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The Conduct of Fiscal Policy
Fiscal Policy 2004
The fiscal policy thrust of the 2004 budget was designed to underpin and support the reform program, focus on job creation and employment generation for youths through support for an enabling environment for the private sector to create jobs. The reforms were in the areas of accelerated privatization, liberalization and private sector development. Public sector reforms were to further reduce public sector expenditure on salaries and overheads; encourage transparency and accountability through extractive industries transparency initiative that would make the oil, gas and solid minerals industries more transparent; simplify the multiple taxes and levies faced by companies and possibly lower the company and personal income tax rates and bring Nigeria’s tariffs in line with ECOWAS regional initiatives. The budget also continued with fiscal discipline through narrowing fiscal deficit to 2% of the GDP, while financing the deficit from the domestic bond market.
The projected revenue was N2, 160 billion, made up of N1, 445 billion from oil and N615 billion from non-oil sources. Out of this, the projected Federal Government retained revenue was N1, 022 billion while the projected total expenditure was N1, 200 billion. Recurrent expenditure was projected at N788 billion while capital spending was estimated at N300 billion.
The actual revenue earned in 2004 was N3, 920.5 billion out of which oil accounted for N3, 354.8 billion and non-oil revenue was N565.7 billion. Federation account revenue was N2, 438.8 billion while Federally retained revenue was N1, 253.6 billion. Actual expenditure was N1, 426.2 billion, made up of N1, 032.7 billion recurrent expenditure and N351.3 capital spending. The fiscal operations of the Federal Government resulted in a current account surplus of N220.8 billion and an overall deficit of N172.6 billion or 1.51% of GDP. This deficit was financed through the non-bank public and draw down from the excess crude account.