Yemisi Izuora
Federal government revenues nosedived in February to 345.095 billion naira ($1.73 billion), down from 370.388 billion naira ($1.86 billion) in January.
The drop according to the ministry of finance is due to a drop in oil prices.
“There was revenue loss of $45.9 million as a result of a drop in average prices of crude oil from $39.04 in December 2015 to $29.02 in January 2016,” the ministry said.
“Also a substantial drop in income was recorded from oil and gas royalty, companies’ income tax and import duty,” it said.
The revenue includes VAT, refunds from state oil firm NNPC and exchange gains, the statement said. It will be distributed to the federal, state and local authorities.
Nigeria, relies on crude sales for about 70 percent of its government revenues.
Global crude prices have fallen sharply since mid-2014, hurting the country’s public funds and leaving many states unable to pay public salaries in time or fund infrastructure projects and other state services.
In response to the seeming challenge, the Central Bank of Nigeria (CBN) tightened monetary policy especially in the face of a slowing economy.
The Bank complained that banks were not extending enough credit to investors to spur growth.
The economy expanded 2.8 percent in 2015, according to the statistics office, the slowest pace since 1999.
President Muhammadu Buhari, is seeking to spur growth with a record 6.1 trillion-naira ($30.6 billion) budget this year.
The government earned about two-thirds of revenue from oil in 2014, the price of which has dropped 26 percent since the beginning of last year.
The CBN’s focus on inflation was the right one and may help to support the naira, according to Charles Robertson, chief economist at Renaissance Capital in London.
“The rate cut last year was about cutting government borrowing rates, and this is evidently less of a priority today,” he said. “Good move by the CBN.”