According to information from the Budget Office of the Federation, the Federal Government has had a revenue deficit of N14.28 trillion while President Muhammadu Buhari has been in office.
The information came from the reports on how the budget was implemented for the years 2016, 2017, 2018, 2019, 2020, 2021, and 2022. (January to November). The Federal Government anticipated making N43.05 trillion in income during the time under review, but only made N28.77 trillion (66.83 per cent of expected revenue).
The Federal Government expected to earn N3.86 trillion in 2016, but it only collected N2.95 trillion. Revenue for 2017 was expected to be N5.08 trillion, but it only came to N2.66 trillion. The government anticipated N7.17 trillion in income in 2018, but only received N3.87 trillion. 2019 had a revenue prediction of N6.99 trillion and actual revenue of N4.12 trillion.
The predicted revenue for the Federal Government in 2020 was N5.84 trillion, while actual revenue was just N4.04 trillion. Actual revenue in 2021 was N4.64 trillion compared to the N6.64 trillion projected. Actual revenue in 2022 was N6.49tn compared to the predicted revenue of N7.48tn.
The government’s failure to produce sufficient money has been a source of concern for the Minister of Finance, Budget, and National Planning, Zainab Ahmed. The majority of Nigeria’s income comes from oil, and in recent years, this revenue stream has been impacted by low production and subsidy payment.
From January to July 2022, Nigeria’s oil production slumped by 28 million barrels.
Recently, while speaking about the implementation of 2022 budget, Ahmed said, “The full implementation of the 2022 budget is challenged particularly by oil revenues that are falling target at 27.1 percent as of August.
“Crude oil production challenges and PMS subsidy deductions by the NNPC constitute a significant threat to the achievement of our revenue growth target as seen in the oil and gas performance 2022 as of August.
“Revenue generation remains the major fiscal constraint of the federation. The systemic resource mobilisation problem has been compounded by recent economic recessions we have witnessed, one during the first term of this administration in 2016, and the most recent one in 2020. But effort has mainly focused on improving tax administration and collection.”
The nation’s debt profile has increased as a result of rising shortage. To cover its income shortages, the Federal Government has constantly turned to the Central Bank. It increased its total borrowings from the CBN to N23.77 trillion as of October 2022 when it borrowed N6.31 trillion from the CBN through Ways and Means Advances.
In its December 2022 report, the World Bank expressed alarm over this and added, “Moreover, funding the budget deficit through Ways and Means continues to drive inflation by raising liquidity in the money market.
“The CBN’s inflation target of six–nine percent, which has not been achieved since 2016, remains unlikely to be met in the near term.”
Even though the Federal Government has been trying to increase its non-oil revenue, the World Bank expects revenue to decline as a share of GDP for 2022.
It said, “Non-oil revenues remained broadly steady as a share of GDP in 2022 through August. Nominal nonoil revenue growth has been strong, but this has been partly due to inflation and some tax administration and policy measures, such as the operationalisation of the electronic money transfer levy, and the rationalization of some tax expenditures.”
It added, “However, given that oil revenues continue to be the single largest revenue item (31 per cent of total general government revenues in 2021), total general government revenues are expected to decline in 2022 as a share of GDP.”
The Federal Government expects to make N10.49tn to fund its 2023 budget. According to the Washington-based bank, the projections are overoptimistic.
It stated, “These estimates are subject to revision following the discussion by the National Assembly and it should also be noted that government revenue projections are often over-optimistic and outturns usually fall below target, resulting in higher than budgeted fiscal deficits.”