RateCaptain
  • Home
    • About Us
    • Contact Us
  • FX Rates
  • Money Market
  • Cryptocurrency
  • Commodities
  • Corporates
No Result
View All Result
Subscribe
  • Home
    • About Us
    • Contact Us
  • FX Rates
  • Money Market
  • Cryptocurrency
  • Commodities
  • Corporates
No Result
View All Result
RateCaptain
No Result
View All Result
Home Economy

Nigeria’s Fiscal deficits Deepens to N7.5 trillion

Stephen Akudike by Stephen Akudike
October 13, 2023
in Economy
Reading Time: 2 mins read
A A
0
Nigeria’s Fiscal deficits Deepens to N7.5 trillion
Share on FacebookShare on TwitterShare on WhatsappShare on Telegram

Nigeria’s fiscal woes have taken a grim turn as the Federal Government concluded the year 2022 with a fiscal deficit amounting to N7.5 trillion, equivalent to a staggering 129% of the actual revenue collected. This alarming revelation, sourced from the 2022 budget implementation report released by the Budget Office, underscores the severe fiscal challenges the country faces in its ongoing struggle to balance its budget.

Deficit Exceeds Expectations: The fiscal deficit of N7.5 trillion surpasses the government’s budgeted deficit of N5.2 trillion by a significant margin. What’s more concerning is that this deficit represents 129% of the actual revenue collected. Such a high deficit reveals that the government’s spending far outpaces its revenue, which could have dire implications for economic stability and growth.

AlsoRead

FG Spends $2 Billion on Debt Servicing in Four Months

Naira Strengthens Amid FX Stability and Monetary Reforms

Mounting Concerns as CBN Maintains Interest Rate at 27.5%

Declining Revenue: In 2022, the government’s actual revenue was a meager N5.8 trillion, falling short not only of the budgeted N9 trillion but also the N6.7 trillion collected in 2021. This declining revenue stream further exacerbates fiscal difficulties, making it increasingly challenging to meet financial obligations.

High Expenditure on Recurrent Costs and Debt Service: The government allocated a substantial N5 trillion to recurrent non-debt expenditure, with personal costs consuming N3.49 trillion of this total. In addition, the debt service cost reached a staggering N5.65 trillion, accounting for a concerning 97.4% of the budgeted revenue. This leaves minimal fiscal space for other vital services and development projects, especially in comparison to the N4.2 trillion or 62.8% of budgeted revenue in 2021.

Efforts to curb the growth in recurrent expenditure, particularly personnel expenditure, are deemed essential moving forward, according to the budget office. This should be accompanied by effective measures to address the ongoing security challenges, which remain a government priority.

Inadequate Capital Expenditure: While recurrent expenses and debt servicing command the lion’s share of the budget, capital expenditure lags significantly. The government managed to spend only N1.89 trillion, which is 50% lower than the targeted N3.6 trillion. This low level of capital expenditure hampers infrastructural development and long-term economic growth.

Budget-Deficit-to-GDP Ratio Exceeds Target: The budget-deficit-to-GDP ratio of 3.77% surpasses the 3.0% target set forth in the Fiscal Responsibility Act (FRA) of 2007. This suggests that the country is living beyond its means relative to the size of its economy. Addressing non-essential fiscal deductions is noted as a crucial step to free up resources for budget implementation at all tiers of government.

Financing the Deficit: The deficit was partly financed through foreign borrowing, amounting to ₦510.21 billion, and domestic borrowing, which reached ₦3,654.12 billion. While borrowing is a standard practice to cover fiscal deficits, overreliance on it may become unsustainable in the long term, as it leads to increased future debt service obligations.

Impact on Exchange Rate: Large fiscal deficits can contribute to a currency crisis by boosting the money supply, leading to inflation and devaluation of the domestic currency. This can result in higher interest rates as the government borrows more to cover the deficit, eroding investor confidence and prompting capital flight. Depletion of foreign reserves worsens the situation, potentially culminating in a balance of payments crisis.

