The Federal Government hopes to earn and
share the sum of N18.61tn among the three tiers of government within
the next three years through the Federation Account.
While N5.929tn is being targeted from
the net distributable Federation Account revenue in 2014; N6.247tn and
N6.434tn will be received and shared in 2015 and 2016, respectively.
The estimated amount for next year indicates a drop of N726bn or 10.9 per cent from the N6.655tn targeted in 2013. Read more after cut.............
These details were contained in the
2014-2016 Medium Term Expenditure Framework and Fiscal Strategy Paper of
the Federal Government.
The MTEF and the FSP, copies of which
were obtained by our correspondent on Sunday, provide the basis for an
annual budget planning and consist of a macroeconomic framework that
indicates fiscal targets, estimates, revenues and expenditure, including
the government’s financial obligations in the medium term.
The documents, prepared by the Ministry
of Finance, also set out the underlying assumptions for the projections,
provide an evaluation and analysis of the previous budget and present
an overview of consolidated debt and potential fiscal risks.
They also produce a number of important outcomes, including the macroeconomic outlook and fiscal balance.
The MTEF and FSP fulfil a requirement of
Section 11 of the Fiscal Responsibility Act, 2007, which stipulates
that the Minister of Finance shall prepare the documents and get them
approved by the Federal Executive Council and the National Assembly.
According to the revenue allocation
formula, the Federal Government gets 52.68 per cent of the statutory
revenue; states, 26.72 per cent; while the local governments receive
20.6 per cent.
The balance is allocated to the oil-producing states based on the 13 per cent derivation principle.
The Federal Government has been
grappling with revenue shortfalls since the beginning of this year,
surpassing its target of about N702bn just once in the first seven
months and earning N651.26bn in January; N571.7bn in February; and
N595.71bn in March.
In the months of April, May, June and
July, the revenue earned by the country stood at N621.07bn, N590.77bn,
N863.02bn and N497.98bn, respectively.
This, it was learnt, had led to the withdrawal of about $5bn from the Excess Crude Account to augment the shortfall in revenue.
According to the MTEF, the conservative projections of the revenue are based on a number of factors.
It stated, “Sequel to extensive
consultations with the NNPC and taking the account of the lingering
challenges of crude oil theft, illegal bunkering and production
shut-ins, which have continued to pose a challenge to government’s
finances, but with some expectation that government’s remedial action
will bear some fruit, we have projected crude oil production for 2014 at
2.3883mbpd.
“This figure is lower than the 2.526mbpd
budgeted in 2013. It is hoped that government’s efforts at tackling the
problem will yield further results in the medium term; hence, the
production is estimated at 2.5007mbpd and 2.5497mbpd for 2015 and 2016,
respectively.”
It stated that the last decade had seen
oil prices rise to record levels, peaking in July 2008 at $148 per
barrel, but had been trending downwards since 2012 with looser
demand-supply balance.
It said the recent discovery and
exploitation of shale oil and gas in the United States had raised
questions regarding the likely impact on global energy markets and the
price of oil.
It noted, “These development suggest
that there could be lower demand for Nigeria’s crude oil in the near
future, and thus necessitates more prudent management of the limited
available resources and the building of fiscal buffers to enable the
country to respond effectively to any negative impact that this
development may have on the international oil price in the near term.”
The report regretted that the delay in
passing the Petroleum Industry Bill could affect the auctioning of new
oil acreages with the resultant non-realisation of signature bonuses,
which were part of the financing items.
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