Surge Despite Revenue Growth
The Federal Government of Nigeria saw its deficit spending increase by 28% year-on-year, reaching N12.1 trillion in the first ten months of 2024, according to an analysis of the Central Bank of Nigeria’s Monthly Economic Reports. This figure significantly overshoots the 2024 budget deficit target of N9.8 trillion by 31%.
Revenue and Deficit Trends
Despite this, the government’s revenue increased by 36% year-on-year during the same period. However, the fiscal deficit still outpaced the revenue growth. In the first quarter of 2024, the deficit was at N4.18 trillion, which grew by 1.9% to N4.26 trillion in the second quarter. There was a notable decrease in Q3’24, dropping by 23% to N3.3 trillion. By October 2024, the deficit stood at N361.89 billion.
Federation Account Revenue Boost
The surge in federal revenue was predominantly due to a 54.5% increase in funds allocated to the Federation Account, amassing N20.214 trillion in the first ten months of 2024, up from N13.079 trillion in the previous year. Quarterly performance showed an increase from N4.973 trillion in Q1’24 to N6.388 trillion in Q2’24, and further to N6.865 trillion in Q3’24, although October saw a month-on-month decline of 7.9% to N1.988 trillion.
Expenditure Fluctuations
On the expenditure front, there was a 17.8% rise quarter-on-quarter in Q2’24, bringing the total to N6.7 trillion from N5.6 trillion in Q1’24. However, spending dropped by 16.4% in Q3’24 to N5.6 trillion. October’s figures showed a 28.4% increase from September, with expenditure at N1.83 trillion.
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Economic Implications and Fiscal Management
The Central Bank’s October Economic Report highlighted that the net disbursement of funds from the Federation Account was 7.9% higher than the previous month but fell short of the target by 43.76%. The report also noted that the increase in expenditure was largely due to higher capital spending, although it was below the target by 44.03%.
With the federal government’s retained revenue climbing to N763.79 billion, up by 6.07% from the previous month, the fiscal balance saw an expansion, indicating a need for strategies to enhance fiscal space through expanding tax bases and diversifying revenue sources.
This scenario underscores the complexities of managing Nigeria’s fiscal policy amidst rising expenditure and the imperative for effective revenue generation strategies.
