The Minister of Budget and National Planning, Udoma Udoma, on Tuesday highlighted the strategies the federal government plans to adopt in funding the 2018 budget.
President Muhammadu Buhari had last week presented a N8.6 trillion 'Budget of Consolidation,' proposal to a joint session of the National Assembly for approval for the 2018 fiscal year.
At the presentation of the budget details on Tuesday, Mr. Udoma said the government realised inadequate revenue was the greatest challenge it was facing in its effort to deliver service to the people.
The minister said the government was determined to increase its revenue target, including raising tax revenue from the current six per cent of gross domestic product to about 15 per cent, to fund the budget in the New year.
"Government's focus is to maximize the use of revenues from the oil sector and spend in the non-oil sector, to get the non-oil sector driving the economy. Once government revenue is up, the debt service ratio to the GDP would come down. More money would become available for infrastructure to better the life of the people," the minister said.
"Oil is a wasting asset. This is the time to maximize our revenues from oil and spend them in the non-oil sector. That is basically the strategy of the ERGP (Economic Recovery & Growth Plan) and government's plan in the 2018 budget."
Other strategies to boost revenue, he said, include deployment of new technology to improve revenue collections; encourage tighter performance on management of fiscal framework for state-owned enterprises, and stronger enforcement action against tax defaulters.
Apart from the tax amnesty programme by the Federal Inland Revenue Service, FIRS, to encourage voluntary payment of tax by Nigerians, the minister said government has adopted other key reform policies to realize its revenue target.
They include new funding mechanisms for joint venture operations in the oil and gas industry to allow for cost recovery in lieu of cash call payments, which constrained new investment in the oil sector;
Also, he said the government expects to realise additional oil related revenue from royalty recovery; new marginal field licensing; early renewal of oil licenses; review of fiscal regime for the production sharing contracts, PSCs to raise more money, and restructuring of government equity in the joint venture oil assets.
Reduction of government equity in oil assets ownership, he explained, will free money for use in the non-oil sector for the provision of social infrastructures like rail, road and other infrastructure.
Reviewing the 2017 budget performance, Mr. Udoma said revenues performed at almost set targets, with oil revenue averaging N1.6 trillion from the N1.9 trillion target as at the end of the third quarter of the year.
Although he said the Nigeria Customs achieved its revenue target, Mr. Udoma said other components of the non-oil revenue, including company income tax, CIT and the value added tax, VAT underperformed.
He said independent revenues remained a huge problem, pointing out that it was clear during the year that they were far from their target and required government to step up efforts to boost their levels.
Many government ministries, departments and agencies, MDAs, the minister noted, failed to remit their revenue collections into government coffers, saying government was considering scrutinizing their activities, particularly their targets against deliveries.
"Government, through the Ministry of Finance, is looking at the possibility of carrying out an amendment of the Fiscal Responsibility Act, FRA, to ensure that they remitted the percentage of their revenue surplus, as required by law. Government is determined to work harder to achieve its revenue targets in 2018," Mr. Udoma said.
On expenditure, Mr. Udoma said the government met 87 per cent of the projected outlay in 2017, with recurrent expenditure showing debt service obligations were met, while regular payment of salaries sustained, along with payment of arrears of personnel emoluments from 2012.
On capital realeases, the minister said despite the delay in the passage of the budget by the National Assembly, total releases for projects stood at about N450 billion as at October 31, 2017.
On a pro-rata basis, the minister said the release constituted more than half of what should have been released within the four months period the budget has been in operation.
The budget, which was presented in December 2016 to the National Assembly for approval, was not signed into law until June 12, 2017, allowing only four months period for implementation of approved appropriation.
"We are not doing badly so far in releasing money, given the short period of time the approved funding were released. When a budget starts, because of long procurement processes, there are always delays in implementation. There is no point releasing money to agencies that are not ready, or where work has not been properly done.
He said such releases were targeted at ongoing infrastructural projects, namely power, roads, rail, and agriculture, guided by the priorities identified by the ERGP.
As a result of the challenges in the economy, Mr. Udoma said the country's growth target for 2017 was adjusted from 2.19 per cent in the ERGP to 1.5 per cent, considered a realistic and achievable target.
He said government has continued its engagement with various interest groups in the Niger Delta to ensure stability in oil production, which improved to about 1.9 million barrels per day in the third quarter of the year.
Besides, he said discussions were equally ongoing to ensure that all taxable Nigerians and companies complied with the legal requirements to declare income from all sources and remit taxes due to the appropriate authorities.
The session was also attended by the Ministers for Finance, Kemi Adeosun; Petroleum Resources, Ibe Kachikwu; Education, Adamu Adamu; Information and Culture, Lai Mohammad.