World Bank Warm Nigerian: Prepare For N19bn In Lost Oil And Gas Revenue

World Bank Warm Nigerian: Prepare For N19bn In Lost Oil And Gas Revenue

The international financial organization, the World Bank, has instructed Nigerian states to prepare for large oil and gas revenue losses this year.

According to Naija News, the global lending financial organization issued the alert in its Nigeria Development Update report released this week.

The research cautioned that several governments will struggle to meet their expenditures this year due to rising debt service costs.
The World Bank estimates that the Nigerian states will lose at least N18.8 billion in oil and gas income in 2022, as deteriorating tax collection at the federal level exacerbates state budgetary challenges.

The research titled 'The Continuing Urgency of Business Unusual' highlighted that decreased revenue from the federation level has placed some states in a perilous financial position.

The research stated, "Due to stagnant net oil and gas earnings, the majority of states would be unable to meet their planned expenditure levels in 2022.

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"Additionally, debt servicing expenses at the state level are increasing due to a drop in gross statutory account revenue transfers from the federation account allocation committee, which consists of oil and non-VAT, non-oil revenues."

In addition, the World Bank noted that the anticipated increase in VAT collection or improvements in independently generated revenues would not compensate for the decrease in Federation Accounts Allocation Committee allocations in 2022.

The financial institution also cautioned that FAAC transfers would decrease by 2.7% in 2022 compared to 2021, noting that this fall would force governments to borrow more and reduce discretionary spending.

It added: "Stagnating net oil receipts will considerably impact the state's fiscal status. It is anticipated that state governments will collectively get 2.7% fewer revenues in 2021 than they did in 2020, due to a 10% reduction in federal transfers.

"Reduced transfers will lead state governments to incur debt or decrease discretionary spending severely. Although states receive the majority of VAT revenue, increasing VAT revenue would not compensate for the loss of net oil earnings.

"As a result, the average Nigerian state will lose N18.8 billion in oil and gas income in 2022, while optimistic forecasts place average gains from VAT and the electronic money transfer levy at N7.1 billion per state and average improvements in each state's independent revenues at N6.7 billion. Consequently, the average state can anticipate a revenue loss of N5 billion in 2022."

orizu kelechi

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