Minister of Finance and National Planning gives a Rundown of how FG will raise Funds to Finance this year’s Budget
2018 Budget – The Minister of Budget and National Planning Mr Udo Udoma, gives a detailed explanation on Buhari’s administration will generate the N9.1tn revenue to finance the 2018 budget.
Delivering a speech during the public presentation of the 2018 budget in Abuja, on Thursday, Udoma expressed optimism and confidence that the government would be able to generate enough revenue to finance its agenda and responsibilities as contained in the fiscal document.
The event was attended by the following financial appointees of Buhari’s Administration – Minister of Finance, Mrs Kemi Adeosun; Minister of State for Budget and National Planning, Hajiya Zainab Ahmed; the Director-General, Budget Office of the Federation, Mr Ben Akabueze, and other top government officials.
The 2018 budget, which was designed to consolidate on the Economic Recovery and Growth Plan, was presented to the National Assembly on November 7, 2017.
It was passed by the lawmakers on May 16, 2018, transmitted to President Muhammadu Buhari on May 25 and assented by him on June 20.
The fiscal document signed by Buhari had a total proposed spending of N9.1tn, made up of N2.87tn for capital expenditure, N3.51tn for recurrent (non-debt) expenditure and N2.01tn projected to be spent on debt servicing.
Giving a breakdown of how the N9.1tn budget would be financed, Udoma said the sum of N2.99tn would be generated from oil revenue, N31.25bn would come from dividend to be received from the Nigerian LNG Limited, while N1.17bn was expected to be realised from minerals and mining revenue.
The minister stated that the Federal Government was targeting to generate N658.55bn from Companies Income Tax, N207.51bn from Value Added Tax, N324.86bn from Customs duties, while N57.87bn was expected to come from Federation Account levies.
In the same vein, he said the government was expecting N847.95bn as independent revenue from its agencies, while tax amnesty income, signature bonus and unspent balance from previous years would provide N87.84bn, N114.3bn and N250bn, respectively.
He also said the sum of N374bn was expected to be realised from domestic recoveries and fines, while N138.44bn would come from other Federal Government recoveries.
The minister added that the sum of N710bn would be realised from the sale of oil assets, while grants and donor funding would contribute N199.92bn.
He stated that N146.64bn would be realised from other unnamed revenue sources, while the budget deficit of N1.95tn would be financed through borrowing of N1.64tn.
The N1.64trn borrowing is made up of domestic borrowing of N793bn and foreign debt of N849bn.
In addition, the minister said about N306bn was expected from privatisation proceeds, while N5bn was projected to be realised from the sale of other government property to partly finance the deficit.
He noted that the government would be implementing some key reform initiatives contained in the ERGP in order to boost its revenue.
Some of them are deployment of new technology to improve revenue collection, upward review of tariffs and tax rates where appropriate, and stronger enforcement action against tax defaulters.
The government, according to Udoma, will improve the revenue performance of government-owned enterprises by reviewing their operational efficiency and cost-to-income ratios.
He said, “The 2018 revenue projections reflect new funding mechanism for Joint Venture operations, allowing for cost recovery in lieu of the previous cash call arrangement; and additional oil-related revenue, including royalty recovery, new/marginal field licences and early licensing renewals.
“Our journey out of the recent economic recession has helped us reset our priorities and to focus more on reforms and activities that have both short and long-term bearings on sustainable economic growth.
“In line with the ERGP, we are seeking to optimise derivable benefits from oil by restructuring our equity in JV oil assets while we intensify our efforts at accelerating economic diversification and non-oil revenue generation.”
The minister added, “Already, diversification efforts are yielding positive results with significant growth in the non-oil sector.
“Government will continue to create the enabling environment for the private sector to increase its investment and contribute significantly to job creation and economic growth.”
With the slashing of funds meant for the completion of key projects between this year and the next by the lawmakers, the implication, according to him, is that there may be a shift in their completion dates.
This, he noted, was because the available funds were insufficient to cater for the costs of the projects.
While calling for the cooperation of the legislature, Udoma noted that the Executive would soon approach them with a request for a readjustment of the already signed budget.
“We are determined to ensure that the budget is effectively implemented. We will work closely with the National Assembly where we need adjustment or a supplementary budget. We hope that they will cooperate with us,” he added.
Akabueze, on his part, promised that the 2018 budget would be the last time that the government would present the annual budget estimates to the National Assembly late.
He said the country would never experience any delay in the commencement of the budget under his watch as the DG of the Budget Office, adding that the development was slowing down the expected growth of the economy.
He noted that the understanding between the executive and legislature would be strengthened to accelerate a cordial working relationship.
Akabueze stated, “This event is holding just a day after the budget was signed, which underscores the seriousness we attach to what we are doing and also a sense of decency to which we must approach the vision of this project.
“This will be the last time, hopefully, that the Federal Government’s budget for any fiscal year will be delayed.”
In her presentation at the event, Ahmed debunked claims that the money meant for the Special Intervention Programme, including the home-grown school feeding programme, was mismanaged.
She explained that those who tried to sabotage the programme were caught and punished accordingly.
She said, “We run the programme in such a way that there are checks and balances. And there has been an attempt from different levels to short-change the programme, but because of the things we have put in place, we have easily found out and taken it up with security agencies, and we are trying to curb the challenges.”
“We have had some people that have been apprehended for short-changing the system.”