Nigeria’s 2017 revenue projection seen as unrealistic
Experts are at a loss as to how Nigeria will achieve its 2017 revenue projection of N4.9 trillion, which is 28.9 percent higher in naira terms than 2016’s N3.8 trillion estimate.
This is because actual revenues generated so far this year have consistently fallen below predications on a pro-rata basis, due to oil production shut-ins and sinking company profits.
The Federal Government raked in N180.46 billion in the month of October, according to the office of the Accountant-General of the Federation, 56% below the pro-rata full-year estimate of N321.6 billion for 2016. In September, it was off-target by 25 percent.
The pro-rata estimate is a breakdown of how much the Federal Government must earn in one month to achieve its full year revenue target and is calculated by dividing the full-year forecast by 12.
Between January and October, actual revenues have never met this forecast, and Yvonne Mhango, Sub-Saharan Africa Economist at investment bank, Renaissance Capital says it is difficult to see how the Federal Government will meet its 2017 projection.
To achieve 2017’s revenue projection of N4.94 trillion, Nigeria must earn N411.66 billion monthly.
“The flaws in the full-year 2017 budget emerge when we look at the revenue projections – an ambitious 28% increase to N4.9trillion– particularly when the Federal government has failed to meet its full-year 2016 target, due to low prices in the first quarter of 2016 and disruptions to crude oil production,” Mhango said by email.
“To the FGN’s credit, it revised down its independent revenue projection for FY17, which at NGN807billion is almost half that projected for FY16. Even the non-oil revenue projection is 5% lower. However, this pragmatism was countered by a 140% increase in the FGN’s oil revenue projections, to NGN2trillion. This may in part be due to an optimistic assumption of oil production of 2.2mn b/d, which the country has failed to achieve since 2014. This assumption is partly mitigated by a modest oil price assumption of $42.5 per barrel,” Mhango added.
Nigerian President Muhammadu Buhari presented the country’s 2017 budget outlining expenditure of NGN7.3trillion on Wednesday and now awaits approval from the National Assembly.
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