The August 2018 issue of the CBN’s monthly economic report, highlights that federally collected gross revenue was N745.5bn, below January-July average of N764.2bn and 32.7% lower than the monthly budget estimate of N1.1tn. This was driven by twin shortfalls in oil & non-oil revenue. Oil revenues fell 37.0% below the monthly budget estimate of N640.0bn to N403.6bn amid weaker crude oil production arising from repairs and maintenance of oil facilities at various NNPC terminals. Also, non-oil revenue flopped 26.8% to the monthly budget estimate of N467.0bn, notably through 2018 till the month of issue, non-oil revenue has never met the budget estimate of N467.0bn.
Meanwhile, the federal executive council has proposed the sum of the N8.7tn budget for the 2019 fiscal year, N400bn lower than the N9.1tn in 2018. The proposed budget holds oil production volume assumption of 2.3mbpd and exchange rate at N305/1$ of the 2018 budget constant. Optimistic assumptions of the lower inflation rate of 9.9% and GDP growth rate of 3.0% for 2019 were made, compared to the IMF’s projection of a higher inflation rate of 13.3% and lower GDP growth of 2.3% in 2019.
That said, while oil price assumption targets for the budget is modest at $60/b (vs market price of above $70/b), revenue from oil would depend more on production capacity while non-oil revenue would be driven by the ability of MDAs to return a better than expected tax and independent revenue. Overall, the traditional delayed passage and implementation may hamper impact.