2023 Budget: FG Posts N4.6tn Half-year Revenue

•Debt service gulped N4.02tn, only 26% of capital vote released 

•Laments poor fiscal accounting of govt inflows, outflows

•Blames failure to provide infrastructure on huge recurrent expenditure 

•Budget Office targets submission of 2024 appropriation by Oct

Ndubuisi Francis in Abuja and Oluchi Chibuzor in Lagos

The federal government yesterday disclosed that it posted a retained revenue of N4.06 trillion or 73.5 per cent of the pro-rata target of N5.52 trillion in the first half of the year.

However, it also emerged that during the review period, the sum of N4.02 trillion was committed to debt service and N2.28 trillion for personnel cost, including pensions.

The Technical Assistant (TA) to the Director-General of the Budget Office of the Federation (BoF) Prof. Olumide Ayodele, made the disclosure at a workshop in Abuja.

The workshop was organised by the BoF to sensitise budget officers in the Ministries, Departments and Agencies (MDAs) involved in the preparations of the 2024 Budget.

Olumide, explained that the pro-rata expenditure budget up to June 2023 was N10.91 trillion, adding that the actual spending was N7.76 trillion.

 Of this amount, N4.02 trillion was for debt service, and N2.28 trillion for personnel cost, including pensions.

He stated: “Only about N475.98 billion (26% of the pro-rata budget) has been released for MDAs’ capital expenditure as of June 2023. This performance is partly explained by the introduction of the “Bottom-up Cash Plan” arrangement with effect from 2023.

“Fiscal deficit for 2023 is estimated at N10.78 trillion. As at June 2023, N3.70 trillion deficit was incurred as against a prorated sum of N5.39 trillion (N1.70 trillion below the pro-rata level). However, multi-lateral-bilateral debt drawdowns are yet to be accounted for,” he said.

According to him, in the 2023 budget, the federal government’s share of oil revenues in the first half of the year was N604.10 billion (representing 54.2 per cent performance) and non-oil tax revenues totaled N1.14 trillion (92.7 per cent performance). Also, Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N592.68 billion and N195.08 billion (127 per cent and 101.8 per cent of respective targets).

Olumide further revealed that other revenues amounted to N2.14 trillion, of which independent revenue was N963.25 billion (60.8 per cent), Government Owned Enterprises (GOEs), N354.77 billion (29.3 per cent).

He lamented that low revenues constituted the key risk to fiscal and debt sustainability, adding that oil revenues have continued to be low despite higher oil prices.

Factors responsible for the low revenues, he noted, included lower crude oil production, oil theft and insecurity, inadequate investment in the oil and gas sector, worsened by Cash Call arrears in oil Joint Ventures.

Others were high crude production costs, weak actual tax collections compared to potential, as well as an unchecked rise in tax expenditures, low tax rates and inefficiencies in tax administration.

He also identified poor supervision of GOEs and weak accountability framework, poor fiscal accounting of government’s inflows and outflows.

He regretted that low revenue had been compounded by the rising cost of governance and low spending efficiency.

According to him, a direct result of Nigeria’s high cost of governance was that less than 30 per cent of federal government’s resources was available to fund capital projects since 2017, when the government set its 30 per cent target.

Due to funding constraints, many capital projects abandoned or uncompleted, stressing that the lack of a rigorous process for selecting capital projects and assessing the viability of the projects vis-a-vis planned outcomes had greatly undermined spending efficiency.

He further stated that government’s huge recurrent expenditure had constrained the provision of good roads, steady power supply, healthcare services, quality education, quality shelter, among others

“This has contributed to observable underperformance of the economy, slow growth and current infrastructural challenges.

“No country can develop where a large part of its earnings is spent on administrative structures rather than on productive public investment,” he said.

Olumide said the workshop set out, among others, to achieve multifaceted goals, including the resolution of all issues associated with the 2023 budget preparation on the Government  Integrated Financial Management Information System (GIFMIS) platform noted by MDAS  and acquaint MDAs with basic steps, processes and procedures involved in preparing the personnel, overhead and capital budget.

Others are to explain the GIFMIS Module for recording revenue, Aid and grants; to enhance MDAs’ understanding of the processes of generating budget reports on the GIFMIS platform, including error report and how to address such errors.

The Technical Assistant revealed that the 2024 federal government framework was prepared against the backdrop of slow growth, supply-chain disruptions, persistent high inflation occasioned by the hike in fuel prices, exchange rate challenges, low capital inflow and insecurity

 “The FGN 2024 Budget Framework was prepared against the backdrop of the weeks of democratic transition and it reflects the new direction of the present Administration in addressing key fiscal challenges and policy issues.

