August 26, 2024/FBNQuest Research
The most recent data from the Central Bank of Nigeria (CBN) shows that the Federal Government of Nigeria’s (FGN) fiscal operations resulted in a fiscal deficit of -N824.8bn in April 2024. The deficit in April is slightly higher than the -N823.9bn recorded in March 2024 but lower than the reported -N1.1trn deficit in the year-earlier period. The m/m expansion in fiscal deficit was mainly due to a m/m reduction in retained revenue to N419.9bn compared with N422.2bn recorded in March 2024. Also, April’s retained revenue more than halved (-74%) below the budgeted benchmark of about N1.6trn.
- The FGN has always been aggressive with its revenue projections. This is highlighted by the consistent pattern of recurring revenue shortfalls compared to the budgeted revenue projections.
- The consistent underperformance of the oil sector, primarily due to issues around pipeline vandalism and thefts, is a significant factor responsible for the persistent revenue challenges.
- For context, a closer look at the composition of federally collected revenue receipts shows that revenue from oil sources fell by -33% m/m to N494.8bn in April 2024. It was also significantly below the monthly budgeted benchmark of N1.8trn.
- Regarding government expenditure, the FGN’s aggregate expenditure declined slightly to N1.2trn from roughly N1.3trn recorded in March. It also declined significantly below the budget benchmark of N2.4trn.
- Recurrent expenditure comprising non-debt and debt service costs increased by +1% m/m but declined by -23% y/y to about N1.1trn.
- Notably, the debt service cost fell modestly by -2% m/m to N563.8bn. As a result, the debt service to revenue ratio declined to 134% in April 2024, down from 136% in the previous month.
- Capital expenditure decreased by -23% m/m to a paltry N78bn in April, significantly less than the monthly benchmark of N832.9bn.
- Cumulatively, the FGN’s retained revenue and expenditure amounted to about N2.0trn and N4.9trn over the 4M period to April 2024, implying a fiscal deficit of roughly N3.0trn.
