Nigeria's finances suffer a big deficit in May according to CBN monthly economic report

NIGERIA'S finances continued to suffer during the month of May as figures just released by the Central Bank of Nigeria (CBN) reveal that the country recorded a N524.25bn fiscal deficit as the nagging reduction in revenue continues to take its toll.

Like many developing nations worldwide, Nigeria is still suffering from the economic fallout of the coronavirus pandemic as export revenue  is yet to return to pre-Covid levels. In April for instance, Nigeria suffered a fiscal deficit of N643.09bn  as the reduction in revenue from crude oil and gas revenue continues to bite hard.

According to the CBN'S monthly economic report on fiscal sector development: “The disproportionate reduction in expenditure and revenue outcomes resulted in a contraction in the overall fiscal deficit, during the period. Following the 14% decline in government spending and 7.2% fall in government retained revenue, the provisional fiscal deficit, at N524.25bn, was 18.5% and 1.5% below the level in April and the budget benchmark, respectively.”

For now, the government’s fiscal operations remain anchored on the extant fiscal framework to pursue macro-economic stability, income generation and the expansion of fiscal space to boost infrastructural development, among other objectives. The revenue challenge persisted in May 2022, as the federation and the federal government recorded shortfalls of 35.8% and 7.2%, relative to the respective monthly targets.

However, the overall fiscal deficit of the federal government contracted by 1.5%, relative to the target, driven, largely, by a 14% drop in aggregate expenditure. Total public outstanding debt, at end March 2022, stood at N41.6tn or 18.8% of gross domestic product (GDP) and remained within the 40% debt-GDP threshold.

In addition, the report stated:  “Provisional federally collected revenue in May dropped due to lower non-oil receipts. At N1.02tn, federation revenue fell below the levels in April and the monthly budget by 22.4% and 35.8% respectively.

"The decline was attributed to a 30.4% shortfall in non-oil receipts, relative to the target. In terms of share, non-oil revenue maintained its dominance in gross federation receipts, accounting for 54.1%, while oil revenue constituted the balance of 45.9%.”

Oil revenue, at N466.34bn, was above the level in April by 3.6% but fell short of the budget target by 41.1%. This increase in oil revenue relative to April was attributed to increased earnings from domestic crude oil and gas sales, following the surge in crude oil price but the higher value shortfall recovery for petrol continued to weigh on gross oil earnings.