…Aggregate Expenditure Rises By Over N120bn In Three Months
Despite generating more revenue as a result of higher crude oil prices and aggressive tax revenue generation drive, the federal government still suffered a fiscal deficit of N3.08tn in the fourth quarter of 2024, futures obtained from the Central Bank of Nigeria have revealed.
A fiscal deficit occurs when a government spends more money than it earns in revenue within a specific period, typically a fiscal year.
It is the negative difference between a country’s total revenue and its total spending.
Deficits can arise due to various factors, including increased government spending on programs or infrastructure, among others.
An analysis of the CBN Economic Report for the fourth quarter of 2024 showed that primary deficit narrowed by 22.62 per cent, relative to the level in the preceding quarter.
The Report noted that the overall deficit also reduced by 3.61 per cent to N3.08tn during the review quarter, reflecting the improved balance that resulted from a more than proportionate increase in revenue over expenditure.
The report put the retained revenue for the fourth quarter of 2024 at N2.52tn.
Further analysis showed that aggregate expenditure was N5.6tn broken down into recurrent expenditure of N4.26tn, capital expenditure of N958.16bn and transfers of N435.7bn.
The recurrent expenditure of N4.26tn is further broken down into non-debt of N2.01tn and debt service of N2.19trn
Further analysis of total expenditure showed that recurrent which is about 75.13 per cent accounted for the largest share outlay, with the remainder split between capital (17.10 per cent) and transfer payments (7.77 per cent).
The federal, state, and local governments received N1.44tn, N1.49tn and N1.09tn, respectively, while the balance was allocated to the 13 per cent derivation fund for oil-producing states.
The report added, “The FGN retained revenue rose in the review period, due to higher nent receipts from the federation account, non-oil excess, and FGN independent revenue.
“At N82.52tn, provisional FGN retained revenue was 10.40 per cent above the level in Q3 2024, but was 48.57 per cent below the benchmark.”
Nigeria has faced persistent fiscal deficits due to a combination of revenue shortfalls, high public expenditure, and economic inefficiencies.
Nigeria’s fiscal deficit has remained high over the years, often exceeding the three per cent of Gross Domestic Product threshold set by the Fiscal Responsibility Act of 2007.
In recent years, the deficit has been exacerbated by low revenue generation and rising government spending.
The deficit is largely financed through borrowing, leading to rising public debt, which has increased concerns over debt sustainability.
Nigeria’s debt service-to-revenue ratio has been alarmingly high, with over 70 per cent of revenue spent on servicing debts.
Despite diversification efforts, oil revenue still accounts for a large portion of government earnings.
The Registrar of the Chartered Institute of Finance and Control, Godwin Eohoi, said the growing burden of debt servicing, coupled with a widening fiscal deficit and declining fiscal space, raises serious questions about Nigeria’s long-term fiscal sustainability.
Without significant reforms to address these issues, he said the country risks being trapped in a vicious cycle of borrowing and debt repayment, with little left for critical national development.
Despite High Revenues, FG Suffers N3.08tn Fiscal Deficit is first published on The Whistler Newspaper
Source: The Whistler