“Factors impacting the medium term fiscal outlook include: Slow global growth and supply-chain disruptions; rising geo-political tensions and unabating Russia and Ukraine war, with severe implications on global food and energy prices; grossly inadequate domestic resource mobilisation; and challenging domestic macroeconomic and business environment,” he said.

He admonished the budget officers to adhere strictly to the 2023 ceilings as contained in the guidelines of the 2024 Budget Call Circular which sets out the requirements and instructions that must be followed in the preparation of the 2024 Federal Government Budget Proposal.

He urged the MDAs to collaborate with the private sector through Public Private Partnership (PPPs), adding that the budget should be disaggregated as soon as possible to in order to see the extent to which the budget was responsive.

For the purposes of transparency and accountability, he said each MDA was required to upload its budget on its website, adding that the BoF would collaborate with the Independent Corruption Practices and Other Offences Commission (ICPC) to eliminate out ghost workers.

Earlier in his opening address, the Director General, Budget Office of the Federation, Mr. Ben Akabueze told the participants at the workshop that as they gathered, it was imperative that to recognise the significance of their roles of, “aligning our activities with the aspirations of the Nigerian people and the development agenda of the current administration.”

“The President Tinubu’s administration is firm in its commitment to fulfilling its promises to our citizens. Our focus therefore should remain steadfast on using the budget as a veritable tool for delivering government’s commitment to all Nigerians.

“To achieve this, collaboration and synergy between the various MDAs is paramount. We must harmonize our sectoral policies and programmes with the overarching National Development Plan 2021- 2025 and the specific programmes of this Administration.

“We must ensure that our efforts are synchronised, resources are optimally utilised, and the impact of our collective work resonates across the nation. Furthermore, it is essential to note that the President Tinubu’s Agenda sets the stage for a transformative era in our great nation.

“This agenda outlines the framework for sustainably achieving inclusive socio-economic growth, infrastructural development, and the overall well-being of our people. It is, therefore, incumbent upon us to integrate the tenets of this agenda into our respective roles and responsibilities.

“The GIFMIS Budget Preparation Subsystem Training programme serves as a platform to equip us with the tools and knowledge required to facilitate our budgetary processes.

“This technology-driven system enhances our efficiency, minimises bottlenecks, and enhances accountability. I urge you all to actively participate in the training sessions, share insights, and seize this opportunity to foster collaboration among MDAs.

“Let us harness the power of information technology to build a more transparent, accountable, and effective government machinery.

“MDAs are enjoined to study the Budget Call Circular in detail and avoid making mistakes that should ordinarily be avoided if they had complied with the relevant sections of the Call Circular.

“To this end, emphasis will be made in one of the modules this year on key items and sections to note in the 2024 FGN Budget Call Circular,” he said.

Meanwhile, the BoF has revealed that it was working to ensure that the 2024 appropriation bill was ready for submission by the end of October, in line with the government’s policy of running a January to December fiscal calendar.

This was as the agency equally stated that the report on the implementation of the running budget for the year 2023, would be made available soon.

Also, the budget office enjoined all the MDAs to study the 2024 Budget Call Circular in detail and avoid making mistakes that could ordinarily be avoided if they had complied with the relevant sections of the Call Circular.

Speaking in Lagos, at the 2024 Budget Preparation training programme for MDAs, Akabueze, said the training was aimed at enhancing participants collective capacity to effectively use the Budget Preparation Sub-System of the GIFMIS in the budget preparation process.

He said, participants must ensure that their efforts synchronised, resources optimally utilised, adding that the impact of their collective work must resonate across the nation.

According to him, “We want to meet up with the yearly submission of budget at the end of the year.  In the last four or five years, we have been submitting the budget in good time and I think the budget has been running between January to December which is the purpose of the training.

“We hope to submit before the end of October and we are working to make sure that it happens even though we know it is a new administration.

“But we are still hoping we can meet up with the deadline so that the National Assembly can also do their own and then the budget is passed within the year.”

The DG, represented by the Director, Revenue and Fiscal Policy, BoF, Hapsatu Mormoni, told participants that their presence reaffirmed shared commitment to advancing the efficiency and transparency of the nation’s budgetary processes.

“This training session underscores our determination to enhance fiscal discipline and accountability in the management of public funds. As we gather here, it is imperative that we recognise the significance of our roles in aligning our activities with the aspirations of the Nigerian people and the development agenda of the current administration,” he added.

Answering questions on the implementation of the 2023 budget, he said, “We are doing well, even though the extension has passed, but we hope to bring out the figure very soon. Before the budget process ends we will tell you how far with the 2023 budget before we go to 2024 definitely.”