26.2 C
Monday, June 24, 2024

FG Raises MDAs Operating Surplus to N916.87bn

Must read

- Advertisement -

In a bid to secure alternative sources of funding, following the crash in crude oil price, the Federal Government has raised the target set for Ministries, Departments and Agencies through the payment of operating surplus from N849.97bn to N916.87bn.

The Federal Government has revised upwards the independent revenue projections from Ministries, Departments and Agencies in the current fiscal period by N66.9bn to N916.87bn.

The new amount represents an increase of 7.87per cent over the original projections of N849.97bn.

The N916.87bn independent revenue is contained in the revised 2020 budget proposal of N10.27tn which has been submitted to the National Assembly.

Out of the estimated revenue projections of N916.87bn, about N436.94bn is planned to be realised from 10 of the agencies.

Some of the top agencies, according to findings, are the Central Bank of Nigeria, the Nigerian Insurance Deposit Corporation, the National Maritime Administration and Safety Agency and the Nigerian Communications Commission.

The upward revision of the revenue projection by the Federal Governnment was caused by the negative impact of the coronavirus pandemic on oil prices.

The pandemic which had so far affected about 34 states and the Federal Capital Territory had led to unprecedented drop in global crude oil prices.

Crude oil price had dropped from about $67.35 per barrel in December when the budget was approved to about $26 per barrel as of Friday.

Based on the revenue parameters upon which the revised proposal was made, the Federal Government had reduced the oil price benchmark from $57 per barrel to $30 per barrel.

Similarly, the oil production volume was cut from the initial 2.18 million barrels per day to 1.7 million barrels per day.

The drop in crude oil price had led to dwindling revenue inflow into the federation account.

Faced with the threat of persistent decline in revenue inflow, it was learnt that the government decided to raise the initial projection from operating surplus remittance by N67bn.

About 122 agencies are required to pay the operating surpluses into the Consolidated Revenue Fund of the Federal Government based on the Fiscal Responsibility Act 2007.

The Act requires listed government agencies to remit 80 per cent of their annual operating surpluses to the CRF.

The operating surplus is made up of revenues accruing to government agencies above what they are approved to spend at the beginning of the budget year.

Some of these agencies are the Petroleum Products Pricing Regulatory Agency, the CBN, the Nigerian Ports Authority, the Federal Airports Authority of Nigeria, the Nigeria Postal Service, the NCC, the National Inland Water Ways Authority, and the National Information Technology and Development Agency.

There is also the Nigeria Airspace Management Agency, the National Examination Council, the Nigerian Television Authority, the Nigerian Shippers’ Council, the National Health Insurance Scheme, the National Pension Commission, the Corporate Affairs Commission and the Standards Organisation of Nigeria, among others.

Over the years, many of these agencies have been underpaying revenue into the coffers of government.

MoneyCentral gathered that about 50 government-owned enterprises generating independent revenue did not remit their operating surpluses running into over N2tn.

Speaking on the development, the Lead Director, Centre for Social Justice, Eze Onyekpere, said that governnment revenue projections over the years had not been based on realistic assumptions.

He said, “Generally, our revenue projections have severally missed the mark over the years.

“The projections and forecasts suffer from lack of realism. In 2016, revenue projections fell short by 23 per cent; in 2017, it fell short by 47.73 per cent and in 2018, by 45 per cent.

“This indicates that overall, a good part of our revenue projections has not been based on empirical evidence.”

He said the revenue projections for 2020 should have been greatly influenced by the trend and actuals of 2018 and 2019 except there had been a dramatic change in economic circumstances warranting the new projection.

The Registrar, Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said in order to achieve the revenue target, key reforms should be implemented with increased vigour to improve revenue collection and expenditure management.

He said achieving fiscal sustainability required decisive actions, noting that the budget performance had shown clearly that the country had revenue challenge.

He gave some of the reform initiatives that should be undertaken to include deployment of new technology to improve collection, stronger enforcement action against tax defaulters and tighter performance management framework.

The Director-General, Budget Office of the Federation, Ben Akabueze, had during a meeting with the heads of the revenue generating agencies said the Federal Government would strengthen its control mechanism to make the revenue process more transparent and inclusive.

To achieve this, Akabueze said the government would implement tight expenditure control to limit allowable expenses, frequency of board meetings and other wasteful practices.

- Advertisement -

More articles


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -spot_img

Latest article