi, Osubi and Dutse have been taken over for redevelopment by the Federal Government.

Sirika said, “Consequent upon that roadmap, we have seen aviation grow in 2018 to become the second-fastest-growing sector of the economy.

“Also and by 2019, it became the fastest-growing sector of the economy and increased its GDP contribution.

“From 2015 till now, we’ve seen a lot of growth in civil aviation, the number of airports is increasing.

“So far, about seven airports have been added to the map, some of them completed, some of them under construction.

“There are airports coming up in Benue, Ebonyi, Ekiti, Lafia, Damaturu, Anambra and so on.

“All these show that civil aviation is growing during this administration.

“So, we have about 10 new airports coming up, that is almost half the number of airports we used to have in Nigeria.

“We are adding 50 per cent of the number of airports,” the minister added.

Sirika noted that Nigeria Air, the proposed national carrier, was part of the new roadmap and could be delivered before 2023.

He said, “We are on it. The transaction adviser has brought in the outline business case.

“It is being reviewed by Infrastructure Concession Regulatory Commission, Soon after it finishes, it will go to the Federal Executive Council and it will be approved.

“We will not leave this government without having it in place.”

He defended why Lokoja, Kogi State needs another airport, saying it is an alternative to the Nnamdi Azikiwe International Airport in Abuja.

He said, “Lokoja is an important northern town. It is a cosmopolitan town, it’s a mini Nigeria and it is extremely very important in growth and development of our country.

“We have a lot of agricultural activities there. There is fishery, there is perishable item production and so on.

“So, establishing an airport there is quite apt. For me, it is something we should have done long ago for its importance.”

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Economy

FG Says Over N6 Billion Disbursed to Poor Households in Zamfara

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Over N6 Billion Disbursed to Poor Households in Zamfara

The Federal Government said it has disbursed over N6 billion under the Conditional Cash Transfer (CCT) scheme to poor households in six out of the 14 local governments in Zamfara in 2020.

The Minister of Humanitarian Affairs, Disaster Management and Social Development, Hajiya Sadiya Umar-Farouk disclosed this on Tuesday during the flag off of Grant for Rural Women Project in Gusau.

The minister said the CCT program was created in 2016 to address the deficiencies in capacity and lack of investment in human capital of poor and vulnerable households.

The programme is designed to deliver timely and accessible cash transfers to beneficiary households.

“And sets to support development objectives and priorities, to achieve improvement in health and nutrition, school enrolment and retention, environmental sanitation and empowerment among others,” she explained.

Umar-Faruk said a total of 130,000 beneficiaries from Anka, Bungudu, Birnin Magaji, Kaura Namoda, Tsafe, and Talata Mafara local government areas received between N30,000 to N80,000, depending on the dates the beneficiary enrolled in the programme.

Speaking on the grant for Rural Women, the minister said the programme was introduced to deepen the social inclusion agenda of President Buhari administration that includes lifting 100 million Nigerians out of poverty in 10 years.

It is designed to provide a one-off grant to some of the poorest and most vulnerable women in rural Nigeria.

“A grant of N20,000 will be disbursed to over 150,000 poor rural women across the 36 states of the federation,” she said.

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Economy

Delta State Gov Okowa Presents N378.48 Billion Budget for 2021

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Ifeanyi Okowa Presents N378.48 Billion Proposed Budget for 2021

The Executive Governor of Delta State, Senator (Dr) Ifeanyi Okowa, on Tuesday presented a N378.48 billion budget to the state’s House of Assembly for consideration for the 2021 fiscal year.

The budget christened “Budget of Recovery” appropriated N207.52 billion for Capital Expenditure while Recurrent Expenditure was allocated N171.32 billion.

According to the Governor, capital expenditure accounted for 54.76 percent of the budget while 45.24 percent represented recurrent expenditure.

He explained that the allocations were in line with his administration’s agenda of spending more on projects and programmes that would impact positively on the socio-economic well-being of the people of Delta.

The proposed budget for 2021 is N96.2 billion or 34.05 per cent more than the N282 billion approved for 2020.

The governor said that the 2021 budget proposals reinforced the state government’s commitment to road infrastructure, education, health, job and wealth creation programmes as the principal-drivers of the Stronger Delta agenda.

According to him, N113 billion, representing 89.94 per cent of the capital budget is allocated to the economic sector while N35 billion is allocated to the social sector; the administration sector got 10.93 billion and the regional sector, N42 billion.

“In 2021, we propose to spend N66.66 billion on Road Infrastructure; N6.79 billion on Health; Education will gulp N23.55 billion; Agriculture, N2.04 billion and Water Sector, N1.83 billion.

“Job and Wealth Creation Bureau will gulp N1 Billion and Youth Development, N1.25 billion. These key sectors are very essential in our 2021 budget,” Okowa said.

Okowa also explained that due to the negative impact of COVID-19 on the economy and the world at large, government spending was significantly affected by the global pandemic and that Delta was no exception.

The governor, therefore, stated that “the proposed 2021 Budget for Delta is primarily focused on protecting and supporting our people in a COVID-19 environment, accelerating infrastructural renewal, incentivizing growth, enhancing job creation, engendering social inclusion and developing sustainably.

“Overall, the proposed 2021 Budget is predicated on inclusive economic growth that is sustainable and people-centred, with strengthening fiscal sustainability through increased efficiency in spending, improved revenue mobilization and debt sustainability.

“It also entails improving processes and systems in Public Financial Management, and Monitoring and Evaluation, to bolster better public sector service delivery.”

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