MP2013: Ministry of Finance

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Presentation by Dr. Ngozi Okonjo-Iweala Coordinating Minister for the Economy & Hon. Minister of Finance

Transcript of MP2013: Ministry of Finance

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    DR. NGOZI OKONJO-IWEALA

    Coordinating Minister for the Economy & Hon. Minister of Finance

    And

    Dr. Yerima NgamaHon. Minister of State of Finance

    June 10, 2013

    MINISTERIAL PLATFORM:

    FEDERAL MINISTRY OF FINANCE

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    Mission Statement

    To manage the Nations finances in an

    open, transparent, accountable and

    efficient manner that delivers on the

    countrys development priorities

    Mission Statement

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    Ministry of Finance: Key Objectives

    2

    Support for Job

    Creation

    Macro Economic

    Management

    Mobilizing Finances for Real Sector

    Activities

    Supporting Enabling Reforms

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    Support for Job

    Creation

    Macro Economic

    Management

    Mobilizing Finances for Real Sector

    Activities

    Put in place Enabling Reforms

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    Dollar exchange rate has been between 155 and 160 over the last two years

    Exchange Rate is Stable

    Inflation rate has slowed to 9.1% from 12.4% in May 2011

    Rate of Inflation is Coming Down

    From $32.08 billion in May 2011 to $48.4 billion as of May 2013

    Excess Crude Account (ECA) - (Component of External Reserves)

    - Rise from about $4 Billion in May 2011 to around $9 billion at the

    end of 2012, but now about $6 billion in May 2013

    - ECA now helping us since oil production has fallen from the

    projected 2.53 million bpd to between 2.1 2.2 million bpd

    External Reserves are Rising

    7

    MACRO ECONOMIC MANAGEMENT

    The Economy is Strong but Faces Challenges of Inequality & Inclusion

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    MACRO ECONOMIC MANAGEMENT

    Projected GDP Growth (%) 2013

    Sub Saharan Africa 5.6

    Emerging Markets 4.2

    Major Economies (G7) 1.2

    South Africa 2.8

    Brazil 3.0

    China 8.0

    Russia 3.4

    India 5.7

    GDP growth in 2013 projected at 6.75% (NBS) and 7.2% (IMF)

    GDP Growth is one of the fastest in the World

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    1 Footnote

    SOURCE: Nigeria Sovereign Wealth Investment Authority; Federal Ministry of Finance

    US$1 billion

    earmarked for

    investment in the

    3 arms i.e.

    Stability Fund,

    Infrastructure

    Fund and Future

    Generation Fund

    Management

    team has

    developed a

    comprehensive

    strategy

    document which

    was presented at

    its inaugural

    board meeting on

    13th November

    2012

    The NSIA to

    commence core

    investing activities

    from Q2 2013 and

    currently evaluating

    potential

    infrastructure

    investment

    opportunities

    1

    The Board of the

    Nigeria Sovereign

    Investment

    Authority was

    Inaugurated on

    9th October, 2012

    2

    3 4

    Sovereign Wealth Fund is in PlacePresident Jonathans Administration believes that putting aside some money for emergencies is important just as we all do for our families. So this administration has supported a policy of

    savings

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    MACRO ECONOMIC MANAGEMENT

    The 2013 budget prepared in record time and

    passed on 20th December 2012

    This provides the Government 12 months

    expenditure program and time to spend the

    funds

    This also provides a boost to domestic and

    international confidence in the countrys fiscal

    management

    Breaking the Budget Jinx

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    Policy is to reduce recurrent expenditure and complete unfinished capital

    projects

    - Recurrent expenditure has dropped from 74.4% of total budget in 2011 to

    68.7% in 2013

    Envelop system developed to enable Ministers prioritize uncompleted capital

    projects

    Cost of Government is Reducing

    Government focusing on sectoral waivers rather than individual. e.g.

    agricultural, power, aircraft spare parts, solid minerals at zero duty

    Waiver and Tariff Policies have Changed

    Imports are down (textiles, plastic & rubber, paper & paper making material),

    and exports are up (plastic & rubber, vegetable products, prepared food stuff

    and beverages).

