FG’s expenditure surpasses revenue by N1.43tn in Q1 2023 — CBN
By Sodiq Adelakun
In the first three months of 2023, the Federal Government of Nigeria faced a significant fiscal challenge as its expenditure exceeded revenue by N1.43tn, according to data obtained from the Central Bank of Nigeria (CBN).
This figure represents a 9.6% increase compared to the previous quarter of 2022.
The CBN’s economic report for the third quarter of 2023 highlights the reasons behind this deficit and sheds light on the government’s fiscal performance during this period.
The provisional fiscal deficit of the Federal Government of Nigeria (FGN) in Q1 2023 amounted to N1.43tn, surpassing the previous quarter’s level by 9.6%.
However, it was 22.1% below the target set for the quarter.The report attributes the fiscal deficit to the underperformance of oil revenue realization, which had a detrimental impact on the FGN’s retained revenue.
In comparison to Q4 2022, the retained revenue fell by 10.7% and was 46.1% below the quarterly target.
The decline in oil revenue realization had a direct impact on the FGN’s aggregate expenditure, which decreased by 1.3% compared to the preceding quarter and 36.0% below the quarterly target.
The report highlights the need for the FGN to address the challenges posed by low oil revenue realization and its impact on the country’s fiscal performance. It emphasizes the importance of diversifying revenue sources to reduce dependence on oil.
Despite the fiscal deficit, the report also mentions that the FGN’s debt-to-GDP ratio remained within sustainable limits, providing some reassurance regarding the country’s overall fiscal stability.
The report underscores the significance of prudent fiscal management and the need for the FGN to explore avenues for increasing non-oil revenue. This includes implementing policies that promote economic growth, attracting foreign direct investment, and improving tax collection mechanisms.
In light of the challenges faced in Q1 2023, the report calls for proactive measures to enhance fiscal discipline, improve revenue generation, and reduce expenditure.
According to the report, “Thus, the FGN overall deficit widened relative to 2022, Q4, but narrowed by 22.1 per cent when compared with the proportionate budget. Consolidated public debt, as at end-December 2022, stood at N46.25tn (or 22.8 per cent of GDP).
At N3.48tn, the CBN report said, gross federation revenue fell below the levels in 2022, Q4 and the budget benchmark by 0.4 and 26.6 per cent, respectively.
Non-oil revenue continued to dominate government revenue, accounting for 61.4 per cent, while oil receipts accounted for 38.6 per cent.
Oil revenue, at N1.34tn, declined by 3.0 and 43.5 per cent, relative to 2022, Q4 and quarterly target. The performance was indicative of revenue shortfalls from petroleum profit tax and royalties, following lower domestic crude production.
“Conversely, non-oil receipts, at N2.14n, improved against the preceding quarter by 1.2 per cent, but was 9.6 per cent below the quarterly target of N2.37tn,” the report said.
