Nigeria generated an actual revenue of N3.9 trillion in 2020, compared to its targeted revenues of N5.36 trillion, thereby increasing the amount of money borrowed by the government to finance its budget.
The result of the revenue shortfall and increased expenditure is a fiscal deficit of about N6.1 trillion as against the N4.6 trillion budgeted by the government.
Minister for Finance, Zainab Ahmed, who disclosed this during the public presentation of the 2021 budget via Zoom, said total oil revenue was N1.5 trillion, about 50% higher than its budget of N1 trillion.
The government also reported that it received a dividend of N144 billion from its shareholdings in NLNG, up from N80.3 billion a year earlier.
The fall in oil prices in 2020 forced the government to revise its benchmark crude oil target price to $28 per barrel from the $57 per barrel originally set in the 2020 budget.
However, average oil prices sold during the year by the government was $43 per barrel as oil prices recovered in the second half of the year as the lockdown eased globally.
In terms of crude oil production output, the FG reported a total of 1.79 million barrels per day as against the revised 1.8 million barrels per day projected.
It is important to add that the increased oil revenue was also because of the devaluation of the exchange rate, which rose from a budget of N360/$1 to N379/$1 in the third quarter of the year.
Non-Oil revenue performance did worse with revenues falling 21% to N1.2 trillion. Non-oil revenues are mostly taxes, levies, and customs revenues.
Company Income Tax fell 18% to N673 billion while VAT revenue suffered a 32% drop to generate a N196 billion in revenue.
Customer revenue also fell 12% to N396 billion despite the effect of the border closure.
The Nigerian economy was shut down in April 2020 and operated with several limitations amidst government requirements for Nigerians to maintain social distancing and avoid crowded areas.
This impacted business operations across the country, indirectly affecting their ability to generate revenues that would have been taxed.
Despite the revenue shortfalls, the government still managed to outspend its expenditure targets, reporting a total of N10 trillion compared to a target of N9.9 trillion which was appropriated.
The report also reveals that of the expenditure, N3.27 trillion was for debt service, and N3.19 trillion for Personnel cost, including Pensions. It also revealed that 1.80 trillion had been released for capital expenditure, which is about 89% of the provision for capital.
The government plans to incur a budget deficit of N5.60trillion for 2021, representing 3.93% of GDP.
It will fund this via N2.34 trillion each in domestic and foreign borrowing and another N709 billion from multilateral sources.