Data from the Central Bank of Nigeria (CBN) has revealed that the expenses of the Federal Government of Nigeria surpassed its revenue by ₦1.43 trillion in the first three months of 2023. The financial imbalance is 9.6 percent higher than the deficit recorded in the previous quarter of 2022. According to the CBN economic report for the third quarter of 2023 which shed light on these concerning financial figures, the government’s fiscal operations in the first quarter (Q1) of 2023 resulted in a deficit.
At ₦1.43 trillion, the provisional fiscal deficit of the FGN was 9.6 percent higher than the level in the preceding quarter but 22.1 below the target. The report noted that this fiscal challenge was caused by a decline in oil revenue, which significantly impacted the government’s income. As a result, the retained revenue of the FGN dropped by 10.7 compared to the previous quarter of 2022, and it fell short of the quarterly target by 46.1 percent.
Statistics of revenue, deficit and debt of the country.
Furthermore, the report highlighted that the government’s aggregate expenditure also decreased by 1.3 percent compared to the previous quarter and by a substantial 36 percent when compared to the quarterly target. Despite this widening deficit, the report noted that the overall fiscal gap, while larger than the fourth quarter of 2022, was 22.1 percent narrower when compared to the proportionate budget. Also, as of the end of December 2022, Nigeria consolidated public debt stood at ₦46.25 trillion, which represented 22.8 of the Gross Domestic Product (GDP).
Again, according to the report, gross federation revenue amounted to ₦3.48 trillion, falling short of the levels in the fourth quarter of 2022 and the budget benchmark by 0.4 percent and 26.6 percent, respectively. Non-oil revenue continued to be the dominant source of government income. It makes up 61.4 percent, while oil receipts contributed 38.6. At the deficit amount, oil revenue experienced a 3 percent decline compared to the fourth quarter of 2022 and a substantial 43.5 percent drop relative to the quarterly target. This decline was mainly due to revenue shortfalls from petroleum profit tax and royalties, resulting from lower domestic crude oil production.
FX inflow rises in the first quarter of the year.
Meanwhile, the apex bank has revealed through the report that foreign exchange (FX) inflows into the Nigerian economy rose by 17.5 percent to $17.18 billion in Q1 of 2023 from $14.62 billion in Q4 of 2022. FX inflow through the Central Bank increased to $7.17 billion, from $6.21 billion in the preceding quarter. Foreign exchange inflow through autonomous sources increased to $10.08 billion from $8.41 billion in the preceding period. CBN receives foreign exchange inflows from crude oil sales and other sources of revenue on behalf of the government.
On the other hand, foreign exchange outflows through the economy increased by 12.8 percent to $9.98 billion, compared to $8.85 billion in Q4 2022. Outflow through the CBN increased by 17.9 to $8.86 billion from $7.51 billion in the preceding quarter. But the report also stated that autonomous outflow fell by 16.2 to $1.12 billion from $1.34 billion in the preceding quarter. So, net foreign exchange inflow through the economy increased by 24.7 percent to $7.20 billion from $5.78 billion in the preceding quarter.
More insights from the latest report released by the CBN.
Similarly, net inflow through autonomous sources rose to $8.89 billion from $7.08 billion in the preceding quarter. However, a net outflow of $1.69 billion was recorded through the Bank, compared to a net outflow of $1.30 billion in the preceding quarter. According to the report, non-residents’ redemption of matured investments and the withdrawal of foreign currency and deposits resulted in a net reduction in financial liabilities. The financial account recorded a net reduction in financial liabilities of $0.52 billion (0.5 of GDP) in Q1 of 2023, compared with $0.85 billion (0.7 of GDP) in Q4 of 2022.
Central Bank of Nigeria: Website