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Finance Bill: No plans to increase tax — FG

The essence was to ensure that local industries grow ahead of African Continental Free Trade Area (AfCFTA) take off.

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The Federal Government has stated that no new taxes will be introduced, nor tax waivers granted under the 2020 Finance Bill.

The FG said the tax stance was due to the effects of the pandemic on the economy.

This was disclosed by the Executive Secretary, Federal Inland Revenue Service (FIRS), Mr. Muhammad Nami, and the Minister of Finance, Zainab Ahmed, at a virtual meeting on the Finance Bill 2020 Public Consultation in Abuja on Friday.

Mr. Nami said that the economy was facing challenges caused by the pandemic, so the FG had no plans to introduce new taxes; however,  it would not grant tax waivers to businesses.

The economy is not doing very great because of the impact of COVID-19 and all other challenges so ordinarily government should be spending more money. However, government is not able to raise the taxes; in the same way, we still balance the budget to reduce the deficit as much as possible. Therefore, there will be no new waivers,” he said.

Nami said that the African Continental Free Trade Area (AfCFTA) agreement would increase Nigeria’s trade volumes and be a boost for the economy.

Nami added, “However, in anticipation of the AFCFTA, it is expected that the volume of trade will surge…and, as such, even though it will not significantly affect revenue being collected currently by government, it will have a way of making the economy increase significantly.”

Mrs. Ahmed disclosed that the public engagements with businesses was to prepare them for the new tax bill as Nigeria prepares for the AfCFTA where Nigerians goods will compete with the rest of Africa.

The essence was to ensure that local industries grow because once the African Continental Free Trade Area (AfCFTA) takes effect our borders will be opened and we will have goods from other countries competing with goods in Nigeria,” she said.

This is being reinforced in the 2021 proposal by removing completely for the small businesses the obligation to pay education tax.

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ECONOMY & POLITICS

2022 Budget: FG says 65% of projected N10.74 trillion revenue to come from non-oil sources

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The Federal Government has announced that it expects up to 65% of its projected aggregate revenue to fund the 2022 budget to be sourced from non-oil means of taxation

This is according to the approved 2022 budget presentation by the Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, during the public presentation and breakdown of the 2022 budget held in Abuja, on Wednesday.

The Minister also revealed a projected annual aggregate revenue of N10.74 trillion for the year.

The Minister said the projected aggregate revenue available to fund the  2022 budget of N10.74 trillion (inclusive of GOEs ) is 2% higher than the 2021 projection of N8.12 trillion.

To promote fiscal transparency, accountability & comprehensiveness, allocations toTETFUND and the budgets of 63 GOEs are integrated in the FGN’s 2022 Budget proposal,” she added.

She also revealed that in aggregate, 35% of projected revenues is to come from oil-related sources while 65% is to be earned from non-oil sources.

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ECONOMY & POLITICS

Nigeria’s external reserve gains $5.15 billion in 2021

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Nigeria’s externals reserve rose by $5.15 billion in 2021 to close at $40.52 billion as of 31st December 2021, representing a 14.5% rise compared to $35.37 billion recorded as of the end of the previous year.

This is according to data obtained from the daily tracker of the Central Bank of Nigeria (CBN).

The gain recorded in the country’s reserve level is majorly attributed to the $4 billion Eurobond, secured by the federal government in September, which saw the reserve surpass $41 billion in October 2021.

Nigeria also secured a $3.35 billion IMF facility under the Special Drawing Rights in the review year, which also served as a boost for the reserves. The external reserve has been a major buffer for the Central Bank in defending the country’s exchange rate, by intervening in the official Investors and Exporters window.

Notably, over $32 billion in FX exchanged hands in the review year, largely due to the Central Bank’s significant intervention into the market, after placing a ban on the sales of FX to BDC operators in the country.

The nation’s foreign reserve had gained $5.99 billion in October, however, in November, the reserve lost $611.01 million in value as against the previous month gain and a $2.76 million gain in September 2021. In December 2021, the reserve dipped by $66.17 million, putting the annual gain at $5.15 billion.

Nigeria’s reserve has declined in recent months as the Central Bank continue to intervene in the official forex market in order to stabilise the local currency. Especially, at a time when naira is highly volatile at the black market.

Foreign reserves are assets held on reserve by the central bank of a country used to back liabilities and influence monetary policy. They include foreign banknotes, deposits, bonds, treasury bills and other foreign government securities.

These assets serve many purposes but are most significantly held to ensure that a government or its agency has backup funds if their national currency rapidly devalues. Foreign exchange reserves are also called international or external reserves.

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ECONOMY & POLITICS

CBN says heavy debt servicing is taking a toll on fiscal resources

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The Central Bank of Nigeria (CBN) has stated that heavy debt servicing is taking a toll on lean fiscal resources.

This was disclosed by a member of the CBN board, Prof. Mike Idiahi Obadan in his personal statement at the last MPC meeting.

The debt serving position for Nigeria could hinder the availability of funds to finance critical government programmes and projects.

Obadan noted that the Nigerian economy has been vulnerable to economic shocks without a fiscal buffer, which has led to a borrowing spree.

“The Federal Government has struggled against the tide of two debilitating recessions in five years, occasioned largely by externally-induced shocks including the coronavirus-induced health and economic shocks. With little or no fiscal buffers, it has had to borrow heavily, domestically and externally, to mitigate the negative impacts of the shocks,” he said.

He stated that the skyrocketing debt service to revenue ratio is putting pressure on Nigerian’s fiscal resources. “With the rising debt service-to-revenue ratio, which is currently put at over 90%, heavy debt servicing is taking a toll on lean fiscal resources and could hinder the availability of funds to finance critical government programmes and projects,” Obadan stated.

Obadan stated that against the backdrop of limited domestic revenue mobilisation and little or no foreign exchange inflow from oil and gas exports, the government’s fiscal capacity remains weak and that it requires continued monetary support to drive economic activities towards the desired sustainable growth trajectory.

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