The Federal Government’s (FG) revenue shortfall continues to pose a major challenge as monthly collected revenue dropped by N387.15 billion in November. This is disclosed in the latest Economic Report released by the Central Bank of Nigeria (CBN).
CBN, in its latest economic report, stated that the Federal Government collected N858.92 revenue in November, as against the monthly budget estimate of N1.24 trillion. This means federally collected revenue fell short of the monthly budget estimate by N387.15 billion (31.1% shortfall).
The Central Bank attributed the drop in federally-collected revenue to shortfall in both oil and non-oil revenue, which shows that the country’s revenue challenges are still staring it in the face.
Oil revenue breakdown
The apex bank disclosed that in November, oil revenue was put at N489.08 billion or 56.9% of total revenue, and this was below the monthly budget estimate of N798.83 billion. Also, oil revenue in November was below the receipt of N577.30 billion in the preceding month.
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- According to the CBN, Crude oil and gas exports, domestic crude oil/gas sales and other revenue streams experienced significant increase in November.
- It was stated that the decrease in oil revenue has been associated with shut-ins and shut-downs at some terminals of the Nigerian National Petroleum Corporation (NNPC) due to pipeline leakages and maintenance activities.
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Non Oil revenue breakdown
On the other hand, Non-oil receipt for November 2019 stood at N369.84 billion or 43.1% of total revenue. Consequently, non-oil revenue was below the monthly budget estimate of N447.24 billion (17.3%).
- The report shows that corporate tax, independent revenue of Federal Government and other revenue sources experienced significant drops in November.
- The CBN also noted that the drop in collection, relative to the monthly budget estimate, was, due to the decline in revenue from Corporate Tax, VAT, Education Tax and Federal Government Independent Revenue.
How the generated revenue was disbursed
Out of the N723.31 billion that was retained in the Federation Account, the sums of N100.72 billion, N26.88 billion, and N23.65 billion were transferred to the VAT Pool Account, Federal Government Independent Revenue, and “Others”, leaving a net balance of N572.06 billion.
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- The Federal Government received N276.12 billion out of the net balance while the state and local governments received N140.05 billion and N107.98 billion, respectively.
- The balance of N47.91 billion was shared among the oil-producing states as 13% Derivation Fund.
- Also, from the N100.72 billion transferred to the VAT Pool Account, the Federal Government received N15.11 billion while the state and local governments received N50.36 billion and N35.25 billion respectively.
Additionally, N1.1 billion was distributed in the month as Exchange Gain, with the Federal, State and Local governments receiving N520 million, N260 million and N200 million. Overall, the total allocation to the three tiers of government in November 2019 amounted to N682.59 billion, which was below the preceding month’s budget estimate of N1.091 trillion.
What it means: The failure of the Federal Government to meet its budgeted revenue targets implies that government borrowing might continue to surge in 2020, as government will seek to fund its activities despite a shortfall in revenue.