Tough Times Ahead, Unless…Finance Minister Warns

By Tony Obiechina, Abuja

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed has warned that without strong economic performance in this third quarter, Nigeria’s economy may lapse into another recession in the next four years with significant adverse consequences.

The minister who spoke in Abuja on Friday, noted that “Nigeria is exposed to spikes in risk aversion in the global markets which will further pressure in the foreign market as foreign portfolio investors exit the Nigerian market”.

Ahmed who made the disclosure during the virtual presentation of the Medium Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP), however pointed out that in response to the development affecting the supply of foreign exchange to the economy, the Central Bank adjusted the official exchange rate recently to N360 per one US dollar.

According to the minister, “the disruptions in global trade and logistics would negatively affect customs duty collections in 2020. The Covid-19 containment measures, though necessary, are inhibiting domestic economic activities, with consequential negative impact on taxation and other government revenues”.

“It therefore imperative to adjust the previously projected customs duty, stamp duty, Value Added Tax and Company Tax revenues”, Mrs Ahmed added.

The minister disclosed that as at the of May, 2020, Federal Government’s retained revenue was N1.48 trillion, representing 56 percent of the target.

She also disclosed that FGN’s share of oil revenue was N701 billion which represents 166%, while non oil tax revenues stood at N439.32 billion (65% of revenue target).

The minister further stated that Companies income tax and VAT stood at N213.24 billion and N68.09 billion, which represent 62% and 58% respectively, while Customs collection was N158 billion(73% of target).

She said other revenues collected amounted to N339.51 billion of which independent revenue was N80.22 billion (21%), adding that recoveries of Stamp duty collected during the period are yet to be booked in the fiscal accounts.

On the expenditure side, the minister disclosed that N9.97 trillion was appropriated, while N3.12 trillion (representing 96.3% of the pro rate N4.16 trillion was spent.

According to her, of the expenditure, N1.25 trillion was for debt service and N1.32 trillion was for personnel cost, including pensions.

“As at end of May 2020, only N253.33 billion had been released for Capital Expenditure due to budget revision exercise”, Mrs Ahmed further disclosed.

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