The decline in Internally Generated Revenue (IGR) in 2020 of the 36 states, including the Federal Capital Territory (FCT) decrease by 1.9 per cent to N1.3 trillion, is pilling pressure on government finances, analysts have said.
“Given the expectation that Nigeria’s earnings from crude oil will remain low over the medium term due to the innovation of cleaner energy sources and COVID-19 impact on the global oil market, we expect sub-national’s financial vulnerability to heighten in the near term”, saiid analysts at Afrinvest.
According to the recently published states (IGR) report by the National Bureau of Statistics (NBS), the total IGR of the thirty-six states and the FCT stood at N1.3 trillion in 2020. This represents a decline of 1.9 per cent when compared to the less than N1.3 trillion generated in 2019.
Meanwhile, the total revenue available to all the sub-nationals (aside grants) in 2020 stood at N3.6 trillion, translating to a mark-up of 63.7 per cent (or N2.3 trillion on their IGR figure. This mark-up which equates to about two third of the total revenue available to the sub-nationals represents the annual aggregate of the monthly FAAC allocation in 2020.
Analysts are afraid that with the third wave of COVID-19 raging in Europe and America may further reduce Nigeria’s expectation from crude oil.
Global C-19 cases increased last week by 3.5 per cent to 145.5 million while the death toll rose 2.5 per cent to 3.1 million.
Notably, weekly cases in India, a major buyer of Nigeria’s crude surged 60.0 per cent to 2.0 million following the spread of a new strain, which reportedly is more contagious. Meanwhile, cases in the US declined 11.0 per cent to 449,430 as vaccination rate continues unhindered.
Last week, fresh lockdown across India and Asia at large ignited some oil demand concerns in the market. Consequently, oil prices decreased mildly by 1bp w/w to close at $65.91/bbl. On the domestic front, external reserves declined by 0.1 per cent w/w to $35.0 billion
