Monday, October 12, 2015 09:13AM / FBN Capital Research
Data from the CBN highlight the impact of declining oil revenues on the FGN’s aspirations for capital expenditure.
Its outlays plummeted to N32bn in Q1 2015, and a derisory N6bn in the second quarter and so far below the payout on statutory transfers to bodies such as the National Judicial Council and the National Assembly.
While we note that the data may be revised in subsequent CBN quarterly reports, it is obvious that the FGN has very limited room to tackle the country’s infrastructural deficit.
Industry estimates put the annual financing gap for the power industry alone at N2trn (US$10bn), which would be met by the FGN, private investors (domestic and foreign) and the donor community.
The vice-president, Professor Yemi Osinbajo, gave a realistic account of the FGN’s fiscal predicament last week when he met a delegation from the Nigerian Economic Summit Group (NESG) in Abuja.
The gameplan is to control recurrent spending and plug leakages so as to free up funds for capital items.
He alluded to two challenging projects, for which greater colour is required. The first is zero-based budgeting wherein spending is based on identified needs rather than the present system of first making revenue projections and then dividing up the cake.
The second is the launch of a new off-budget infrastructure fund. We are curious to learn how it would work with the Nigerian Sovereign Investment Authority, the manager of the sovereign wealth funds.
The 21st summit of the NESG opens tomorrow amid high expectations that the new administration will finally flesh out its many policy pronouncements.
7. Further decline in FAAC distributions – May 19, 2015
8. Picture for debt service less healthy – May 14, 2015