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Economy gloomy as revenue slides by 14%

By  Babajide Komolafe
LAGOS—Nigeria’s economic indices are bad, going by the latest Central Bank of Nigeria (CBN’s) report for the second quarter ending today.

The gloomy picture shows that the Federal Government’s budget deficit rose more than 500 per cent  to N382.23 billion during the period.

The sharp upward movement, according to the apex bank was attributable  to the 13.5 per cent fall in revenue and 11.4 per cent increase in expenditure.

Taking into cognisance aggregate happenings in the quarter, according to economic watchers, the nation’s mono-economic revenue source — oil, must have been badly influenced by militant activities in the Niger Delta, shortly before the amnesty deal became effective on August 6. Even non-oil receipts did not do better.

This brought totally collected revenue down by 11.6 per cent to N1.04 trillion during the quarter.

CBN said in its economic report for the quarter, “The fiscal operations of the Federal Government in the second quarter of 2009, resulted in an overall deficit of N 382.23bn, compared  to the deficits of N57.96bn in the preceding quarter and the budgeted N209.15bn. As a percentage of GDP, the fiscal deficit was 5.7 per cent in the reviewed quarter.

The fiscal deficit was financed from additional issuance of FGN Bonds and other funds.

“At N519.36bn, the Federal Government retained revenue for the second quarter of 2009, was lower than the proportionate budget estimate and the receipts in the preceding quarter by 13.5 and 30.5 per cent, respectively.

At N901.59bn, total expenditure for the review period rose by 11.4 and 30.8 per cent over the proportionate budget estimate and the level in the preceding quarter, respectively.

The rise in total expenditure relative to the budget estimate and the preceding quarter was attributed largely to the increase in capital releases during the quarter.

A breakdown of total expenditure showed that the recurrent component accounted for 63.1 per cent, capital component 31.3 per cent, while statutory transfers accounted for the balance of 5.6 per cent.

As a percentage of GDP, recurrent expenditure was 8.4 per cent, while capital expenditure and transfers stood at4.2 and 0.8 per cent, respectively.

“Available data showed that total federally-collected revenue during the second quarter of 2009 stood at N1,044.89bn, representing a decline of 21.2 and 11.6 per cent from the proportionate budget estimate and receipts in the preceding quarter, respectively.

At N696.61 billion, oil receipts, which constituted 66.7 per cent of the total, was lower than the proportionate budget estimate and the receipts in the preceding quarter by 10.5 and 17.3 per cent, respectively.

The fall in oil receipts relative to the preceding quarter was attributed to the decline in receipts from crude oil and gas sales as well as petroleum profit tax and royalties occasioned by militant activities in the Niger Delta.

Non-oil receipts, at N348.29 bn or 33.3 per cent of the total, was lower than the budget estimate by 36.4 per cent but exceeded the receipts in the preceding quarter by 2.7 per cent.

The decline relative to the budget estimate was attributed largely to the fall in Value Added Tax (VAT) and Companies Income Tax .

As a percentage of GDP, oil revenue was 13.7 per cent, while non-oil revenue stood at 6.8 per cent in the second quarter of 2009.

The decline in revenue relative to the level in the preceding quarter was due to the fall in oil receipts during the review quarter. Of the total federally-collected revenue during the review quarter, N655.98bn was transferred to the Federation Account for distribution among the three tiers of government and the 13.0 per cent derivation fund.

The Federal Government received N311.47bn, while the state and local governments received N157.98bn and N121.80 billion, respectively.

The balance of N64.73 bn went to the 13.0 per cent derivation fund for distribution by the oil- producing states.


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