Citing increased cost of subsidy payments and high fuel costs, which may likely erode the profits of many companies, thus resulting in lower tax receipts, analysts at CSL Research have predicted that the Federal Government is unlikely to meet its N10.1 trillion revenue projection for this year.
The analysts, who stated this in a report obtained by New Telegraph yesterday, also forecast that the fiscal deficit will widen “considerably” this year, given that, according to them, expenditure is set to exceed the N17.12 trillion projected by the Federal Government. They noted that their forecast is in line with the predic-tion by the Economist Intelligence Unit (EIU) that Nigeria’s fiscal deficit will widen to a 10-year high this year as high global fuel prices push up petrol subsidy bills, while crude oil output remains low despite higher prices. According to the CSL Research analysts, “Brent oil price passed $100/bbl for the first time since 2014 as a worsening of the Russian Ukraine crisis continues to spark fears of a disruption to the region’s energy exports. “Theoretically, the rise in crude oil prices, a major source of foreign exchange to the country, should be positive for revenues. However, the perennial issue of terminal shutdowns, vandalism, thefts and low investments in the sector continues to fuel suboptimal oil output despite the relaxation of OPEC+ production agreements.
“The country’s fiscal deficit has surpassed the target by an average of c.65 per cent over the last five years due to ambitious revenue estimates and volatile crude oil prices. The fiscal deficit has more than doubled from 1.0 per cent of GDP in 2014 to about 5.9 per cent in 2021 based on IMF forecast. This is significantly above three per cent of GDP as recommended by the Fiscal Responsibility Act (FRA). “The low oil revenue mobilization continues to mask the gains from the non-oil segment. The total gross CIT collection in 2021 was N1.69trillion, up by 19.6 per cent y/y compared with N1.41trillion in 2020 and the highest amount of CIT collected since the official publication began in 2015.”