The Federal Government has had a revenue shortfall of N14.28 trillion while President Muhammadu Buhari has been in office, according to data from the Budget Office of the Federation.
The reports on the budget’s execution for the years 2016, 2017, 2018, 2019, 2020, 2021, and 2022 provided the information. January to November.
During the year under review, the Federal Government projected to earn N43.05 trillion in revenue but only generated N28.77 trillion (66.83 per cent of expected revenue).
In contrast to expectations, the Federal Government only raised N2.95 trillion in 2016. The anticipated revenue for 2017 was N5.08 trillion, however it was just N2.66 trillion. In contrast to expectations, the government only earned N3.87 trillion in revenue in 2018. The projected revenue for 2019 was N6.99 trillion, however the actual revenue was N4.12 trillion.
The Federal Government was expected to earn N5.84 trillion in 2020, however only N4.04 trillion was actually earned. As opposed to the N6.64 trillion forecast, the actual revenue in 2021 was N4.64 trillion. Compared to the forecasted revenue of N7.48tn, the actual revenue in 2022 was N6.49tn.
Zainab Ahmed, the minister of finance, budget, and national planning, is concerned about the government’s inability to generate enough cash. Oil is the main source of income for Nigeria, although in recent years, reduced production and subsidy payments have had an influence on this revenue stream. 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.”
