Following the financial crisis occasioned by the global COVID-19 pandemic, the Federal Government has instituted fiscal measures aimed at improving revenue and entrenching a regime of prudence with emphasis on achieving value for money.
The goal of the fiscal interventions, according to government, would be to keep the economy active through carefully calibrated regulatory or policy measures designed to, among others, boost domestic value-addition, de-risk the enterprise environment, attract external investment and sources of funding.
Minister of State for Budget and National Planning, Prince Clem Ikanade Agba, disclosed the series of measures when he made a presentation last Thursday to the House of Representatives Committee on Finance at an interactive session on the 2021-2023 Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).
He said that in order to enhance independent revenue generation and collection, government would aim to optimize the potential, operational and collection efficiency of Government-Owned Enterprises (GOEs) with a view to generating significantly higher revenues required to fund the budget.
“Current sub-optimal revenue performance of GOEs will be addressed through the effective implementation of the enhanced Performance Management Framework,” he stated.
Agba said that the Federal Government was also improving the tax administration framework to optimize government revenue. He stressed that this had been a major thrust of the administration’s Strategic Revenue Growth Initiative (SRGI).
According to him, “We have included in the 2021 – 23 MTEF/FSP, a Tax Expenditure Statement (TES) overview which seeks to dimension the cost of tax waivers/concessions, and evaluate their policy effectiveness.”
The minister disclosed that the Finance Bill 2020, which would accompany the 2021 budget proposal, would contain measures to advance the SRGI, adding that, “we shall also work closely with the National Assembly to amend relevant laws that need to be amended to help with the SRGI.”
Agba, who represented the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, at the 5-day interactive session, said that the Nigerian economy faced serious challenges in H1 (first half of) 2020, with the macroeconomic environment significantly disrupted by the COVID- 19 pandemic. He said that Nigeria was exposed to spikes in risk aversion in the global capital markets, which would put further pressure on the foreign exchange market as foreign portfolio investors exited the Nigerian market.
The minister said the 2020 budget had been revised to accelerate implementation in order to maintain budget credibility, enhance Gross Domestic Product (GDP) growth and promote social inclusion.
He said that the draft 2021–2023 MTEF/FSP had been prepared against the backdrop of a global recession and heightened global economic uncertainty, adding that the MTEF showed that there were continuing global challenges due to the COVID-19 pandemic.
Agba stated that the medium- term outlook for Nigeria suggested that fiscal risks were somewhat elevated, largely due to COVID-19 related disruptions which had exacerbated structural weaknesses in the economy.
“Nigeria faces significant medium-term fiscal challenges, especially with respect to its revenues, which if not addressed could snowball into a debt sustainability crisis. “In furtherance of our objective of greater comprehensiveness and transparency in the budget process, the FGN 2021 Budget will reflect the revenues and expenditures of all (about 60) significant GOEs (excluding NNPC), not just 10 as in the 2020 budget.
“Achieving fiscal sustainability and macro-fiscal objectives of government will require bold, decisive and urgent action. Government is determined to act as may be required. Thus, key reforms will be implemented with increased vigour to improve revenue collection and expenditure management,” he said.