Report from the Central Bank of Nigeria (CBN) indicates that the Federal Government of Nigeria recorded a fiscal deficit of N3.68 trillion in the first five months of 2023. The report, which was released as part of the personal notes of the Monetary Policy Committee, highlights growing concerns about low revenue alongside a high fiscal deficit.
The report quotes Mike Obadan, a member of the Monetary Policy Committee, who expressed concerns about the need for the government to reform its expenditure practices to address the substantial fiscal deficit. Obadan emphasized that the fiscal deficit in the country has been a structural factor contributing to rising inflation. He noted that in the first five months of 2023 alone, the Federal Government’s fiscal deficit reached -N3.7 trillion, which has significant implications for inflation, given the monetary methods used to finance it.
Obadan stressed the importance of undertaking comprehensive reform of public expenditure, urging the government to scrutinize the structure of its spending to eliminate unproductive and wasteful expenditures. He emphasized the need for meaningful fiscal consolidation to complement the Central Bank’s tight monetary policy stance, aimed at curbing persistent inflationary pressures.