The cycle can create a self-perpetuating loop of economic instability, making it challenging for a country to stabilize its currency. Nigeria’s ongoing currency crisis is a reflection of these factors, exacerbated by the influx of money supply that has fueled inflation without corresponding economic growth.

Tags: budget implementationbudget-deficit-to-GDP ratioCapital ExpenditureCurrency Crisisdebt servicedeclining revenueeconomic instability.Exchange Ratefinancing deficitFiscal DeficitNigerian governmentrevenue collection
Previous Post

American Banks Brace for Earnings Season Amidst Rising Interest Rates

Next Post

NCC Restores Regulatory Services to Globacom as Telco Clears ₦154 Billion Debt

Related News

FG Records N13.33bn Revenue Shortfall from Gas Flaring Penalties

FG Spends $2 Billion on Debt Servicing in Four Months

by Akpan Edidong
May 22, 2025
0

Nigeria has spent $2.01 billion on external debt servicing between January and April 2025, a 50% increase compared to the...

NEC Affirms CBN $3 Billion Loan for Naira Stability

Naira Strengthens Amid FX Stability and Monetary Reforms

by Stephen Akudike
May 22, 2025
0

The Nigerian naira showed continued strength this week, appreciating to N1,625/$1 on the parallel market on Wednesday, slightly up from...

$26 Billion for unidentified source passed through Binance-Cardoso

Mounting Concerns as CBN Maintains Interest Rate at 27.5%

by Stephen Akudike
May 21, 2025
0

Amid ongoing economic instability and global trade tensions, the Central Bank of Nigeria (CBN) has decided to retain its benchmark...

CBN bans foreign bank representative offices from engaging in banking business in Nigeria..

CBN Holds Interest Rate Steady at 27.5%, Retains Other Key Monetary Tools

by Rate Captain
May 21, 2025
0

The Central Bank of Nigeria (CBN) has chosen to maintain its benchmark interest rate, the Monetary Policy Rate (MPR), at...

Next Post
NCC Restores Regulatory Services to Globacom as Telco Clears ₦154 Billion Debt

NCC Restores Regulatory Services to Globacom as Telco Clears ₦154 Billion Debt

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recommended

Femi Otedola Reveals Unsuccessful Bid to Acquire Transcorp Plc for N250 Billion.

Otedola Invests ₦320bn in First Bank, Citing Tinubu and CBN Reforms

May 22, 2025
FG Records N13.33bn Revenue Shortfall from Gas Flaring Penalties

FG Spends $2 Billion on Debt Servicing in Four Months

May 22, 2025

Popular Story

  • $26 Billion for unidentified source passed through Binance-Cardoso

    Mounting Concerns as CBN Maintains Interest Rate at 27.5%

    0 shares
    Share 0 Tweet 0
  • BlackRock Joins Blockchain Platform Axoni for Equity Swap Trades

    0 shares
    Share 0 Tweet 0
  • Fair Money Job Opening: Regional Sales Manager

    0 shares
    Share 0 Tweet 0
  • Global Gold Reserves Rankings: Top 10 countries with largest gold reserves

    0 shares
    Share 0 Tweet 0
  • UPL Leads Gainers with 10% Surge as All-Share Index Slightly Declines

    0 shares
    Share 0 Tweet 0
RateCaptain

RateCaptain

We bring you the most accurate in new and market data. Check our landing page for details.

  • Home
  • About Us
  • Privacy Policy
  • Terms & Conditions
  • Disclaimer
  • Cookie Policy
  • Contact Us

Copyright © 2022 RateCaptain - All rights reserved by RateCaptain.

No Result
View All Result
  • Home
    • About Us
    • Contact Us
  • FX Rates
  • Money Market
  • Cryptocurrency
  • Commodities
  • Corporates

Copyright © 2022 RateCaptain - All rights reserved by RateCaptain.

RateCaptain
Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
View preferences
{title} {title} {title}
?>