•Non-oil revenue surpasses target

By Peter Egwuatu 

THE Federal Government, FG, may have recorded about N1.9 trillion shortfalls in actual revenue generation against its budgeted amount between January and November 2021.

Afrinvest Research, a Lagos based investment house, said its findings show that actual aggregate FG revenue for the 11 months amounted to N5.5trillion, 26 percent short of the pro-rated N7.4trillion.

However, the research findings also show that non-oil revenue was N1.6 trillion, about 18.8 percent higher than the budgeted target as at November while FGN’s independent revenue also exceeded target by 13.4 percent to stand at N1.6trillion.

The underperformance of the total revenue widened fiscal deficit from N6.4trillion based on the 2021 budget and supplementary budget to an actual deficit of N7.1trillion within the period.

To plug the gaps, the domestic and foreign borrowings rose from N2.7trillion to actual figures of N5.1trillion for domestic including an estimated Ways and Means, according to the research report.

The analysts stated further: “We project that the 2022 budget deficit will likely cross N10.0trillion. Thus, we expect that domestic bond sales should exceed N2.6 trillion to an estimate of N3.1trillion in 2022”.

Meanwhile, analysts at Coronation Research, operated by Coronation Merchant Bank, have explained that the   Debt Management Office, DMO plans to offer N150billion worth of bonds across the earlier listed tenors to finance the budget deficit.

The analysts stated: “We expect a rise in bond yields over the medium term owing to an expected increase in domestic borrowing by the FGN to finance the budget deficit and tight domestic monetary policy amidst global monetary policy normalisation this year.”

Commenting on the 2022 budget deficit of the Federal Government, analysts at Investment One Financial Services Limited stated: “We are concerned about the ability of the government to meet up with the oil production quota target for the year as oil revenues continue to be a major determining factor for budget implementation.

“We opine that focus should be on diversification of earnings from oil proceeds to boost revenue.”

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