The 2017 budget implementation report shows a paltry average performance in 2017, compared to the projections contained in the budget. The actual oil and non-oil revenue generated were N1.1 trillion and N957 billion respectively, considerably below the projected figures of N2.1 trillion1 and N1.4 trillion. Other revenue sources brought the total revenue generated to N2.7 trillion. However, on the expenditure side, the combination of personnel expenditure and debt repayments amounted to N3.5 trillion, which exceeded total revenue by N885 billion. This implies that Nigeria borrowed to pay salaries and service debts in 2017. As long as the culture of making unrealistic budget projections continues, we expect to record low budget implementation going forward. To address the wide gap between actual and expected budget performance, better forecast of future revenue alongside making less ambitious spending plans is critical.
Macroeconomic Report & Economic Updates
Data released by the National Bureau of Statistics shows that Internally Generated Revenue by states increased in 2017H1. The IGR increased from N392.1 billion in 2016H1, to N396.9 billion in 2017H1, a slight 1.2 percentage half Year-on-year growth. Also, N149.5 billion was generated in 2017Q3. Lagos state remains top in internal revenue generation, with a significant 42.3 percent share of total IGR in the review half year. The improvements in IGR may be attributable to efficient revenue collection by each reported state from the various sources of internal revenue: taxes, fines and fees, licenses, earnings & sales, rent on government property, interests and dividends, among others.
The paper explores the policy framework for implementing the FRA across the 36 states, and identifies the underlying macroeconomic principles required for the FRA to be effective at the state level.
The naira continued its downward trajectory in the review week. Specifically, naira depreciated significantly at the parallel segment by 3.5 percent to a record low of N440/$ on September 23, 2016. Notably, this was driven by the worsening liquidity constraints at the interbank market which left the excess forex demand to be sourced at the parallel market, and thus exerted downward pressure on the naira. The naira is likely to further weaken given that most of the liquidity constraints are exogenously determined and thus forex supply will likely remain subdued by its demand.