Federal Government’s Deficit Spending Surges by 22.8% in Early 2023 as Oil Revenue Plummets
According to the Central Bank of Nigeria (CBN), the Federal Government’s fiscal Operations in early 2023 have led to a Significant Increase in deficit spending.
The rise in Spending is primarily attributed to a sharp decline in Oil Revenue during the period.
The CBN’s Monthly Economic Report (MER) for February 2023 reveals that the deficit for the Month amounted to N513.05 Billion, bringing the total deficit for the first two months of the Year to N931 Billion.
The Report highlights a drastic drop in the Oil Sector, with a 60% plunge from N774.15 Billion in January to N308.07 Billion in February.
Similarly, Non-Oil Revenue experienced a 3.7% decline, reaching N730.2 Billion during the same Period.
As a result, the Revenue accruing to the Federation Account in February witnessed a 32.3% decline.
The CBN also notes that the Expenditure side of fiscal Operations compounded the deficit, with a 5.9% Increase in spending, reaching N991.6 Billion in February.
The Federation receipts amounted to N1.038 Trillion, which was 32.3% lower than in January and 34.3% below the Budgeted N1.580 Trillion.
The decline in Revenue was primarily attributed to reduced collections from Petroleum Profit Tax and Royalties.
Oil Revenue witnessed a Substantial Decrease of 60.2%, while Non-Oil Revenue fell below the preceding Month and the Monthly target by 3.7% and 7.4% respectively, mainly due to a decline in Corporate tax Collections.
The Provisional aggregate Expenditure of the Federal Government rose by 5.9% to N991.62 Billion compared to January, with recurrent Expenditure, capital Expenditure, and transfers Accounting for 84.7%, 9.5%, and 5.8% of total Expenditure, respectively.
Despite the 22.8% Increase in the fiscal deficit to N513.05 Billion, it remains 16.2% below the Budget Benchmark.
Experts suggest that addressing Fuel Subsidies and reducing the burden of Debt Service are crucial for achieving fiscal Consolidation.
They emphasize the need to Combat Oil theft and Bunkering, as well as explore Avenues for Revenue Growth through smart Strategies and Improved Governance.
