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Monday, 4 November 2013
Nigeria: Revenue Shortfall Takes Toll On Capital Expenditure
The persistent revenue shortfall recorded this year has continued to take its toll on the projections made in the 2013 budget: a total of N1.01 trillion has been released for capital expenditure as at the fourth quarter. The federal government yesterday announced the release of N160 billion for execution of capital projects in the fourth quarter of 2013. The latest release, which was announced by the Federal Ministry of Finance yesterday, brings the total amount released for the execution of capital projects in the 2013 budget to N1.01 trillion.
However, this represents a shortfall of 34 per cent compared to the N1.54 trillion approved for execution of capital projects in the 2013 budget.
Nigeria has continued to suffer decline in projected revenue as theft of crude and output disruptions persist in the Niger Delta.
Coordinating minister for the economy and minister of finance Dr Ngozi Okonjo-Iweala admitted, during an interview with Bloomberg, that revenue gap may reach as much as $12 billion (up to N1.92 trillion) short of this year's budget estimates.
With the 2013 budget based on a daily output of 2.53 million barrels and an oil price of $79 a barrel, Africa's biggest oil producer expected revenue of almost $80 billion from exports.
In the first half of the year, oil receipts amounted to $28.2 billion, more than $7 billion below the estimate, according to figures from the Central Bank of Nigeria (CBN).
The revenue shortfall has already increased the level of budget deficit planned for this year. At the onset, the minister was seeking to meet a budget deficit target of 1.9 per cent of gross domestic product this year. However, the deficit reached 2.5 per cent in the second quarter during the peak of the output outages, according to data from the CBN. The government will draw down its oil savings in the Excess Crude Account to compensate for the drop in revenue to keep the budget deficit under control, Okonjo-Iweala said.
Meanwhile, according to the Ministry of Finance, previous quarterly releases for the 2013 capital budget indicate that N400 billion was released for first quarter, N200 billion for second quarter and N250 billion for third quarter.
A further breakdown showed that N598.4 billion of the capital budget or 72.3 per cent has been utilised as at the end of the third quarter of 2013, while a balance of N229.6 billion unspent by various MDAs remains at the CBN.
With the N160 billion released for the fourth quarter, total spendable balances available to the MDAs till the end of the year currently stands at N450 billion, the ministry stated.