The gross oil and gas federation revenue for the first four months of 2022 failed to meet the expected target, falling from N3.12 trillion to N1.23 trillion, representing a 39 percent performance, according to the Overview of 2022 Fiscal Outcomes and Update on 2022 Federation Revenue Performance presented by the finance minister.
Though, the Federal Government fashioned to spend a sum of N6.7tn on fuel subsidy next year and a major shortfall in government oil revenue this year, economic and energy experts have predicted tougher days ahead for the economy, states and Nigerians.
The Minister of Finance, Zainad Ahmed, had on Thursday released the four-month fiscal report of the economy during a public consultation on the 2023-2025 Medium Term Expenditure Framework/FSP.
“Crude oil production challenges and PMS subsidy deductions by NNPC constitute significant threat to the achievement of our revenue growth targets, as seen in the 2022 Performance up to April,” Ahmed said.
“Bold, decisive and urgent action is urgently required to address revenue underperformance and expenditure efficiency at national & sub-national levels,” she noted.
Ahmed said the subsidy projection was based on business-as-usual or reform scenarios, noting that the first scenario assumed that subsidy would be retained and fully provided for.
The second scenario, she said, assumed that subsidy would remain up till mid-2023 based on the 18-month extension earlier announced, but only N3.36 trillion would be spent.
She further said that the amount available for distribution from the Federation Account was N1.52 trillion within the first four months of the year.
Of this amount, she said, the Federal Government received N802.50 billion, while states and local governments got N407.04 billion and N313.81 billion respectively.
“Federal, State and Local governments received N107.67 billion, N358.90 billion and N251.23 billion respectively from the VAT Pool Account.”
“In the MTEF, real GDP growth is projected at 3.75% in 2023, from a revised projection of 3.55% for 2022. Growth is expected to moderate to 3.30% in 2024 before picking up to 3.46% in 2025,” she said.
On the other hand, inflation rate is projected to average 17.16 per cent in 2023, up from the revised average of 16.11 per cent for 2022.
“Upward pressure on prices is expected to be driven by the current and lag effect of the global price surge due to the Russian-Ukraine war, domestic insecurity, rising costs of imports, exchange rate depreciation, as well as other supply-side constraints.” she said.
In response to the fall in revenue and projection of the federal government, economists and petroleum experts, have said Nigerians, state government and the economy would experience tougher days ahead going by the numbers.
