The Central Bank of Nigeria (CBN) has reported that the Federal Government of Nigeria recorded a fiscal deficit of N1.54tn in July and August 2023. Despite an uptick in gross federation account revenue, the fiscal deficit contracted by 11.0% and 19.1% in July and August, respectively. The report also highlights the composition of revenue, with non-oil revenue remaining dominant at 81.5%.
Key Points:
- Fiscal Deficit Figures:
- The Federal Government recorded fiscal deficits of N818.53bn in July and N726.85bn in August 2023. The lower deficit in August was attributed to a decline in interest payments during the period.
- Improved Federation Account Receipts:
- The federation account receipts amounted to N1.69tn, exceeding the level in the preceding month by 1.7%. However, it fell below the benchmark of N1.76tn by 3.9%. The improvement was driven by increased collections from production sharing contracts, interim dividend payment by NNPC, and higher receipts from customs & excise duties and FGN independent revenue.
- Revenue Composition:
- Non-oil revenue remained dominant, accounting for 81.5%, while oil revenue made up the remaining 18.5%. Non-oil revenue at N1.38tn was 2.7% below the level in July 2023 but exceeded the monthly target by 43.8%.
- Oil Revenue Performance:
- Oil revenue at N314.38bn exceeded the level in July by 27.0%, driven by higher receipts from production sharing contracts and dividends from NNPC. However, it was below the target of N803.63bn by 60.9%.
- Distribution Among Tiers of Government:
- The Federal Account Allocation Committee distributed a net balance of N966.11bn among the three tiers of government after statutory deductions and transfers. The federal, state, and local governments received N374.49bn, N310.68bn, and N229.41bn, respectively, while N51.54bn was allocated to the 13% Derivation Fund for Oil-Producing States.
- Disbursement Comparison:
- Net disbursement in August 2023 was 6.5% above the level in July 2023 but fell short of the monthly target by 11.4%.
Conclusion: Despite improved revenue in the federation account, Nigeria continues to grapple with a fiscal deficit, reflecting ongoing financial challenges. The emphasis on non-oil revenue dominance underscores efforts to diversify income sources. Addressing fiscal deficits and meeting revenue targets remain critical for sustaining economic stability and supporting government expenditure on essential services and development projects. The report highlights the importance of continued fiscal discipline and effective economic management.
