Why Nigeria Is Reeling Under Cash Crunch — Budget Minister

Minister of Budget and Planning, Udoma Udo Udoma

Big cash crunch has hit Nigeria – no thanks to poor returns from oil and the inability of revenue agencies to meet their targets.

The Nation report continues:

The implementation of the budget has taken a hit, Budget Minister Udoma Udo Udoma said yesterday.

He told the Senate Appropriations committee that the government called a meeting to review the situation. The meeting is ongoing in Kano.

The minister was invited by the Senate to give an update on the performance of the budget.

He noted that overall for the first quarter; the government was running at about 55% of revenue projections.

He also explained that only existing projects, which already met the criteria for the various procurement stages qualified for funding.

Udoma blamed the shortfall in revenue receipt on the Niger Delta crisis, which affected oil production and prevented the government from reaching the 2.2 million barrels production level even when the price was going up.

He said: “There is a revenue meeting going on in Kano State, hence I won’t be able to give adequate revenue breakdown because we are not with the document here.

“That is why it is the expenditure figure that we will be able to give you. The Kano meeting was called to review revenue and the revenue situation because we are not achieving revenue targets which we set for the revenue generating agencies. 

“In personnel releases, the budget was ₦1, 723, 819, 398, 198, we have released ₦871, 459, 760, 939, which comes to about 50%.

“This is the way it should be because we are already in July and we have done six months, which is half of the year. 

“For overhead, the budget is ₦218, 368, 364, 886 and we have released ₦52, 913, 047, 226 (25%).

“The National Assembly gave us till May, next year to carry out the capital expenditure and we still have 10 months of capital spending to do.

“Nevertheless, out of the capital for MDAs, out of ₦1, 587, 598, 122, 028, we have released ₦235, 916, 566, 642 (15%).

“There are two reasons for the low level of capital releases. The first is the procurement procedure. No new project is ripe for any capital release because of the six months of procurement process including advertising and so on.

“It is only the existing projects which already met the criteria for the various procurement stages that are qualified for releases.

“The second reason for the low capital releases is the low revenue. Overall for the first quarter we were running at about 55 per cent in terms of our revenue expectations.

“The bulk of it is because of the problems in the Niger Delta which affected oil production, which prevented us from reaching the 2.2 million barrels even though the price is going up.

“We are hoping that as the year goes along, we will recover some revenue from oil as production increases.

“We also expect revenue coming from FIRS because people don’t pay taxes in the first quarter. FIRS has already reached 60% of the projected revenue as of June this year and we expect it to keep on rising.”

On the 2017 budget, Udoma said it would be transmitted to the National Assembly in October.

Budget Director General Ben Akabueze said that the inability of the country to generate the expected revenue target has to do partly with the difficulties in accessing foreign exchange that affected the import volume and, therefore affected customs revenue.

He noted that importers and manufacturers could not import, “but now the situation has changed there was improvement in importation since the access to forex improved.” 

He added that the statutory transfer of ₦175, 681, 000 had been met in full as priority projects of the MDAs were considered.

Senate Committee of Appropriations Chairman Mohammed Danjuma Goje said the budget performance as at first quarter of the year was impressive despite the dwindling revenue.

 He said “You have done well; personnel releases are okay. The Federal Government is on course in paying salaries, unlike states.

“The only problem is capital release, which is understandable. The important thing is that we need to let Nigerians know what the government is doing. We will call on the Finance Minister when she comes back from Kano.”

Goje praised the minister for his comment on the importance of constituency projects to Nigerians.

He said: “We had the concern that for the Secretary of the Government of the Federation, Lawal Babachir, to single out constituency projects for non-implementation because of funding gave us concern.

“We feel there is more to it.  We are uncomfortable and you know the importance attached to constituency projects.”