Due to the Federal Government’s early-year fiscal decisions, the deficit expenditure in February 2023 will increase by 22.8%. A sharp decline in oil earnings during that time period was the main factor for the development.
The Monthly Economic Report (MER) for February 2023, published yesterday by the Central Bank of Nigeria (CBN), stated that the deficit for the month of February was N513.05 billion, increasing the deficit for the first two months of 2023 to a total of N931 billion.
According to the study, the oil sector experienced a 60% decline to N308.07 billion in February after growing by 31% to N774.15 billion in January.
Similar trends in non-oil revenue, which fell 3.7% to N730.2 billion during the period, did not improve the situation.
As a result, the amount of money that went into the Federation Account in February decreased by 32.3%.
The CBN also noted that the deficit position was exacerbated by the expenditure side of the fiscal operations, which saw a 5.9 percent increase in spending to N991.6 billion over the period.
Federation receipts tumble
The CBN stated: “At N1.038 trillion, federation receipts were below the level in January by 32.3 per cent. Similarly, it was below the budget of N1.580 trillion by 34.3 per cent.
“The decline relative to January was attributed to a fall in collections from Petroleum Profit Tax and Royalties. Oil revenue, at N308.07 billion, was 60.2 per cent below receipts in the preceding month.
“The outcome was driven, largely, by the 60.5 per cent decrease in collections from Petroleum Profit Tax and Royalties. Similarly, at N730.21 billion, non-oil revenue, was below the level in the preceding month and the monthly target by 3.7 per cent and 7.4 per cent, respectively.
“The decrease was largely attributed to the 10.5 per cent decline in collections from corporate tax on account of the seasonality associated with its payments
“At N478.57 billion, retained revenue of FGN was below the level in January and the proportionate budget by 7.7 per cent and 42.4 per cent, respectively.
“Provisional aggregate expenditure increased on account of the rise in both recurrent and capital expenditures.
Consequently, the provisional aggregate expenditure of FGN at N991.62 billion rose by 5.9 per cent relative to the level in January and was 31.3 per cent below the monthly target.
“A breakdown of the expenditure reveals that recurrent expenditure, capital expenditure, and transfers accounted for 84.7 per cent, 9.5 per cent and 5.8 per cent of total expenditure, respectively.
“At N513.05 billion, the provisional fiscal deficit of the FGN rose by 22.8 per cent relative to the preceding month.
“However, it was 16.2 per cent below the budget benchmark.
Analysts make recommendations
Vice Chairman of Highcap Securities David Adonri commented, saying: “Full year 2023 appropriation law is a deficit budget. The government must follow the law. They can examine the spending plan and submit a bill to change the law.
“However, CBN report covers the period before assumption of office by this new administration. With the removal of fuel subsidy which constitutes a major expenditure item, this administration can cut the deficit if it follows the budget.”
