2018 Budget: Why FG May Not Meet Revenue Projections – Fitch
So, Nigeria's 2018 budget aims to make sure expenditure does not exceed revenue.
But there is a problem. Government still depends so much on oil revenue and growth in non-oil revue isn't matching up.
This is according to an international ratings agency, Fitch.
Fitch said in a statement on Thursday that Nigeria's non-oil revenues are likely to fall short of the budget projections.
Recall that President Muhammadu Buhari presented the budget, tagged the "Budget for Consolidation" to a joint session of the national assembly on 7 November.
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According to the budget, it wants to see the Federal Government’s fiscal deficit narrowing to 1.7% of GDP in 2018, from the 2.8% that Fitch expects for 2017.
“Nigeria's overall revenue/GDP ratio is among the lowest of Fitch-rated sovereigns. We expect that overall revenue will continue to increase in 2017 and 2018 as oil production increases and the economy recovers from recession, but more slowly than budget forecasts envisage,” Fitch said.
“Tax revenue growth is likely to have accelerated in 2H17 with faster economic growth, which rose to 1.4% in the third quarter, but is still unlikely to meet budget targets,” it added.
Fitch further stated that “one-off increases in independent revenues and the recovery of stolen funds may help, but these brought in significantly less revenue than projected in the previous two budgets.”
It also noted: “The 2018 budget assumes 2.4 trillion naira in FGN retained oil revenue, based on a budgeted oil price of $45 per barrel. This is well below Fitch's forecast that Brent crude will average $52.5 per barrel in 2018, but the budget's production assumption of 2.3 million barrels per day (mbpd) is optimistic.”
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