…. Records N5.8trn Deficit In Eight Months
By Tony Obiechina, Abuja
President Muhammadu Buhari has approved the relaunch of the Ministry of Finance Incorporated (MOFI) Assets, now valued at N30 trillion.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed who disclosed this at the public presentation of the 2023 Budget estimates in Abuja on Wednesday said MOFI has become quite inefficient.
“We started the process of re-engineering the Ministry of Finance Incorporated (MOFI), saddled with the responsibility of managing government assets. MOFI has been existing since too many years ago and has gradually become quite inefficient.
“So, We have got the president’s approval to start the process of re-engineering MOFI and we are now at the stage where we hope in the next one month or six weeks, we will be able to relaunch MOFI.
“We’ve been able to take stock of the assets that are in the books of MOFI and even without taking stock of the ones that are not in the books of MOFI, we have about N30 trillion in terms of assets size. So, if we are looking for a debt of N10 trillion, we already have assets of N30 trillion, Mrs Ahmed said.
According to her, “we are going to open these assets for investments, so we will issue different kinds of equities investments into these assets. The government doesn’t have the kind of resources to recapitalise these assets.
According to the Minister, “When I talk about assets, I am talking about our investments like the Bank of Industry (BOI), the Development Bank of Nigeria (DBN), Galaxy backbone and several other agencies of government: Companies that government has set-up. A few of them are doing well and delivering the books but our assessment is what they’re doing can still be better by incremental adjustments”.
She cited the case of the railways in the books of MOFI which she put at N20 million as the asset size adding that the we a re-evaluation has commenced.
Mrs Ahmed said, “By the time we finish the re-evaluation, the value of the Nigerian Railway Corporations will run into trillions. Also, by the time we finish the re-evaluation of our airports, it will run into trillions.
“There is a process that is on going, we’ll have MOFI fully set up a world class investment company with a new management and a new board to move from the civil service structure where it sits as a unit under the office of the Accountant General of the Federation, and get core professionals that are really focus and specialised in portfolio management and driving investments to run better.
“So we expect to sweat our assets to amend the books and show the real value. We hope to actually raise equity, to open up investment for Nigerians and non-Nigerians to invest in the assets”, she added.
On the Ways and Means, which the Minister estimated at a total of N20 trillion she said approval has been given for the securitization which will be over a 40yr period with interest rate of 9%, adding, “but over the years we have been paying the interest component at current rate that is charged on the Ways and Means”.
The CBN Act 2007 Section 38 states:
(1) Notwithstanding the provisions of section 34 (d) of this Act, the Bank may grant temporary advances to the Federal Government in respect of temporary deficiency of budget revenue at such rate of interest as the Bank may determine.
2) The total amount of such advances outstanding shall not at any time exceed five per cent of the previous year’s actual revenue of the Federal Government.
(3) AlI Advances made pursuant to this section shall be repaid-
(a) as soon as possible and shall in any event be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the Bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid, and
(b) in such form as the Bank may determine provided that no repayment shall take the form of a promissory note or such other promise to pay at a future date or securitization by way of issuance of treasury bills, bonds, certificates or other forms of security which is required to be underwritten by the Bank”.
Meanwhile, despite the implementation of the Strategic Revenue Growth Initiatives by the Ministry of Finance aimed at shoring up revenue, the Federal Government still recorded N5.8trn as fiscal deficit in the first eight months of this year.
The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed revealed this on Wednesday in Abuja at the ministerial presentation of the 2023 budget proposal.
The Strategic Revenue Growth Initiative was launched in 2020 by the Federal Government for identifying and exploiting sources that would largely boost and diversify the revenue base of the country.
The key thematic areas covered by the SRGI are achieving sustainability in revenue generation, identifying new and enhancing the enforcement of existing revenue streams, as well as achieving cohesion in the revenue ecosystem (people)
She said, “The fiscal deficit for 2022 is estimated at N7.53trn. The N5.53trn deficit as at August is N430.82bn above the prorate level. The level of borrowing is at N1.26trn ahead of August target.
“The FGN share of oil revenue was N395.06bn representing 27.1 per cent performance, while non-oil tax revenue totaled N1.549trn a performance of 102.9 per cent.
“CIT and VAT collections were N826.27bn and N210.36bn representing 136.3 per cent and 99.6 per cent of their respective targets.
“Customs collections comprised of imports duties, excise and fees, and federal account special levies, trailed the target by N102.51bn (17 per cent). Other revenues accounted by N2.19trn of which independent revenue was N866.16bn.”
In terms of expenditure, she put the
aggregate expenditure for 2022 at N17.32trn with a pro-rata spending target of N11.55trn at the end of August.
The actual spending, as of August 31 was N9.56trn and of this amount, N3.52trn was for debt service and N2.89trn for personal costs including pensions.
In addition, the Minister stated that N1.78bn was released for capital expenditure.
On current debt service to revenue ratio, the Minister stated that as at 31st August the debt service to revenue ratio is 83 percent.
She said, “and that is why I said what we have is on revenue and we have to do everything we can to increase our revenue, our policy target is to keep it at no more than 50% over the medium term period and ultimately reduce it down to 30% but we are currently over 50% debt service to revenue.
On why and how to grow revenue on informal sector, she said, “It is first of all to try to get the sector formalized that one of the reasons why we make provisions for free registration and online registration. You can actually go the CAC website and register if you have all the document within 48 hrs you get your certificate.
” So, once you register, the process of registration includes; you’ll provide your TIN, you’ll provide your account number and BVN also. Once you …. Registration then its easier to track those companies and since that provision was given, the Ministry of Industry Trade and Investment is reporting that there are more of this informal sector operators that are not formalized.
“Remember that I said we granted tax rebate for small businesses but the businesses were still expected to file in returns to show that their turn over is below those thresh hold that either entitled to zero CIT or 20% CIT so, gradually the tax net is able to include some of these informal sector place.
“More currently the JTB is chaired by the chairman FIRS is working with each state chair of FIRS as a member, they are currently working at upgrading the process of TIN to include NIN and you know that there is a lot of progress that has been made in the NIN registration process, the NIMC reports that the numbers are now at up to 84 million Nigerians that have been registered on the data base.
” So, there will be a link between the NIN and the TIN, that’s another way that we are going to be able to use to track tax payers registration as well as tax compliant and its gradually expanding the tax net as well. we are able to check where a company has paid its tax, to look behind the company to the directors of the company also look at the tax compliant of the directors of the companies”.
