Nigeria’s budget deficit decreased by 29% in the first quarter of 2024, falling to N2.83 trillion from N3.96 trillion in the same period of 2023.
This improvement is partly attributed to the federal government’s plan to leverage banks’ foreign exchange gains.
Revenue for the first quarter of 2024 increased to N1.76 trillion from N1.32 trillion, while expenditure was N1.53 trillion.
The Nigerian presidency has also introduced a 50% windfall tax on banks’ forex revaluation profits to help fund a N6.2 trillion budget expansion for 2024, which the Senate has since increased by 70%.
Analysts suggest that while the windfall tax and higher revenue from oil production may help reduce the deficit, it may not fully address rising government expenditures.
There are concerns that increased spending on subsidies and debt servicing could offset the deficit reduction.
The recent petrol subsidy removal has significantly raised fuel prices, further impacting the budget.