February 22, 2023/FBNQuest Research
The CBN’s most recent monthly report shows that the federal government of Nigeria’s (FGN) fiscal operations resulted in a smaller fiscal deficit of -NGN531bn in October ’22. The fiscal deficit in October is below the -NGN672bn in the preceding month and -NGN611bn the previous year. The improved deficit position in October was supported by a marked m/m reduction in the FGN’s total expenditure. The data series provided by the CBN are provisional and as such, subject to revisions.
The FGN’s retained revenue amounted to NGN549bn, implying a +15% y/y growth, but -4% m/m decline. It was also -34% lower than the monthly budget benchmark of NGN831bn.
The major drivers of the revenue underperformance m/m were lower collections of value-added-tax (VAT) and FGN independent revenue.
The marked shortfall in revenue relative to the pro-rata monthly benchmark mirrors the FG’s bullish revenue expectations.
The total expenditure declined by -13% m/m and -1% y/y to NGN1.1trn in Oct ’22, and well below the monthly benchmark of NGN1.4trn.
The data also shows a primary balance (ex-net interest payments on public debts) of NGN88bn. The overall balance of NGN-531bn represents a debt service cost of NGN619bn.
The m/m decline was largely due to a -10% m/m fall in recurrent expenditure, which accounted for 96% of total expenditure.
In contrast, capital expenditure which represents 4% of total government expenditure, increased at a faster rate of +128% m/m to NGN41bn, but significantly lower than the monthly budgeted benchmark of NGN455bn.
