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The Conduct of Fiscal Policy
Fiscal Policy 1997
The objective of fiscal policy in 1997 was to achieve sustainable output growth and external viability predicated on dominant role of the private sector. The main fiscal incentives were minimization of the adverse implications of multiple taxation; tax relief on interest payments in respect of agricultural loan; and waiver of tax clearance requirement on interest or dividend for which withholding tax had been deducted.
The total budget estimate was N188billion with a break down of N89billion and N99billion for capital and recurrent expenditures respectively. The break down of revenue showed that the oil sector continued to maintain its dominance, accounting for 71.5 percent of total receipts compared with 71.00 percent in 1996. As a corollary, total non-oil receipts accounted for 28.5 percent of the total revenue compared with 29 percent in 1996.Aggregate expenditure of the Federal Government during the year was N356.26billion made up of N146.42billion and N209.84billion of recurrent and capital expenditures respectively. The fiscal operations of the Federal Government in 1997 resulted in an overall operational deficit of N5billion due to a sharp increase in expenditure. The major items of expenditure were on national priority projects and debt service payment. In all, total expenditure exceeded budget estimate by N79.53billion or 28.7 percent while total expenditure as a proportion of GDP was 11.4 percent from 10.2 percent in the previous year.