A former deputy Chairman of the Finance Committee of the House of Representatives, Abayomi Ogunnusi, has advised the Federal Government to adjust the oil benchmark adopted for the 2018 budget proposals from $45/ barrel to $48/barrel, in order to reduce the budget deficit and borrowing.
Ogunnusi recalled that as an ex-member of the House, the finance committee had always had continuous battles with the executive on the assumptions used for the federal budget preparation and its subsequent implementation.
According to him, the 2018 budget proposals have shown that the same issues are still being encountered.
“The 2018 budget proposal has once again shown overly optimistic revenue projections and using these to fuel high expenditures,” Ogunnusi said in an emailed comment on the 2018 budget.
“Upon that, a huge deficit is still being envisaged; these unrealistic revenue projections are not likely to be met and this will imply an even higher budget deficit if the budget is to be implemented as submitted,” he added.
The former House committee deputy chairman, therefore said that if the oil benchmark was raised to $48/barrel, the additional revenue could be used to reduce the budget deficit and hence borrowing.
He added that the excess fund gained from this adjustment could be channeled into the Excess Crude Account or Sovereign Wealth Fund.
Ogunnusi said, “It is important to note here that our oil production estimates of 2.3 million barrels per day have never been met before and as such revenue projections on oil revenue will likely incur severe shortfalls. Our current production as at now stands at about 1.9 – 2.0 million barrels per day.
“Mr. President also talked about the severe shortfalls due to Federal Government independent revenue in 2017. Only N155.4bn was collected out of a planned N605.87bn as at September, 2017. Surprisingly government has projected an increase in independent revenue to N847.9bn for 2018. The implication of this is that there is likely to be another severe revenue shock due to this sub head and will further increase the budget deficit for 2018.”
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