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Analysts: FG may record 22% revenue drop this year

The total revenue that would be collected by the Federal Government in 2020 could drop by 22 per cent(N704billion) to N3.2trilion from N3.9trillion last year, analysts at NOVA Merchant Bank Research have said. They made the prediction in the firm’s H2’20 economic outlook report obtained by New Tele-graph yesterday. According to the analysts, the expected drop in government revenue will be driven by lower oil income occasioned by the sharp drop in the price of the commodity as well as Nigeria’s compliance with the production cut deal agreed by the Organisation of Petroleum Exporting Countries (OPEC). The projected lower revenues, the analysts said, would likely impact implementation of the 2020 budget, especially its capital expenditure component.

The analysts said: “Overlaying lower oil revenue (from lower prices and compliance to OPEC cut), we estimate total 2020 FGN revenue of N3.2 trillion (-22% YoY). We believe the implementation of the 2020 budget is largely doubtful with the scapegoat being the capital expenditure.

“With our base case scenario assuming budget implementation of 80 er cent (5-year average: 84.4%), we estimate budget deficit could range between N4.5 trillion and N5.5 trillion in 2020. While the IMF loan of $3.4 billion and the $150 million drawdown from Nigeria Sovereign Investment Authority (NSIA) will unlock about N1.4 trillion for the federation, the 2020 budget will still have a financing gap of N3.2 trillion.

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