Nigeria’s 2016 Budget: Highlights of Revenue and Expenditure - PwC

Proshare

Wednesday, June 01, 2016 11:32AM /PwC

Highlights of Revenue and Expenditure

·         **Total capital expenditure is circa NGN 1.8 trillion which includes NGN156 billion under Statutory Transfers and NGN 86 billion in Debt Service.

·         Oil revenue is expected to decline by 50% while non-oil revenue is projected to increase by 26.5%.

·          Increase in non-oil tax revenue will come mainly from Company Income Tax and Value Added Tax expected to increase by 33.2% and 14.9% respectively.

·         Spending is planned to increase in 2016 (compared to 2015) by about 35% to an aggregate expenditure of N6.06 trillion.

·         Non-debt recurrent expenditure for 2016 which represents about 43.7% of the aggregate expenditure is expected to rise by 2% to NGN2.646 trillion. This includes NGN300 billion special intervention fund.

·         Capital expenditure is proposed to increase by about 180% to NGN1.58 trillion which constitutes about 30% of total expenditure.

·         The ministry of works, power and housing was allocated NGN423 billion or 26.6% of the capital expenditure being the top recipient of capital spending.

·         The federal government has earmarked NGN2 billion for the National Job Creation/Graduate Internship scheme.

Debt Service

·         The debt service cost is expected to increase by 54.7% (to a record NGN1.475 trillion) accounting for about 24.3% of total expenditure or 38% of revenue notwithstanding a low debt to GDP ratio of circa 13%.

·         NGN1.3 trillion and NGN54.5 billion are required to service foreign and domestic debt respectively.

·         A sinking fund of 113.4 billion is for the purpose of retiring matured loans.







MTEF is Medium Term Expenditure Framework

·         Actual inflation year on year as at April 2016 was 13.7%

·         Real GDP growth rate for Q1 2016 was -0.36%

·          

Tax Proposals in 2016 Budget Speech

·         There was no proposal to change tax rates or impose new taxes in 2016.

·         The budget speech was silent on the proposals to introduce a National Security Tax and the proposed increase in Tertiary Education Tax.

·         Government is however focused on measures to increase the tax base and overall compliance rate in the country.

·          Luxury tax is expected to generate NGN15billion but no disclosure of measures to implement.

·         It was mentioned that the tax rate for smaller businesses will be reduced.


2016 Revenue Generation Split (MTEF)


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