FBNQuest: Soundness of non-oil revenue forecasts

Must Read

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...

Top 10 Most Expensive Universities In Nigeria

For many Nigerians, high-quality higher education is a luxury. There are many private universities who are known not only...

Novel Coronavirus: Lagos alerts public, lists precautionary measures

…Says No Case Of Virus Reported In Nigeria The Lagos State Government has alerted the public to a new virus,...
- Advertisement -
- Advertisement -

The presidency last week submitted the 2018-2020 Medium Term Expenditure Framework and Fiscal Strategy Paper to the National Assembly. Total FGN revenue is projected to rise from N5.08trn in this year’s budget to N5.65trn in 2018. The outturn of N2.43trn in H1 2017, according to the Budget Office of the Federation document, is not far short of the projection on a pro rata basis. In days to come, we will comment on the expenditure and financing projections.

The outturn for FGN revenue for H1 2017 looks better than the narrative from official sources might suggest. Over the six months, oil and non-revenue collections were N100bn and N340bn behind projections respectively, the latter due largely to a dire record on companies’ income tax. The aggregate figure for FGN revenue was boosted by refunds, exchange-rate gains and an unexplained one-off N530bn transfer to the Consolidated Revenue Fund.

Read:  Day 1: The GTBank Fashion Weekend, Meet the Runway Designers

Turning to the underlying assumptions for 2018, the framework has average oil production of 2.30 mbpd (vs 2.20 mbpd in 2017), an average oil export price of US$45.0/b (vs US$44.5/b) and an unchanged exchange rate of N305 per USD.

We have no issue with the assumptions. The budget planners have run with their familiar combination of a figure for output that may look a little optimistic and a conservative projection for the price. On the exchange rate, our view is that the authorities will maintain multiple currency practices at least until end-2018.

In view of the weak performance YTD, we can see why non-oil revenue is forecast as broadly flat next year (N1.39trn vs N1.37trn). The framework assumes an unchanged standard rate of VAT but leaves open the possibility of a rise in the medium term. It has high hopes of efficiency gains.

Read:  What You Need To Know About Getting U.S.A Visa In Nigeria
Read:  Google introduces 5 more products

It has FGN revenue from fines, recoveries and the tax amnesty combined at N600bn in 2018, compared with N570bn in the current year’s budget. This is a grey area in which analysts would appreciate rather more colour. We know that recoveries and fines are regularly challenged in the courts, and that the monies cannot immediately be “banked”. We would, however, like to be told the basis of the projected tax amnesty proceeds of just N90bn.

We hear criticism that the presidency has submitted the documents to the assembly only four months after the sign-off of the 2017 budget. There are set procedures and the FGN should not be faulted for following them in the hope that the 2018 budget might be approved at, or at least nearer, the start of the new calendar year.

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

CBN MPC Retains MPR and Liquidity Ratio; Raises CRR to 27.5% In First Meeting of 2020

The Monetary Policy Committee (MPC) concluded its two-day policy meeting today. The committee agreed to raise the cash reserve...

Dangote Cement and 15 others drives equity market higher as NSE-ASI gain 0.13%

The Nigerian bourse on Friday ended the trading week on a positive note, extending the previous day’s positive sentiment. The growth was impacted by gains...

EUR114 million in fines have been imposed by European authorities under GDPR

Breach notifications exceed 160,000 in Europe since the introduction of GDPR according to a survey by DLA Piper European data protection regulators have imposed EUR114...

Fashion Fix 3 (Ep 6)- Your Transitional TGIF Wardrobe

Award-winning fashion stylist Rhonke Fella joins Mercy on this week’s episode of Fashion Fix to discuss getting your Friday office workwear sorted. The pair dish...

More Articles Like This