Since the administration began in 2015, the Nigerian Government has missed its revenue targets, amid high interest rates and runaway inflation
The eight years of the Muhammadu Buhari administration were characterised by ups and downs as far as fiscal and monetary performance is concerned, even though the negatives seem to outweigh the positives.
Also, a record string of rate hikes is failing to suppress inflationary pressures and is putting more strain on borrowers, while a dollar crunch dating back to 2020 is making things difficult for importers. The World Bank expects Nigeria’s fiscal deficit to surpass five per cent of GDP until 2025 in the absence of a substantial increase in crude oil earnings and tax reforms.
The Nigerian government earmarked N3.4 trillion for fuel subsidy this year to be spent until June, with no provision made for the second half of the year. For 2020, N8.6 trillion was the target for revenue but N6.5 trillion or 76 per cent was achieved. While the government missed its projection for non-oil revenue, it exceeded its target for non-oil revenue. However, revenue contracted by 27.1 per cent year on year.
The income generated by way of company income tax between when President Buhari took office in 2015 and last December stood at N11.5 trillion, according to the statistics office. The government posted its biggest earnings ever from CIT in the four quarters of 2022, all summing up to N2.8 trillion for the year.
Mondaq, the New York-based legal industry intelligence syndication service, estimates that given the N4.9 trillion planned for capital expenditure in the 2023 budget, it will take the Nigerian government almost 70 years to bridge the infrastructure gap. That was in addition to the 41 items for which forex for their importation had already been banned in 2015. The government noted that those items could be produced locally and boosting their production would not only help conserve the foreign exchange reserve but also help diversify the oil-dependent economy.in March 2022 of the Dangote Fertiliser Plant, which has an installed capacity of 3 million metric tons of urea per annum and is planned to export fertilisers to the US, Brazil and India.
Revving up the benchmark interest rate by a cumulative 650 basis points between last May and March has caused borrowing rates to trend upward at commercial banks and bonds to be priced higher.N199The rate had climbed 132.7 per cent to N463 at market close as of 19 March 2023, according to data from the FMDQ Exchange.
The central bank has ignored suggestions from the International Monetary Fund and the World Bank to ditch its multiple exchange rates regime and unify rates around that of the parallel market. Within the two months to January, the CBN was able to recall as much as 70.4 per cent of the N2.7 trillion cash outside banks’ vaults, according to the governor, Godwin Emefiele, in addition to the N500 billion banks already held. But that came at a cost.
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