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Tuesday, April
24, 2018 /10:10 AM /FBNQuest Research
The
CBN’s latest quarterly Economic Report (for Q4 2017) points to
the central challenge for the federal finance ministry. FGN expenditure runs
far below budget. For 2017, for example, it totaled N4.9trn according to the
CBN report rather than the figure in the approved budget of N7.8trn.
This
very large shortfall is explained by the underperformance on revenue
collection. In 2017 “suboptimal” oil production was a factor but the
explanation over several years remains the paucity of revenue generation from
the non-oil economy.
The
FGN’s retained revenue in Q4 2017 was 87% sourced from the federation account,
indicating the need to boost revenue from its independent sources.
The
CBN report shows the FGN’s capital spending at just N147bn in 2017, which we
assume to be incomplete data. The Office of the Accountant-General of the
Federation has N1.2trn for the year, compared with N600bn in 2016.
Ben
Akabueze, director-general of the Budget Office, told the media at the
recent spring meetings in Washington DC that capital spending would not be
affected by the delayed passage of the 2018 budget because of preliminary work
by the ministries, departments and agencies on procurement.
The CBN data point to deficits equivalent to 2.2%
and 1.9% of GDP in 2016 and 2017. The FGN did not therefore breach the 3.0%
ceiling set in the Fiscal Responsibility Act 2007. The multilaterals and
ratings agencies favour the broader measure of the general or consolidated
government deficit, for which the IMF has 3.9% and 5.5% (preliminary) for the
respective years.
All these sources work with calendar years whereas
budget years, as we have noted, run well past end-December. This creates a
statistical quagmire.
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