Business - Business & Economy - News - October 10, 2021

2022 Budget: Non-oil sector to account for 65.1% of revenues -Finance Minister

By Bassey Udo

More than 65 percent of the over N10.13 trillion aggregate revenue to fund the 2022 budget is projected to come from non-oil sources (including government-owned enterprises (GOEs), the Minister of Finance, Budget and National Planning, Zainab Ahmed, has said.

The Minister who presented an overview of the revenue framework on where the revenue in the 2022 Budget would come from on Friday said about 34.9 percent of the total projected revenue is expected from oil-related sources.

Details of the N3.15trillion share of oil revenues, the minister said, include N187.4 billion as dividend payment from the Nigeria LNG and N8.32billion from the Bank of Industry, while revenues from minerals and mining would be N2.92billion.

In terms of non-oil tax revenues, the minister said the highlights from the overview of the revenue framework showed a total of N2.13trillion is being expected by the government during the year.

A breakdown consists N909.3billion from company income tax (CIT); N316.69 billion from the value-added tax (VAT); N834.12 billion from the Nigeria Customs Service; N71.97billion as a share of the Federation Account levies; N29.37billion from the share of the electronic money transfer levy (formerly Stamp Duty), and N96.94billion from oil royalty.

Other revenue sources include N2.88trillion from government-owned enterprises; N1.82trillion from independent sources; N300billion from drawdown from special levies accounts; N280.86billion from Signature Bonus/Renewals/Early Renewals; N26.93billion from Domestic Recoveries/Assets/Fines; N63.38billion from grants and donor funding, and N305.998billion from tertiary education tax fund (TETFUND).

On where the money is going, the Minister said of the aggregate expenditure outlay in the budget, including government-owned enterprises (GOEs) and project-tied loans), 41.7 percent, or about N6.83trillion of the total expenditure of N16.39 trillion, would go to recurrent (non-debt) spending.

Also, 32.7 percent of the total expenditure, or about N5.35trillion, would go to aggregate Capital Expenditure, including Capital component of Statutory Transfers, GOEs Capital, and project-tied loans expenditures, while debt service would take 22 percent of total expenditure, or N3.61trillion and 35.6 percent of total revenues.

Besides, the provision to retire maturing bonds to local contractors/suppliers is
1.79 percent of total expenditure, or about N292.7 billion, in line with the commitment to
offset over a decade accumulated arrears of contractual obligations.

Details of the overview of expenditure framework, the Minister said, showed statutory transfer would take about N768.3 billion; debt service N3.61 trillion, and sinking fund N292.7billion.

Out of the total recurrent (non-debt) expenditure of about N6.83 trillion, the Minister said personnel costs by ministries, departments, and agencies would take the lion’s share of 51.1 percent, or N3.49trillion; personnel costs of GOEs 9.05 percent, or N617.7billion; Overheads for MDAs 4.99 percent, or N341.4 percent; overheads (GOEs) 6.6 percent, or N451billion; pensions, gratuities and retirees benefits 8.45 percent, or N577.36 billion; other Service Wide Votes (including GAVI/Immunization) 13.43percent, or N916.87billion; Presidential Amnesty Programme 9.52 percent, or N65billion, and TETFUND recurrent 2.2 percent, or N15.3billion.

The Minister said other fiscal items provisioning include N350billion for special interventions (recurrent) and N5.35 trillion for capital expenditure.

Details of the capital expenditure include Capital Supplementation N487.92 billion; Capital Expenditure in Statutory Transfers N462.53billion; Special Intervention Programme (Capital) N10billion; MDAs Capital Expenditure N2.14trillion; GOEs Capital Expenditure N647.08billion; TETFUND Capital Expenditure N290.7billion; Grants and Donor Funded Projects N63.38billion; Multi-lateral/Bi-lateral project-tied loans N1.16trillion, and FGN Share of Oil Price Royalty Transferred to the Nigerian Sovereign Investment Authority (NSIA) N96.9billion.

On deficit financing, the Minister said that out of the overall budget deficit of N6.26 trillion, representing 3.39 percent of the gross domestic product (GDP), financing would be mainly by borrowing, split N2.51 trillion each from domestic and external sources in addition to N1.16trillion from multi-lateral/bilateral loan drawdowns as well as N90.7billion from the proceeds of privatization.

On why the 2022-2024 medium-term expenditure framework (MTEF) was revised, the Minister said apart from the projected decrease in government revenue, deductions for federally-funded upstream projects cost, and 13 percent derivation, there was a need to accommodate the decline in the net Federation oil and gas revenue projections.

Gross Federation Revenue projection decreased by N341.57 billion, from N8.870 trillion to N8.528 trillion, while deductions for federally-funded upstream project costs and 13 percent derivation, decreased by N335.3 billion and N810.25 million respectively.

Besides, net Federation Oil and Gas revenue projection declined by N5.42billion, from N6.540 trillion to N6.535 trillion.

Despite the decline in Federation Account revenue, the Minister said the Federal Government’s revenue
projection still increased from N8.36 trillion to N10.13 trillion, as a result of projected increase in the retained revenues of GOEs by N837.76 billion and MDAs internally generated revenue by N697.6 billion.

She said the introduction of Education Tax of N306 billion and Dividend of N8.3 billion
from the Bank of Industry as revenue lines as well as the Federal Government share of oil price royalty of N96.9 billion to be transferred to the Nigerian Sovereign Investment Authority in line with the provisions of the Petroleum Industry Act (PIA) necessitated adjustments in the MTEF.

On the expenditure side, the Minister said the increment was necessary to provide for additional critical expenditures, including N100 billion additional provision for the Independent National Electoral Commission (INEC) toward advance preparations for 2023 General Elections; N400 billion for National Poverty Reduction with Growth Strategy, and N178.1 billion for population and housing census scheduled for 2022.

Another N50 billion was provided for Police Operations Fund; N37 billion additional provision for MDAs’ Electricity Bills Debts; N517.5 billion additional Multi-lateral/Bi-lateral Project-tied Loans; N54 billion to NASENI, representing one percent of FGN Share of Federation Account, and N305.99 billion for TETFUND (funded by the Education Tax).

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