Targets N850bn unclaimed dividends, dormant bank deposits
Succour coming for local contractors
BY COBHAM NSA, ABUJA – The Federal Government plans on accessing N5.6 trillion loan facility from local and foreign sources to finance its N13.59 trillion 2021 budget implementation.
In addition, the government is also having its eyes on the over N850 billion reported as unclaimed dividends and dormant bank deposits in the country.
According to the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, the N5.6 trillion is the total deficit profile outlined in this year’s budget.
Outlining the government’s borrowing plans for the year at the public presentation and breakdown of the 2012 budget in Abuja on Tuesday, Mrs Ahmed explained that N2.34 trillion each will come in from domestic and foreign sources.
Similarly, she disclosed that multi-lateral and bi-lateral loan drawdowns will provide a total of N709.69 billion while government intends to privatise some public assets valued at N205.15 billion during the year.
The Minister stated that the aggregate revenue available to finance the 2021 budget is projected at N7.99 trillion, which represent about 36.9 per cent higher than the N5.84 trillion projected in 2020, adding that the budgets of 60 Government-Owned Enterprises (GOEs) have been integrated in the FGN’s 2021 Budget proposal as part of measures “to promote fiscal transparency, accountability, and comprehensiveness” in the financial system.
Mrs Ahmed further explained that cumulatively, about 30 per cent of projected revenues are expected from oil-related sources with non-oil sources providing the remaining 70 per cent.
Admitting that “overall, the size of the budget has been constrained by our relatively low revenues”, the Minister said government is however banking on some assured sources to finance the 2021 budget.
She listed the projected sources as: its oil revenue share of N2,011,017,892,674; NLNG dividend – N208,540,960,000; Minerals and Mining N2,650,393,903; and non-oil N1, 488,924,372,031.
Also being targeted are: Company Income Tax (CIT) – N681,718,292,330; Valued Added Tax (VAT) – N238,426,227,556; Nigeria Customs – N508,269,596,837; and Federation Account levies – N60,510,255,308.
Also taken as government’s budget funding sources are: revenues GOEs Operating Surplus, 80 per cent of which is captured in Independent Revenue – N825,023,025,138; Independent Revenues – N1,061,898,590,939; and Transfers from Special Levies Accounts – N300,000,000,000.
Not left out from sources that will fetch government some earnings during the year are: Signature Bonus/Renewals/Early Renewals – N677,015,511,478; Domestic Recoveries/Assets/Fines -N32,675,085,307; Stamp Duties or electronic transfers – N500,000,000,000; as well as Grants and Donor Funding – N354,852,661,650.
Mrs Ahmed said overall about N7,986,412,575,941 will be available to fund the 2021 budget and that explains why “N5.60 trillion has been provided for borrowing to finance the budget deficit.”
She however offered the cheering news that maturing bonds will be retired to local contractors, through the N200 billion provided in the 2021 budget, representing about 1.68 per cent of the total budget.
handing down further insights on government’s move to access unclaimed dividends and the dormant deposits as its revenue source in 2021, the Finance Minister said robust liaison is ongoing with the Central Bank of Nigeria and relevant stakeholders on the way forward.
“We have to get the exact report from CBN (Central Bank of Nigeria) and the registrars (of security firms) to ascertain that so it could be realised into this special a trust fund for unclaimed dividends and dormant account”, adding that government is partnering with the apex bank to standardise some of its past borrowings.
“We are working with the CBN to regularise the previous borrowing that have been made to turn them into formal borrowing by the Nigerian economy and to this extent, the CBN and I need to agree on the rates and the tenures and the cost of the borrowing, so we would be formally doing that in the early 2021 on the previous borrowing that has been made, and also projected borrowings in 2021.
“So, we will design special instrument that limits what is done in terms of domestic borrowing from the CBN”, Mrs Ahmed assured.
On controversies surrounding existing tax waivers to some organisations and companies, she said government is currently reviewing the list of beneficiaries and concessions made to them, adding; “What it’s costing us, we are now in the process of reviewing what can be scaled back because the size of the cost of the tax waiver is quite significant in terms of revenue for the country.”
The Minister, who also offered clarification on the 2020 budget performance, said government overshot by 101 per cent the threshold appropriated by National Assembly.
For disbursement, she explained that “N9.97 trillion was appropriated (excluding GO Project tied loans), while N10.08 trillion (representing 101%) was spent”, noting that the excess spending arose from unforeseen circumstances occasioned by COVID-19 pandemic.
The outlay also indicated that “Of the expenditure, N3.27 trillion was for debt servicing and N3.19 trillion for personnel cost, including pensions amounting to N6.46 trillion.”
Mrs Ahmed stated that as at 2020 ending, about N1.80 trillion had been released for capital expenditure, representing about 89 per cent of the total portfolio, noting that of this amount, over N118.37 billion went into “COVID-19 capital expenditure” as government battled to contain the pandemic.