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    Nigeria chases $2.6b loan to plug budget deficit

    APA-Abuja (Nigeria)

    Nigeria is seeking $2.6 billion loan to finance part of its $29.4 billion 2018 budget signed by President Muhammadu Buhari on Wednesday.

    The Minister of Budget and National Planning, Mr. Udoma Udo Udoma, said on Thursday in Abuja at the presentation of the approved 2018 Budget of Consolidation.

    The budget expenditure was premised on oil price benchmark of $51 per barrel, while crude oil production was bench-marked at 2.3 million barrels per day and an exchange rate of N305 to the dollar.

    Udoma said the money would be borrowed domestic and foreign sources.

    He, however, said that the overall budget deficit of $2.6 billion in the budget represents 1.74 percent of the Gross Domestic Product (GDP).

    He added that the projected deficit was within the threshold stipulated in the Fiscal Responsibility Act (FRA), 20017.

    According to him, the federal government expects that oil revenue will make up 41.7 percent of revenue for the budget, while Independent Revenue would make up 11.8 percent.

    He also said that proceeds from the Nigeria Customs Service (NCS), would make up 4.5 percent as it is expected that its revenue would go up significantly.

    Other sources of revenue are Value Added Tax (VAT), which is to make 2.9 percent, Company Income Tax (CIT), 9.2 percent, Tax amnesty, 1.2 percent, Signature bonus, 1.6 percent and Joint Venture (JV), equity restructuring to make up 9.9 percent.

    He added that grants and donor funding was estimated to make up 2.8 percent, while other sources would make up 7.2 percent of the revenue.

    Udoma, however said that recoveries would make up for 7.2 percent of the revenue.

    The recoveries, he said was made up of recoveries from Swiss ($320 million), assets and fines.

    The minister said that the 2018 revenue projections reflects new funding mechanism for JV operations, allowing for cost recovery in lieu of previous cash call arrangements.

    He said it would also reflect additional oil-related revenue to include royalty recovery, new/marginal field licenses and early licensing renewals.

    Others are review of the fiscal regime for oil Production Sharing Contracts (PSCs), restructuring government’s equity in JV oil assets, with proceeds to be reinvested in other assets.

    “This will improve efficiencies in the operations of the JVs and position them for better revenue performance in the future”, he said.


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