Everything seems to be going bad economically for the Buhari led government since they came into power in 2015. The exchange rate has plummeted by about 100%, Nigerian economy is likely to go into a recession, we have galloping inflation, oil prices remain stubbornly low, the National Assembly is in turmoil, the budget implementation is low etc.
The list goes on and on and it appears the government has now run out of excuses on who to blame as the economy is now firmly theirs. Despite the gloomy economic outlook, most oil-producing countries got a glimmer of hope when oil prices rose to about $50 after hitting a year low of about $27. This implied a significant boost in their heavily dented revenues as higher oil prices meant higher oil revenues. But not so for Nigeria!
In the latest string of bad news to befall this government, the Budget Minister on Thursday confirmed that the Nigerian Government collected just 55% of budgeted revenues for the for the first quarter of 2016. As expected, the Government is blaming everyone but themselves.
“Up to April we have not been able to meet our revenue target. We have only realized 55 percent. The bulk of this constraint is the problem in the Niger Delta…..”Our budgetary production target of 2.2 million bpd could not be met. At some point in time it was down to one million. We have, however, been told by the petroleum ministry that it’s going up again, not withstanding the problems,”Udoma Udo Udoma.
The Government in its 2016 budget projected a total revenue of about N3.86 trillion. When divided into four it amounts to about N965 billion per quarter in revenue. Assuming N965 billion is the Government’s quarterly budgetary revenue expectation, then it implies that they likely only collected about N530 billion in revenues only.
This is a huge shortfall and could mean more borrowing from the government in the next few months. The government already planned to borrow about N800 billion locally in 2016.
With the Niger Delta Militants intensifying their bombing activities, it is unlikely that the government will close this revenue gap anytime soon. Just last week the government announced that oil production had risen to about 1.95mbpd after dropping to under a million a few weeks back. However, the recent string of attacks on oil pipelines must have sucked out another 200,000bpd from our exports.
The sad part of all this is that the Nigerian Government appears to be clueless on possible solutions to our economic crisis. They are currently between a rock and a hard place as the militants are not even willing to negotiate while the government’s army is also considered to be over stretched.