Provisional revenue dropped by 8.3%
The Federal Government recorded an estimated fiscal deficit of N580.93billion in February 2022, which is 6.5 per cent above the preceding month’s N545.62billion, the Central Bank of Nigeria (CBN) has said. The apex bank, which disclosed this in its February 2022 Economic Report posted on its website yesterday, stated that the increase in the fiscal deficit followed the decline in the Federal Government’s retained revenue and an increase in government expenditure during the period under review. According to the report, “FGN revenue declined in Feb-ruary 2022 driven by a lower allocation from the Federation Account, as net oil and gas revenues were much lower than expected. At N371.67 billion, the provisional revenue of the FGN dropped by 8.3 per cent, relative to the preceding month. It was also short of the budget target by 44.2 per cent, indicating perennial revenue challenges.
“Despite a shortfall in revenue, federal government aggregate spending rose marginally, on account of higher recurrent expenditure, as the government sought to rev-up consumption, especially of vulnerable groups. “At N952.61 billion, provisional aggregate expenditure rose by 0.15 per cent, from N951.14billioninJanuary2022, owing to a 22.7 per cent rise in recurrentexpenditure. Therise intotalexpenditurewasdampened by the50.0per centdecline incapitalexpenditure. Thus, recurrent spending maintained its dominance in total expenditure, accounting for 80.9 per cent; while capital expenditure and transfers constituted the balance of 14.8 per cent and 4.3 per cent, respectively.” It added: “The decline in FGN retained revenue and increase in FGN outlay further expanded the fiscal deficit in February 2022.
At N580.93 billion, the provisional fiscal deficit of the FGN was 6.5 per cent abovethelevelinthepreceding month.” Specifically, thereportstated thatfederallycollectedrevenue at N799.60 billion fell below the levels in the preceding month andtheproportionatemonthly target, by 22.0 per cent and 15.4 per cent, respectively. It ascribed the decline, largely, to lower receipts from Petroleum Profit Tax (PPT) & Royalty, and Corporate Tax components.
“Non-oil accounted for a dominant74.0percentof gross federally collected revenue, in the period, while oil revenue constituted the balance of 26.0 per cent, highlighting the persistent challenges in the oil sector. “Further analysis indicates that, at N208.20 billion, oil revenue was lower than collections in the preceding month and the proportionate budget benchmarkby36.9percentand 58.8 per cent, respectively. All components of oil revenue fell short of their prorated budget benchmark, reflecting the effectsof operationalconstraints.
“Likewise, non-oil receipts, at N591.40 billion, fell by 3.8 per cent against earnings in January 2022, but were higher than its proportionate budget target by 14.0 per cent. “Thedevelopmentwasdriven by a 33.6 per cent decrease in corporate tax, reflecting the cyclicality of corporate tax receipts,” the report said. On foreign exchange market developments in February, the CBN said it reduced its interventions in the foreign exchange market “to improve efficiency in the utilization of foreign exchange and to conserve external reserves.” According to the report, “total foreign exchange sales to authorised dealers by the bank was $1.39 billion in February, a decrease of 16.1 per cent, relative to $1.65 billion in January. Further analysis shows that matured swaps contracts and the Secondary Market Intervention Sales (SMIS) windows rose by 60.2 per cent and 3.9 per centinFebruaryto$0.34billion and $0.56 billion, respectively, relative to their levels in January 2022.