Going by the conclusion of an International Monetary Fund (IMF) team led by Amine Mati, Senior Resident Representative and Mission Chief for Nigeria, the apex bank, Central Bank of Nigeria (CBN) may be in trouble.
The team whose report is coming on the heels of the 2020 budget proposal presentation by President Muhammadu Buhari, suggested that “over-optimistic revenue projections – leading to higher financing needs than initially envisaged – resulted to over reliance on expensive borrowing from the central bank of Nigeria to finance the fiscal deficit.
“The current account’s shift to a deficit is expected to persist while the pace of capital outflows continues to weigh on international reserves.”
This was further reinforced by Bloomberg’s analysis of Nigeria’s projected and actual income between 2015 to 2018. The analysis confirmed that Nigeria has been unable to meet its income target. The government was only able to collect 58% of 2019 revenue as at June. This was due to shortfalls in both oil and non-oil earnings with the government takings from crude sales 49% below target.
In 2016, Nigerian Government projected revenue to be N3.86 trillion but actual revenue was N3.19 trillion and ever since then, the margin has grown wider. 2017 projected revenue was N5.08 trillion but only generated 2.78 trillion; 2018 expected income was N7.17 trillion but actual income was N3.96 trillion.
IMF expressed concern about the current policies, but was optimistic about growth in the oil and agricultural sector. “The outlook under current policies remains challenging. Growth is expected to pick up to 2.3 percent this year on the strength of a continuing recovery in the oil sector and the regaining of momentum in agriculture following a good harvest.”