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Fiscal sector underperforms in last seven months

By Amaka Ifeakandu

Lagos

Nigeria’s fiscal sector recorded an underperformance in the seven months of this year ending July 2017 as both oil and non-oil revenues fell short of projections of the fiscal authorities.
The underperformance according to Cowry Assets Management was partly due to relatively low productivity in the real sector. The economic output decline in the first quarter of 2017 – as well as relatively lower crude oil prices in the review period.
However, between January and July, cummulative net distributable federation account revenue (revenue for the federating units: central, states and local governments) amounted to N1.97 trillion, 50.12 per cent lower than an expected N3.96 trillion.
A breakdown showed that accumulated gross oil revenue went to N1.95 trillion, 37.33 per cent lower than a projected N3.11 trillion.
The report within the seven months period showed that accumulated deductions (comprising Joint Venture cash calls, etc) amounted to N738.75 billion, 315.22 per cent higher than projected N177.92 billion, while accumulated 13 per cent Derivation charge stood at N157.48 billion, 58.71 per cent lower than projected N381.40 billion.
Consequently, the current report on the economy stated that accumulated net oil revenue after derivation charge went to N1.05 trillion, 58.71 per cent against projected N2.55 trillion. On the other hand, cummulative net non-oil revenue was N920.39 billion, a 32.42 per cent lower than projected N1.36 trillion as net Customs revenue was N324.38 billion, 14.05 per cent lower than expected N389.05 billion while net FIRS revenue stood to N596.02 billion, 38.66 per cent lower than N971.61 billion targeted for the year.
Meanwhile, fiscal operations of the central government showed cummulative Federal Government retained revenue of N2.63 trillion a 15.73 per cent higher than I’d N2.57 trillion expected while cummulative expenditure of N3.13 trillion was 27.82 per cent lower compared with N4.34 trillion projected. The report showed that fiscal balance resulted in deficit of N500 billion, 71.71 per cent decline over N1.77 trillion targeted within the period.
In a related development, United States imports of Nigerian crude oil and petroleum products totalled to 63.25 million barrels between January and July, 18.68 per cent higher than 53.29 million barrels recorded in the corresponding period of 2016. In the external sector, Nigeria’s foreign exchange reserves increased week-on-week by 1.30 per cent to $32.74 billion as at Tuesday, October 03, 2017 despite softening global crude oil prices – Opec’s reference basket price moderated w-o-w by 1.73 per cent to $54.63 a barrel while ICE Brent crude oil price tanked w-o-w by 0.96 per cent to $56.99 a barrel as at Thursday, October 05, 2017.on the other hand, a report on global economy showed that the month of September witnessed sustained expansion in global economic activities.
The J.P.Morgan Global All-Industry Output Index – which measures activities in both manufacturing and services sectors steady at 54.0 points.
It said that rates of expansion improved in the Euro area, the United Kingdom and Russia; Brazil returned to growth after three consecutive contractions; while output in the United States, Japan and Australia increased at slower rates.
Meanwhile, Expansion in global output resulted from increase in new orders, at 54.3 points in September (albeit, slower than 54.6 points in August). Furthermore, employment index posted 52.4 points in September against 52.6 in AAugust, while index for input prices rose faster to 57.0 points in September from 55.6 in August) following increased activities of input suppliers. Producers were able to transfer some of the increased input prices on to retailers as output prices index posted 53.2 points in September higher than 52.6 in August.

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