The Central Bank of Nigeria has said that the Federal Government recorded a fiscal deficit of N699.48 billion in July 2021.
This was despite an increase in its retained revenue for the period, an 8.9 per cent growth in expenditure, occasioned by, new and rising non-discretionary spending, particularly on security and COVID-19 mitigation measures.
According to the CBN’s economic report for July 2021, the fiscal deficit for July was higher than the figure for June 2021 and the budget benchmark by 1.6 per cent and 49.8 per cent, respectively.
The Apex Bank said; while the Federal Government recorded an aggregate expenditure of N1.093trillion in July, its retained revenue for the period stood at N394.11 billion. This means that the fiscal deficit stood at N699.48billion.
Part of the report read: “The provisional aggregate expenditure of the FGN, at N1,093.59 billion, rose by 8.9 per cent, relative to June 2021 but remained below the 2021 proportionate benchmark of N1,132.34 billion by 3.4 per cent.
The increase was due to a 5.9 per cent rise in recurrent expenditure. Disaggregation of the expenditure reveals the dominance of recurrent spending, constituting 88.6 per cent of total government expenditure in July 2021, while capital expenditure and transfers accounted for the balance of 7.6 per cent and 3.8 per cent, respectively.
“Compared with the projected expenditure composition of 61.9 per cent 6 (recurrent expenditure), 28.3 per cent (capital expenditure), and 6.7 per cent (transfers), the largely disproportionate share of recurrent expenditure in July 2021 is indicative of lags in capital releases.
“Growth in FGN retained revenue was owing to the 60.4 per cent rise in receipt from the Federation Account. Retained revenue of the Federal Government increased by 24.9 per cent to N394.11 billion, relative to June 2021. Nonetheless, FGN receipts in July 2021 fell below the benchmark of N665.53 billion by 40.8 per cent, suggesting the prevalence of revenue challenge in the review period.”
The report further stated: “Federation account operations improved earnings from petroleum profit tax and corporate income tax[1] induced a significant rise in federation earnings in the review period.
At N1,064.54 billion, federation receipt surpassed the level in June 2021 and the budget benchmark by 38.5 per cent and 3.9 per cent, respectively driven by non-oil receipts.”
According to the report, the growth in non-oil receipts above the proportionate budget was an indication that the Strategic Revenue Growth Initiatives of the Federal Government was beginning to yield the desired result.
Noting that non-oil revenue constituted 61.3 per cent of the gross federally collected revenue, while oil revenue accounted for 38.7 per cent, the report said that at N652.44 billion, non-oil earnings in July exceeded both the proportionate budget estimate and June earnings by 25.8 per cent and 35.5 per cent, respectively.