The Central Bank of Nigeria (CBN) has revealed that the Federal Government recorded a fiscal deficit of N930.8bn in the first two months of 2023. According to the CBN’s monthly economic report for February, the fiscal deficit expanded in February due to a decrease in retained revenue.
In January, the fiscal deficit stood at N417.75bn, but it increased by 22.8% to N513.05bn in February. Despite this increase, the fiscal deficit remained 16.2% below the budget benchmark. The report highlighted that the expansion of the fiscal deficit was mainly driven by a 16.4% surge in provisional Federal Government of Nigeria (FGN) capital expenditure, coupled with a 7.7% decline in FGN retained revenue.
The report further revealed that the accretion into the federation account decreased by 32.3% in February compared to the previous month. This decline was primarily attributed to a significant 60.2% fall in oil revenue. Consequently, the overall fiscal deficit (provisional) expanded by 22.8%.
Total public debt stood at N46.25tn (23.2% of GDP) at the end of December 2022, which remained within the 40.0% national threshold. The report noted that federation receipts in February were 32.3% lower than in January and 34.3% below the budget target of N1.58tn. This decline was attributed to reduced collections from petroleum profit tax and royalties. Oil revenue saw a substantial decrease of 60.2% compared to the previous month.
Non-oil revenue, at N730.21bn, also experienced a decline of 3.7% compared to the preceding month and fell short of the monthly target by 7.4%. The decrease was mainly due to a 10.5% decline in collections from corporate tax, which can be attributed to the seasonality associated with its payments.
The CBN’s report highlights the fiscal challenges faced by the Nigerian government in the early months of 2023. The decrease in retained revenue and the fall in oil revenue have contributed to the widening fiscal deficit. The government will need to address these issues and explore strategies to enhance revenue generation in order to achieve fiscal stability.
As the year progresses, policymakers will closely monitor the fiscal situation and take necessary steps to manage the deficit effectively. It remains to be seen how the government will navigate these challenges and work towards achieving its budgetary targets while ensuring sustainable economic growth.
