According to the Central Bank of Nigeria’s (CBN) latest monthly economic report, the Federal Government of Nigeria (FGN) saw a slight decline in retained revenue, which fell by 0.6% month-on-month (m/m) to NGN419.91 billion in April, down from NGN422.23 billion in March. This dip was primarily driven by a significant reduction in foreign exchange (FX) gains, which plummeted by 52.3% m/m, despite a remarkable 1,720.1% m/m increase in inflows from the federation account.
On the expenditure side, the report noted a slight contraction, with aggregate spending decreasing by 0.1% m/m to NGN1.24 trillion, compared to NGN1.25 trillion in March. The decline in spending was largely attributed to a 23.5% year-on-year (y/y) reduction in capital expenditure, which reflects the government’s ongoing challenges in sustaining investment in critical infrastructure.
As a result of the sharper decline in retained revenue compared to expenditure, Nigeria’s overall fiscal deficit widened slightly by 0.1% m/m, reaching NGN824.79 billion in April. This figure is marginally higher than the NGN823.91 billion deficit recorded in March and exceeds the pro-rated budget deficit target of NGN764.91 billion. The growing fiscal gap highlights the pressures on Nigeria’s public finances, driven by weaker revenue inflows and the need for continued government spending.
Looking ahead, the outlook for Nigeria’s retained revenue in 2024 appears challenging, particularly with the expected significant shortfall in oil revenue. Analysts anticipate that the government will meet its expenditure targets, driven by increased spending on vulnerable groups and other priority areas, consistent with historical patterns.
However, the fiscal deficit is projected to escalate substantially in 2024. The baseline expectation is for the deficit to reach NGN13.16 trillion, including Government-Owned Enterprises (GOEs) and project-tied loans, up from an estimated NGN9.56 trillion in 2023. Furthermore, the Federal Government’s introduction of a supplementary budget totaling NGN6.20 trillion is expected to push the fiscal deficit to NGN19.81 trillion, representing approximately 7.5% of GDP.
As Nigeria faces these fiscal challenges, the government’s ability to balance revenue generation with prudent spending will be crucial in managing the widening deficit and ensuring sustainable economic growth.
