Fiscal operations of the Federal Government has resulted in a fiscal deficit of N2.4 trillion, about 6.1 per cent of the country’s Gross Domestic Product (GDP) in the first quarter of this year, 2021, the apex bank has said.
The implication is that, the government is spending much more than its revenue.
According to FBNQuest Research, from the Central Bank of Nigeria (CBN)’s Quarterly Statistical Bulletin (QSP) for first quarter of 2021 that the fiscal operations of the Federal Government of Nigeria (FGN) resulted in a deficit of N2.4 trillion, up from c.N1.6 trillion in fourth quarter of 2020 (N1.4 trillion first quarter of 2020).
“In more relatable terms, the deficit widened to 6.1 per cent of GDP in first quarter compared with 3.6 per cent in fourth quarter of 2020, and 4.0 per cent in first quarter of 2020”, said FBNQuest.
Worth mentioning is that the deficit is tracking ahead of the 3.9 per cent envisaged in the 2021 budget. The wider deficit relative to the benchmark can be explained by a lower revenue outturn compared with the pro-rata share of budgeted revenue.
The data is sourced by the CBN from the Office of the Accountant-General of the Federation. It is provisional and could be revised in the future.
In first quarter, the Federal Government of Nigeria (FGN)’s retained revenue of N904.3 billion was down nine per cent year-on-year (y/y) and fell short of the pro-rata budget benchmark by 55 per cent.
As with prior years, the FGN’s revenue projection (ex- the supplementary budget) for 2021 is ambitious at N7.99 trillion, and implies a pro-rata quarterly run-rate of almost N2.0 trillion.
Again, similar to previous years, analysts at FBNQuest Research believe that actual collections on key revenue headline items is likely to fall short of budgeted forecasts.
For instance, the FGN anticipates it will earn N2.7 trillion from government-owned enterprises (GOEs), despite the source’s weak track record.