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The Conduct of Fiscal Policy 2008
The 2008 Appropriation and Amendment Acts and 2008 Supplementary BudgetThe 2008 Budget of N2,748 billion was signed into law on April 14, 2008 but due to challenges in implementing the Appropriation Act, an Amended Bill was provided. The 2008 Amendment Act received Presidential assent in October 2008 and authorised aggregate spending of N2,647 billion, representing a 27 per cent growth in the level of expenditure compared to actual expenditure of N2,088 billion for 2007. Capital expenditure was increased by N294 billion or 60 per cent from N491 billion actual spending in 2007 to N785 billion in 2008. This increase in expenditure was to ensure the adequate funding of the priority areas outlined in the Federal Government's 7-Point Agenda. On the recurrent side, Statutory Transfers were increased by 59 per cent from N102 billion spent in 2007 to N163 billion; while Debt Service increased from N232 billion in 2007 to N372 billion in 2008, representing a 60 per cent increase. The Recurrent expenditure increased from N1,262 billion in 2007 to N1,328 billion in 2008, representing N66 billion or 5 per cent increase.
Following the amendment of the 2008 Budget, about N100 billion of savings were realised from the substitution of the N2,748 billion in the 2008 Appropriation Act with the N2,647 billion from the 2008 Amendment Act. These savings contributed to the financing of the 2008 Supplementary Budget of N683.3 billion assented to on 13th November 2008, which provided for the funding of critical infrastructural investments particularly in the power sector.
2008 Budget Performance:
Total revenue in 2008 was below budgeted levels due principally to a series of oil production shut-ins and disturbances in the Niger Delta. These disruptions largely affected production from the Joint Venture wells, which provide the greatest proportion Government oil revenues. Average oil production from January to December 2008 was about 2.1 mbpd as against 2.45 mbpd projected. In addition, oil revenues further declined due to falling international oil market prices caused by the global economic slowdown. These shortfalls were augmented with drawdown on the Excess Crude Account (ECA) and other financing sources.
On the non-oil revenue side, while Company Income Tax (CIT) and Value Added Tax (VAT) receipts exceeded the budget benchmark by N52.8 billion (or 14.5 per cent) and N81.53 billion (or 25.2 per cent) respectively, Customs revenues slightly underperformed by N2.7 billion or 1 per cent.
The actual FGN retained revenue amounted to N2,226.66 billion (excluding financing items) as at end-December, 2009. A breakdown was as follows: share of oil revenue (N1,379.55 billion), share of non-oil revenue (N489.93 billion) and FGN's unspent balances of previous fiscal year (N375.18 billion).
Breakdown of the 2008 aggregate expenditure (Amendment Budget) was as follows: capital expenditure (N787.17 billion), recurrent spending (N1,327.55 billion), statutory transfers (N162.57 billion) and debt service (N372.20 billion). The actual FGN total spending in 2008 amounted to N2,806.74 billion compared with N2,647 billion budgeted, indicating 6 per cent increase. Therefore, total deficit financing stood at N580.08 billion.