FG records N2.3trn fiscal deficit — CBN
…Says growth outlook positive but fragile
…As PIA implementation begins in oil, gas sector
By Uthman Salami
The Central Bank of Nigeria (CBN) has said the Federal Government recorded N2.23 trillion fiscal deficit in the fourth quarter (Q4) of 2021.
The Apex Bank further revealed that although the growth outlook remains positive, some factors put it in a fragile position at the same time
The Bank made this known through its economic report for the fourth quarter of 2021.
According to findings, a fiscal deficit is a shortfall in a government’s income compared with its spending.
This, however, means a high fiscal deficit that the government is spending beyond its means.
The report said the 12 per cent contraction in fiscal deficit followed a decline in aggregate expenditure in the fourth quarter of 2021.
“Following a decline in aggregate expenditure in the fourth quarter of 2021, the fiscal deficit of the FGN contracted by 12.0 per cent to N2,232.33 trillion, relative to the preceding quarter,” the report states.
“Non-oil revenue maintained its dominance, accounting for 60.8 per cent of the total collections, while oil revenue constituted the balance of 39.2 per cent.
“Provisional Federal Government of Nigeria (FGN) retained revenue, at N1,265.34 trillion, declined by 36.6 per cent and 3.2 per cent, relative to the budget benchmark and the preceding quarter, respectively, reflecting the persistent revenue challenge over the past two years.”
The report added that the federation receipts in the fourth quarter fell below benchmark due to the shortfalls in oil revenue.
“The shortfalls were largely the result of poor performances in some oil revenue components. Non-oil maintained its dominance of gross federation receipts in the period, accounting for 60.8 per cent of the total collections, while oil revenue constituted the balance of 39.2 per cent,” the report added.
“This is a deviation from the 51:49 non-oil versus oil revenue mix, projected in the 2021 budget.
“Federation receipts in the fourth quarter of 2021 declined, following shortfalls in oil revenue. At N2,844.73 trillion, provisional federation receipts fell below the quarterly benchmark and the level in the preceding quarter by 7.5 per cent and 0.7 per cent, respectively,” the report added.
…Says growth outlook positive but fragile
The Bank further maintained that the growth prospects for the Nigerian economy remain positive but fragile in the near term, on the back of a rebound in manufacturing activities, improvements in vaccination rates, and the supportive impact of CBN interventions on growth-enhancing sectors.
CBN, however, said the lingering security challenges and the delayed implementation of the Petroleum Industry Act (PIA) are the major downside risks to the outlook.
Implementation of PIA has commenced — Sylva
Meanwhile, the implementation of the Petroleum Industry Act (PIA) in the upstream sector of the nation’s oil and gas industry has begun, which was predicted by analysts to further stabilise not oil and gas sector, but also the Nigerian economy as a whole.
According to the Minister of State for Petroleum Resources, Chief Timipre Sylva, the process of ratifying the first set of regulations is on.
Sylva said the regulations would guide the sector in line with Section 216 of the PIA and that the forum was convened to enable stakeholders to provide inputs to brush up the key regulations as prepared by the NUPRC and the Presidential Steering Committee.
“It is believed that a robust engagement such as this will create the platform for all of us to brainstorm in a constructive manner.
“It will also harness the necessary inputs from various stakeholders to further clarify the draft regulations and the eventual firming up of the final regulations for use,” he said.
He said strong regulations were required to keep the industry vibrant and relevant even though the PIA had removed the uncertainties that hampered investments in the sector.
He called on the stakeholders to embrace innovation in their operations to enable the industry to survive the challenges imposed by the global energy transition.
“However, the challenge posed by the huge divestments in the hydrocarbon explorations by oil majors in the country in the past as a result of the global energy transition calls for more innovative ways in the exploitation and exploration of fossil fuel in the country.
“If we must continue to be relevant at the global stage, we must, in designing any regulation, put in focus how we can balance the energy base-load for Nigeria.
“This will ensure that we will not be left behind in the energy transition train while still harnessing our rich natural hydrocarbon reserves.”
