A fraudulent loan and a bogus consultancy firm have put a damper on Nigerian oil producer Lekoil which, since it discovered and announced the fraudulent nature of an $184m loan arrangement with the Qatar Investment Authority, has suffered heavy losses on the London Stock Exchange, where its market cap fell £35m ($45.6m) in less than a week.
Nigeria: the new Buhari budget
President Muhammadu Buhari has signed into law the 2019 budget, just a couple of days before the clock begins ticking for his second (democratic) term in office as president of Nigeria.
In a rare interview granted to the media, Buhari lambasted the heads of the national assembly for delaying the process of passing the N8.91trn appropriation bill which he presented in parliament last December.
“All those who say I am Baba Go Slow will know if I go slow or fast”, said the President.
- The budget is based on a benchmark crude oil price of $60 per barrel and estimates oil production at an optimal 2.3 million barrels a day.
- The signed budget differs from the budget proposal seven months ago and now contains extra billions in severance pay for legislators and a N10billion special intervention fund for the escalating security situation in Zamfara.
- Approximately N2.2 trillion will be spent servicing federal debts.
- Capital expenditure is N2.031 trillion, a slight increase from 2018’s N2.87trn. But recurrent expenditure is double that, at N4.04tr, a sign that the government might be prioritising the payment of salaries of civil servants this year.
The government has earmarked N305bn ($1bn) for fuel subsidies in 2019, standing by its word not to heed the advice of the international Monetary Fund (IMF).
- And BudgIT, a fiscal-transparency nonprofit which tracks government expenditure, raised alarms about a number of frivolous items in the budget proposal, including a N943.7m listing by the defence ministry loosely labelled “Outstanding liabilities (payment of 1st phase)”.
The signing of the federal budget has previously been delayed under the Buhari administration, too.
- In November 2017, the president submitted the N8.61trn appropriation bill for the following year with revenue projections projected at N7.1trn. It was passed by the national assembly in May 2018 and signed by the president a month later.
By that time, NASS had bumped it up to N9.1trn. The lawmakers also increased the proposed oil benchmark price from $45 to $51.
- Capital spending was pegged at 31.5% of total FGN expenditure(N2.87trn) in 2018
- There was a budget deficit of N1.950trn in 2018 – approximately 1.74% of GDP
Nigeria’s revenues in 2018 were significantly lower than what was listed in the budget by 45% and this was largely due to a number of factors including the higher exchange rate, lower oil production in spite of oil prices doing better than anticipated and a marginal growth in custom revenues.
- Consequently, this led to reduced spending.
According to a report by BudgIT, “As at Q3 2018, actual revenue by the federal government came to N2.81 trillion, with a total revenue performance of 39.2%. From the oil sector, the federal government was expecting a revenue of about N2.98 trillion, the FG’s Share of Oil Revenue as at Q3 arrived N1.43trilion.”
With the repeated push by the government to diversify its streams of revenue, it projected N1.63tr of Non-Oil revenue, but by Q3, had received only about N839bn.
It did manage to trim its overhead expenses – Q3 alone was N23.93bn, down by N55bn from Q2’s N79.53.
- But it overshot its projected debt servicing costs, paying out N1.76trn in total for 2018 by Q3, instead of the allotted N1.5trn for the period under question.