    - Non-oil exports have increased from 9% of total exports in 2008 to 31% in

    2012

    - Oil exports are now 69% of total exports, compared to 91% in 2008

    Trade has Improved

    8

    MACRO ECONOMIC MANAGEMENT

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    Government Borrowing is Declining:

    Total Debt Stock

    Flow of Domestic Borrowing

    Note: Domestic and External Debt Stock figures for 2013 are as at end of March 2013)

    SOURCE: Debt Management Office

    DomesticExternal

    200524

    852 744 5881,360

    155107

    1,753 2,170 2,3203,239

    4,5525,623 6,346 6,493427

    585488

    450

    683

    978888

    Debt/GDP Ratio (%)

    Our National Debt is Low

    1041

    11.9% 12.6% 11.6% 15.4% 17.3% 18.2%15.4%

    2006 2007 2008 2009 2010 2011 2012 2013

    21%

    South Africa 42.7%

    Sub-Saharan Africa 34.2% USA 106% Japan 225% UK 90%

    MACRO ECONOMIC MANAGEMENT

    Total Debt is 7.5 trillionExternal Debt is US$6.6bn (1.04 trillion)

    NGN, Billions

    Slowed Down Growth of Debt Stock:

    YEAR

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    Tax Type

    10

    Petroleum Profit Tax

    % increase in non-oil

    Taxes- 39.2% 27.5%

    SOURCE: Federal Inland Revenue Service

    Non-Oil Taxes

    Total Taxes

    1,866 1,847 2,972

    38.1% 14.6%8.0%

    2,198 4,628 5,0072,839

    939

    3,2013,071

    1,4802,061

    1,1321,353

    514715

    911

    1,8061,558

    1,3591,258

    16.0%

    NGN, Billions

    2006 2007 2008 2009 2010 2011 2012

    Increasing Revenue ReceiptsMACRO ECONOMIC MANAGEMENT

    YEAR

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    Measures Taken

    Next steps: Intensify drive to improve non-oil tax revenues

    Compliance & Enforcement

    Recovery of tax arrears in the sum on 704.8 million

    Tax investigation and enforcement activities led to the recovery of over 10.65 billion

    Tax Policies & Legislative

    Issues

    B National Tax policy formally launched by Mr. President in April 2012

    Nigeria /Mauritius Double Taxation Agreement (DTA) signed in August 2012

    Modernization of Tax

    Administration

    & Operation

    C Commenced implementation of the Integrated Tax Administration

    System (ITAS) project

    Registered 227,140 new taxpayers in 2012

    Implemented full taxpayer segmentation

    Full restructuring of Tax offices nationwide

    Roll-out nationwide Tax Identification Number

    A

    Increasing Non-oil Revenues (Measures taken to Improve Non-oil Revenues)

    MACRO ECONOMIC MANAGEMENT

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    12

    1 Total collections between Jan and Oct 2012, compared to the same period in 2011

    SOURCE: Nigerian Customs Service

    Federal Collections

    Total Collections

    345 413 470

    Non-Federal

    Collections

    Annual increase

    (%) 19.8% 13.9%

    514 742547

    9.2% 35.7% 9%6.4%

    190239

    275 304318

    431 436

    155 175 196210 229

    311 297

    7321

    2006 2007 2008 2009 2010 2011 2012

    NGN, Billions

    Increasing Revenue Receipts: Improvement in Customs RevenueMACRO ECONOMIC MANAGEMENT

    YEAR

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    Measures Taken

    Upgrade of the ASYCUDA system to version 3.0

    Integration of Customs Operation (Platform) through a portal named Nigeria Integrated Customs Information

    Systems (NICIS) thus eliminating multiple submission

    of cargo and goods documentation to several

    stakeholders e.g. Bank, CBN, Freight Companies, etc

    Deployment of ICT

    Online real-time processing of Customs documents/manifest by shipping/airlines

    Simplification and harmonization of Customs clearance procedures, in line with international best practice

    Electronic tracking and auditing of Customs operations and transaction

    Trade Facilitation

    Disbanded hinterland Customs Check points and outlawed duplicity in cargo examination by Agencies at

    the ports

    Anti-smuggling efforts

    Training, Training school etc

    Stepping up Anti-Smuggling Activities

    C

    B

    A

    Measures Taken to Improve Customs Performance

    MACRO ECONOMIC MANAGEMENT

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    Expenditure Side Measures Taken

    Introduction of the Government Integrated Financial Management and

    Information System (GIFMIS) in April 2012.

    GIFMIS is aimed at improving the acquisition, allocation, utilization and

    conservation of public financial resources using automated and integrate